By  on October 8, 2008

Fred Segal Beauty, the iconic salon, spa and retail space in Santa Monica, Calif., is closing this week after 16 years in business amid a breach-of-contract lawsuit filed against Fred Segal’s owners, Fred Segal and his son, Michael, by the business’ co-founders and licensees, Michael Baruch and Paul DéArmas.

The suit alleges that Fred and Michael Segal rebuffed plans by Baruch and DéArmas to open a second space adjacent to the Fred Segal location on Melrose Avenue and to establish a branded product line, after initial assurances they could proceed.

“Our hope from the beginning was to resolve this with an amicable solution to allow us to move forward with our ideas and our concept,” said Baruch. “That was obviously faced with a stonewall. That means either moving forward with all the ideas or being compensated for not moving forward.”

Michael Segal did not return calls for comment.

The lawsuit states that Baruch and DéArmas have invested at least $1.2 million in developing a Melrose location, $1.3 million in creating a product line and $1.5 million in renovating the Santa Monica location. Fred Segal Beauty was launched in 1992 and added Fred Segal Workshop, an educational arm, and Fred Segal Agency, which represents its stylists for Hollywood and editorial work, in 1998. The business began a mobile services component in 2003, and that same year added a spa, which increased its footprint to more than 6,000 square feet.

Fred Segal Beauty’s roughly 50 employees were informed of the closure last month. Baruch said he might still release a Fred Segal Beauty product line under the condition that he and DéArmas have rights to the Fred Segal Beauty name, which Baruch believes continues to resonate with consumers worldwide.

“We created it, we oversaw it, managed and supervised it without any discretion from [the Segals],” he said of the name. “It was basically 100 percent developed and used by us without any oversight.”

Fred Segal Beauty’s approach of combining a spa, salon, retail store, mobile program, agency and classes has been a model emulated within the beauty industry. Fred Segal Beauty also was one of the first venues to incorporate a hair color bar and to use thermal relaxer and airbrush tanning techniques, and provided a platform for such brands as Borba, Kérastase Paris and Hard Candy to reach upscale customers.

Fred Segal Beauty helped launch the careers of many stylists, and in the Los Angeles area, Fred Segal Beauty alumni at the helm of their own salons include Eva Diaz Duarte at Duarte, Eli Thomas at Thomas Chase Hairdressing, Frank Galasso at Frank Studio and Corey Powell at The Parlour.

The remaining Fred Segal beauty spots include Studio at Fred Segal at the Santa Monica location, and Apothia by Ron Robinson at Fred Segal on Melrose Avenue.

Baruch, 42, and DéArmas, 51, who met 27 years ago when Baruch was a client of DéArmas’ at the former Los Angeles salon Cassandra, are not committed to future business ventures yet, but Baruch said he will consult and DéArmas will pursue artistic endeavors.

“The talent that we have are all hugely successful at what they do,” Baruch said of the business’ staff, adding, “I feel strong about the mark that we left for our business. I am a little bit saddened by the closure, but feel excited about my future.”

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