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

by Franchise Chatter on July 17, 2013

in Franchise Costs, Massage Franchise

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This post was updated on July 9, 2017 to reflect information from Massage Heights’ 2017 FDD (Item 7).

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

  • These estimated initial expenses describe the estimated range of the initial investment for a single Massage Heights business that will occupy space ranging from a size of approximately 1,980 square feet to 2,800 square feet, with between 8 massage rooms with 9 tables and 10 massage rooms with 11 tables.
  • Each additional room exceeding 10 rooms will cost approximately $3,000 per room.
  • These estimates are based on the company’s experience, the experience of its affiliates, and its current requirements for Massage Heights franchises.

1.  Initial Franchise Fee:  $42,000

2.  Retreat Development Package:  $115,000 to $136,000

  • The Retreat Development Package includes millwork, interior signage, reception and office desk, reception seating, retail display tables, massage tables and chairs, operational inventory including massage lotions and oils, massage equipment, facial supplies and equipment, and retail and back bar operational products.

3.  Security Deposit:  $3,500 to $9,600

  • This estimate does not include deposits required by your telecommunications services company.

4.  3 Months Rent:  $10,500 to $42,500

  • This estimate includes 3 months’ rent at a monthly rate of approximately $1.66 per square foot to $4.17 per square foot. Retreats will typically be 1,980 to 2,800 square feet in size. Retreats typically are located in shopping malls and strip malls.

5.  Leasehold Improvements and Professional Design Fees:  $170,000 to $238,000

  • Building and construction costs will vary depending upon the condition of the premises for the Retreat, the size of the premises, local construction costs, and the extent and quality of improvements desired by you over and above the minimum requirements.
  • This estimate does not include tenant improvement allowances, which is a negotiated sum a landlord may be willing to spend to customize the leased space for the needs of a tenant. If offered, the range of the tenant improvement allowances may be as low as $5 per square foot and as high as $40 per square foot.

6.  Exterior Signage:  $4,300 to $8,000

  • This estimate is for a single exterior sign. The type and size of the signage installed will be based upon the zoning and property use requirements and restrictions.

7.  Equipment:  $15,000 to $26,500

  • This estimate includes a sound system, sound masking system, appliances, interior decorative items not included in the Retreat Development Package, and phone system.

8.  Computer Hardware and Software Fees:  $10,400 to $13,500

  • This estimate includes the cost of obtaining the required computer hardware, networking equipment and installation, and the required customized software. There is a one-time setup fee of $500 for Massage Heights’ customized software and a recurring monthly “Software Fee.”

9.  Business Licenses and Permits:  $150 to $2,100

  • Certain states may require that you file and post a bond to sell memberships or if you are classified as a health spa. It is your responsibility to verify whether or not your state requires such bond and provide the franchisor with the bond documentation.

10.  Professional Fees Including Project Management:  $1,000 to $10,000

  • Massage Heights strongly recommends that you hire a lawyer, accountant, or other professional to advise you on this franchise offering, the lease for your Retreat, and to assist you in setting up your Massage Heights business.

11.  Initial Inventory:  $9,400 to $13,750

  • This estimate includes the beginning inventory for 3 months. These items include:  operational linens, office supplies, opening marketing kit and retail products, brochures, flyers, business cards, recruiting materials, gift cards and certificates, stationery, table signs, forms, membership cards, decals, pre-opening and grand opening banners, pens, and other marketing materials not included in the grand opening advertising program.

12.  Insurance:  $3,500 to $6,000

13.  Initial Training Expenses:  $1,500 to $3,000

  • The company provides training at its corporate office located in San Antonio, Texas, at another location it designates, and/or through an online platform. You must pay for airfare, meals, transportation costs, salaries, benefits, lodging, and incidental expenses for all training program attendees.
  • Initial training is provided at no charge for your managing owner and up to 2 key personnel. If additional initial training is required, or more people need to be trained, an additional fee may be assessed.
  • This estimate includes the travel and living expenses including airfare that you will incur when you and one other person attend the initial training program for Retreats. It does not include any wages or salary for you or your employees during this training.

14.  Start-Up Advertising Expense:  $14,000 to $15,400

  • The Start-Up Advertising Expense will be spent towards generating awareness within the local trade area of the opening of the Retreat and promoting introductory massage and facial services as well as memberships.

15.  Local Advertising Requirement:  $9,000

  • This estimate includes 3 months ($3,000 per month) of local advertising once your Retreat has opened.

16.  Telecommunications Services and Advertising:  $350 to $1,000

  • This estimate includes the security deposits and service fees for your telecommunications system, telephone directory advertising fees, and startup fee for online business listing and reputation management services.

17.  Additional Expenditures for Facial Services:  $4,500 to $5,000

  • Massage Heights businesses began offering facial services system-wide in April 2012 after approximately 2 years of testing.
  • Facials may be offered in dual use therapy rooms unless local and state regulations require separate rooms.
  • The costs are determined by the number of rooms being designated as dual use and this estimate range assumes there will be 2 rooms.
  • Certain facial equipment and supplies are included in the Retreat Development Package. This estimate is for the remaining equipment and supplies that you will need.

18.  Site Evaluation Assistance Fee:  $0 to $5,000

  • If the franchisor assists you with site selection, you must pay its, or its designee’s, expenses for travel, lodging, meals, and/or reasonable per diem, which are included in this estimate.

19.  Demographic/Psychographic Analysis:  $1,000

  • Massage Heights will perform a demographic and psychographic analysis of the sites that you submit for acceptance and provide you with the results of the analysis for the site you select.
  • The analysis provides information helpful to not only select a site that matches up with the Massage Heights core customers, but with relevant information you can use to market to the customer segments in your area as part of your local store marketing plan.

20.  Additional Funds – 3 Months:  $15,000 to $50,000

  • These amounts represent the franchisor’s estimate of the amount needed to cover your expenses for the initial three month startup phase of the Massage Heights business. They include payroll, administrative, utilities, and other items.
  • These figures do not include standard pre-opening expenses, royalties, or advertising fees payable under the Franchise Agreement or debt service, and assume that none of your expenses are offset by any sales generated during the startup phase.

21.  Total Estimated Initial Investment:  $430,100 to $637,350

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