Franchise Costs: Detailed Estimates of Massage Envy Franchise Costs (2017 FDD)

This post was updated on August 6, 2017 to reflect information from Massage Envy’s 2017 FDD (Item 7).

Detailed Estimates of Massage Envy Franchise Costs Based on Item 7 (Estimated Initial Investment) of Massage Envy’s 2017 Franchise Disclosure Document

• Massage Envy is unaware of any fees payable to third party suppliers that are refundable, although some landlords refund security deposits at the end of the lease if the tenant does not default.

1.  Initial Franchise Fee:  $45,000

• The initial franchise fee is $45,000 for your first Massage Envy Business. If this is your second or subsequent franchise (regardless of whether your first franchise was a Traditional Location or a Total Body Care Location), your initial franchise fee is $35,000.

• If you qualify under the VetFran program, your initial franchise fee is $34,000 for your first Massage Envy Business and $28,000 for your second or subsequent Massage Envy Business.

2.  Initial Opening Package:  $30,000 to $60,000

• Before you open your Massage Envy Location, you must purchase the Initial Opening Package from Massage Envy’s third-party distribution vendor. The Initial Opening Package includes:

• (i) most of your initial supplies (including massage lotions, oils, equipment for stretching and skin care services, uniforms, Hot Stone equipment, and certain printed items);
• (ii) all of your initial inventory (retail skin and body care products, essential oils, and gift items);
• (iii) certain of the furniture and fixtures for your Massage Envy Location (including tables, chairs, desks, room equipment, and other items); and
• (iv) your office equipment (excluding computer hardware and software).

3.  Computer System:  $58,100 to $72,500

• This amount estimates your cost for the purchase and installation of your Dell computer system and related technological equipment.

• For a Total Body Care Location, the low estimate assumes you will have 5 computers and the high range assumes you will have 7 computers. For a Satellite Location, the low estimate assumes you will have 3 computers and the high range assumes you will have 6 computers.

• This estimate also includes a configuration fee that must be paid to the computer supplier as well as telecommunications (voice/internet), phone systems, low-voltage cabling, sound equipment system, surveillance (audio/video) system, sound masking system, digital signage, overhead music, and messaging on hold.

4.  Security Deposits:  $5,000 to $10,000

• This includes average security deposits required by the landlord and utility companies.

5.  Three Months’ Lease Rent:  $15,000 to $50,000

• This estimate presumes that you will be leasing the premises for your Business.

• A typical Total Body Care Location is located in a high-end retail shopping center and ranges in size from 2,500 to 5,000 square feet. At least 4 of the facility’s massage rooms will be dual purpose rooms for massage and skin care services.

• On the other hand, Satellite Locations will generally be located in nontraditional, smaller locations, in an urban strip center or stand-along building, with size ranging from 1,700 to 2,000 square feet with between 5-7 rooms, all of which will be dual purpose rooms.

• The expense of leasing will vary, depending upon the size of the premises, its location, landlord contributions, local real estate market conditions, and the requirements of individual landlords.

• The total estimated initial investment shown includes 3 months’ rent.

• Rents will tend to be higher in metropolitan areas like New York City and other large cities.

6.  Leasehold Improvements:  $199,000 to $620,000

• This estimate does not include any construction allowances that may be offered by the landlord.

• The cost of leasehold improvements will vary widely depending upon:

• the size and condition of the premises;
• if you are located outside the 48 contiguous states;
• whether or not there are any existing and comparable leasehold improvements in the premises;
• the extent and quality of improvements desired by you over and above Massage Envy’s minimum requirements;
• landlord’s cash contribution to the cost of the improvements;
• whether you are required to use union labor, and the like.

• In 2015 and 2016, the national average cost per square foot of leasehold improvements for Total Body Care Locations was $106.76. Massage Envy does not have similar historical data for a Satellite Location since no Satellite Location has opened as of the date of the 2017 Disclosure Document.

7.  Signage (excludes interior signage that is part of the building materials from MeyerDC included in Leasehold Improvements):  $6,000 to $18,000

• This fee range represents a single sign up to 3 signs.

8.  Business Licenses and Permits:  $250 to $5,000

• Certain states may require that you file and post a bond if it is determined that your business is considered a health spa. Currently, the states of New Jersey ($25,000 to $50,000 depending on gross income for fiscal year), Iowa ($150,000), Missouri ($10,000 – $25,000 depending on number of unexpired contracts) have the indicated bond requirements for health spa.

• To Massage Envy’s knowledge, no franchisees have been required to post these bonds. However, you should check your local laws to confirm whether you will be required to post such a bond.

• In addition, the city of New York has additional and unique licensing requirements for the opening of a Massage Envy Business.

9.  Professional Fees:  $7,000 to $30,000

10.  Grand Opening Advertising Program:  $15,000

11.  Insurance:  $10,000 to $35,000

13.  Training Expenses:  $2,000 to $5,000

• This item estimates the travel and living expenses, including airfare, which you will incur when you and your employees attend the initial training programs. It does not include any wage or salary for you or your employees during training.

14.  Additional Funds – 3 Months:  $42,473 to $65,000

• This item estimates your initial start-up expenses (other than the items identified separately in the table).

• These expenses include payroll costs during your first 3 months of operation but not any draw or salary for you.

• These expenses also include the $375 monthly sublicense support fee for the Millennium Software for up to 5 workstations, payable to Massage Envy after you open the Business, and the $15 monthly technology compliance fee.

• These figures are estimates and you may have additional expenses starting your Business.

15.  Total Estimated Initial Investment:  $434,823 to $1,030,500

• Massage Envy relied on its franchisees who have been in operation since August of 2007 to compile these estimates.