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Franchise Costs: Detailed Estimates of Woodhouse Day Spa Franchise Costs (2013 FDD)

by Franchise Chatter on January 1, 2014

in Franchise Costs, Massage Franchise, Spa Franchise

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Detailed Estimates of Woodhouse Day Spa Franchise Costs Based on Item 7 (Estimated Initial Investment) of Woodhouse Day Spa’s 2013 Franchise Disclosure Document

1.  Development Fee:  Varies

  • If you sign a development agreement, you must pay the franchisor a development fee. The franchisor credits the allocable portion of your development fee against your initial franchise fee.

2.  Initial Franchise Fee:  $45,000

Woodhouse Day Spa Photo by WoodhouseColumbus3.  Spa Development Package:  $84,000 to $115,000

  • This estimate is for the Spa Development Package, which includes furniture, fixtures, equipment, amenities, decor, and uniforms that you will need for your Spa.

4.  Computer Systems:  $15,000 to $28,000

  • This amount estimates your cost for the purchase and installation of software from Harms Software, Inc. (“Harms”) and Dell computers. The low range assumes you will have 4 computers and the high range would be 6 computers.
  • This includes Harms configuring your computer systems before they ship and a 1-time Millenium software license fee of $7,878.50 (which includes 1 year of tech support).
  • It also includes a 1-time set-up fee of $1,200 payable to Harms for access to the franchisor’s Online Reservations System and a $1,200 website development and setup fee to build a webpage for your Spa.

5.  Building and Land:  Varies

  • This estimate does not include the costs for real estate, building permits, or financing.
  • Woodhouse Day Spas are typically located in new commercial in-line shopping center buildings.
  • You may purchase or lease the building for your Spa. The franchisor is unable to estimate real estate costs or lease costs because of wide variations in prices depending on factors like location, type of building on the property, size of the property, the type of interest you acquire, and market conditions.
  • The franchisor estimates that the size of your Spa will range between 4,000 and 5,000 square feet.

6.  Leasehold Improvements:  $180,000 to $225,000

  • This estimate is based on the average rate that the existing Spas have spent to renovate/construct a Woodhouse Day Spa. This estimate can vary due to your locality.
  • The estimate is for the total construction/renovation cost of a Woodhouse Day Spa, excluding the cost of building permits which vary due to wide variations in building and site conditions. The estimate also excludes financing costs, which may vary widely based on factors like the type of loan, the size and location of the Spa, and your creditworthiness.
  • This estimate assumes that you receive a minimum tenant improvement allowance of $45 per square foot.

7.  Signage:  $3,500 to $5,000

  • The signage will have to meet city and the developer’s requirements.

8.  Business Licenses and Permits:  $250 to $1,000

  • Each state varies on the requirements for licenses and permits.

9.  Architectural Fees:  $15,000 to $18,000

  • This estimate is for architectural fees that you will incur in adapting the franchisor’s prototype architectural plans.

10.  Training Expenses:  $1,000 to $3,500

  • The franchisor provides initial training to your initial Operating Principal, General Manager, and Spa Coordinator at no additional charge. Therefore, these amounts include only your out-of-pocket costs for the training of these people.
  • This estimate is based on your travel expenses to the franchisor’s corporate office in Victoria, Texas for your initial training. You will be responsible for all of your and your employee’s expenses like lodging, meals, and wages. These costs will vary depending upon your selection of salary levels, lodging and dining facilities, mode and distance of transportation.

11.  Strategies Incubator Seminar:  $2,500 to $4,200

  • Your Operating Principal and General Manager (if applicable) must attend a 4-day “Strategies Incubator” seminar located in Centerbrook, Connecticut, in which you will receive additional leadership training and instruction on client retention, growth, staff retention, staff compensation, and retail sales.
  • This estimate includes the cost of tuition, plus each attendee’s travel expenses, lodging, meals, and wages.

12.  Professional Services:  $1,500 to $3,500

  • This estimate is for the cost to establish an entity to hold the franchise and review the franchise documentation. The cost of professional services can vary widely.

13.  Insurance:  $2,500 to $4,000

  • This amount represents an estimate of the down payment on your annual insurance premiums. You must obtain the insurance coverage described in the Franchise Agreement.
  • The franchisor must be named as an additional insured on these policies. Your cost of insurance may vary depending on the insurer, the location of your Spa, your claims history, and other factors.

14.  Grand Opening and Advertising Program:  $5,000 to $10,000

  • You must send out grand opening invitations and carry out a grand opening promotion for the Spa in compliance with the franchisor’s written specifications.
  • The estimate includes the purchase of 1,000 grand opening invitations.
  • You must spend at least $5,000 on the Spa’s grand opening promotion and you must provide the franchisor with evidence of these expenditures. The franchisor must approve all advertising items, methods, and media.

15.  Initial Inventory:  $35,000 to $45,000

  • This estimate includes cost for back bar supplies, retail, and marketing materials for approximately the first 60 to 90 days of operations.

16.  Additional Funds for the Start-up Phase (for Initial 3-Month Period):  $30,000 to $45,000

  • This is an estimate of your working capital needs during the first 3 months of operation. These expenses include payroll costs during the Spa’s operation but not any draw or salary for you.
  • These are estimates and the franchisor cannot guarantee that you will not have additional expenses starting the business.

17.  Total:  $420,250 to $552,200

  • This estimated initial investment is for one Woodhouse Day Spa. The total does not include costs for real estate, building permits, or financing.
  • The franchisor has relied on its franchisees’ experiences to compile these estimates.

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