Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

  • Anytime Fitness
  • CruiseOne
  • Firehouse Subs
  • Jimmy John's
  • Massage Envy
  • Menchie's
  • Orange Leaf Frozen Yogurt
  • Planet Fitness
  • The UPS Store
  • Yogurt Land
  • And Hundreds More...

No, thanks. I'm not interested in uncovering the actual earnings of hundreds of franchises at this time.

Franchise Chatter Guide: Is Success of Massage Envy Franchise Program Creating More Competition?

by Brian Bixler on February 26, 2014

in Franchise Chatter Guides, Massage Franchise



Franchise Chatter Membership Information

Don't Invest in a Franchise Until You Check Out This List Find the Ideal Business for You

Massage Envy Lobby

This Massage Envy franchise report was written by Brian Bixler.

It’s a safe bet to say that the Massage Envy franchise program is the envy of most other franchisors, not just those in the massage franchise category.

As it closed out 2013, Massage Envy announced it had signed its 1,200th franchise agreement. That milestone is significant because only 2.4 percent of franchised brands operate 1,000 or more franchised units, according to FRANdata, a source of information and analysis for the franchise industry.

“We have a lot of strength in numbers and because of that, we have a lot of national visibility,” Director of Franchise Sales Lori Merrall told Franchise Chatter in an interview last year.



More recently, we asked Merrall to comment on Massage Envy’s success in 2013. “Massage Envy Spa is the pioneer of the massage therapy franchise sector,” she said. “In 2013 we signed our 1,200th franchise agreement, opened 95 new locations and expanded into our 48th state. By this summer, we will be in 49 states and celebrating our 1,000th clinic opening.”

The accomplishment of 1,200 franchise agreements indicates that Massage Envy Spa is well on its way to being one of the largest franchise systems in the country. According to a report updated in January 2014 by IBISWorld market research company, the company has already captured a 46.8 percent market share among massage franchises and no other competitor even comes close. None of the others has exceeded even 5 percent market share.

While it does have competitors such as Elements Therapeutic Massage and Hand & Stone Massage and Facial Spa, Massage Envy is the pioneer in affordable massage and spa services, having created a completely new category in the wellness industry just over a decade ago. That puts the company in a position to set trends and competitors are paying close attention, often adopting some of the company’s strategies to boost their own bottom lines.

What are some of the secrets to success of a Massage Envy franchise? Convenience, affordability and diverse services. Founded in 2002 and headquartered in Scottsdale, Ariz., the wellness franchise offers a variety of massage styles, including Swedish, deep tissue, prenatal and geriatric, among others.

In 2007, it expanded its services beyond massages and launched a spa concept featuring an array of facial treatments for its patrons and members. It changed its banner to Massage Envy Spa and formed a strong partnership with Murad Inc., a producer of skin care products. The successful marriage has helped the company grow to more than 920 locations in 48 states, employing more than 21,000 workers across the country.

The franchise system has relied heavily on location expansion for revenue growth. “As a result of its robust membership base and aggressive expansion, the company’s revenue was estimated to grow an annualized 36.9 percent to $1.2 billion over the five years to 2013. Moreover, the number of locations in Massage Envy’s network increased 14.8% per year on average from 2010 to 2013,” the IBISWorld report states.

As another barometer of its dominance in the field, Massage Envy Spa has consistently landed within the top 100 of Entrepreneur magazine’s Franchise 500, this year coming in at No. 54. The competitor coming in second-highest was Elements Therapeutic Massage at No. 212.

In October 2013, Roark Capital, a private equity firm with a focus on investing in franchise companies, acquired Massage Envy. No major changes were announced at the time of acquisition. Roark said it plans to aggressively expand the company’s presence in the Midwest and South in the upcoming years.

Industry Overview

massage industry

A number of factors are coming together to create an environment for continued growth of massage franchises in the next five years, even though sole proprietors are expected to maintain their dominance in the industry.



Among some of the factors facilitating future growth: an expected rise in per capita disposable income, rising health expenditures and an aging population. The industry’s increasing connection to the healthcare sector should fuel growth as well. Consequently, IBISWorld expects industry revenue to grow at an annualized rate of 3.4% to $3.2 billion in the next five years.

Keeping in mind that the Massage Envy model was introduced in 2002, leading to explosive growth over a decade, the massage franchise industry is still in the growth stage of its economic life cycle. IBISWorld expects the number of massage-only establishments to grow at an annualized rate of 3.4% to 2,601 companies by 2019.

Plus, players in the sector continue to expand their product portfolio. While massage centers have traditionally offered various types of massage, like Massage Envy they are also adding facial treatments. Body scrubs and chiropractic services are some of the other offerings franchises are adding to their menus.

The recession had a detrimental impact on the industry, but by offering affordable massages and spa treatments, which caught on with value-oriented customers, the overall sector weathered the economic downturn fairly well.

Between 2007 and 2012, the number of day spa and nail salon franchises, which includes massage, waxing, skin-care, nail-care and other services, has grown from 5,003 to an expected 5,406, representing average growth of 1.6% per year.

Between 2007 and 2017, IBISWorld anticipates that the number of locations will increase at an average annual rate of 2.6% to 6,477.

Trends

  • Providing more services and products for males is an overall industry goal. According to the International Spa Association, men account for a third of all customers at spas. With help from lifestyle magazines such as GQ and Men’s Health, businesses hope to attract even more men with specially created services developed just for them, including massages, facials, manicures and waxing. As a result, that market segment is forecast to increase its share of revenue over the next five years.
  • The number of massage therapists in the United States continues to grow, which bodes well for employment opportunities with a massage franchise. According to the American Massage Therapy Association, there are more than 350 accredited massage therapy schools and an estimated 280,000 to 320,000 massage therapists and massage school students in the country. The large pool of trained workers could be a factor in more companies entering the market.
  • The health benefits of massage continue to be touted by healthcare providers. That coupled with an increase in total health expenditures should have a positive effect on the massage franchise industry. With support from doctors and healthcare providers, massage should remain attractive to consumers with a wide variety of ailments. Furthermore, baby boomers are expected to continue focusing on health and fitness, which has prompted greater demand for massage services.
  • Members of Generation Y will also drive growth in the sector. According to IBISWorld, the age group accounts for 11.9 percent of revenue for franchise day spas and nail salons. That percentage could increase as consumers of that age group obtain more disposable income.
  • In addition to goals for domestic expansion, franchise day spas and nail salons will increasingly expand internationally, creating more brand awareness for the biggest companies, which should benefit operators in the United States.

Major Players

Elements Therapeutic Massage

Elements Therapeutic Massage Exterior

Though it has a market share estimated at less than 3.1 percent, Elements Therapeutic Massage has more than 160 franchise locations throughout the United States and future growth is anticipated. According to the company’s management, 83 new locations opened in 2013 alone.

The brand has clout and stability operating under WellBiz Brands Inc., one of the largest wellness franchise organizations in the United States.

Like other massage franchises, Elements is also focusing on global expansion, beginning with Canada, where it opened its first franchise in that country last year.

Elements’ business model is not that different from the initial Massage Envy franchise program. It focuses on building membership by providing the ultimate experience in therapeutic massage as part of an overall wellness program.

The company also stresses that its initial investment costs (between $233,000 and $399,000) are lower than those of some other franchised options in the massage industry, including Massage Envy Spa.

Massage Heights

Massage Heights Photo by TheBusinessMakers

Founded in San Antonio, Texas in 2004, Massage Heights now operates approximately 100 locations in the United States, with an additional five locations in Alberta, Canada. The company’s market share is less than 3.1 percent.

Its business model probably mimics that of Massage Envy Spa more than some other competitors. It offers massage and facial services, and operates a membership program.

In 2013, IBISWorld anticipated that Massage Heights’ U.S. revenue would total $82.5 million.

The company also focuses on convenience. Locations are usually staffed with some 20 trained massage therapists and are open seven days a week until late, making scheduling easy for clients.

Massage Heights also undoubtedly raised its public profile and brand awareness when COO and co-founder Shane Evans appeared on an episode of CBS’s “Undercover Boss” last December.

LaVida Massage

LaVida Interior

LaVida Massage made some changes in the fourth quarter of 2013 that could increase its revenue and enhance the brand. For one thing, it launched a redesigned website with the intent of making it more user-friendly for consumers. The site includes new and improved brand imagery, content and information, as well as updated online booking options.

Perhaps even more important to potential investors, the company also created a new revenue stream by introducing its own brand of essential oils. The first product line under the LaVida Massage name is marketed as an aromatherapy add-on to any LaVida Massage facial or massage session to assist in providing relief from sore joints, aching muscles, and a number of additional physical and psychological ailments. The oils are available for purchase to be used at home.

The company was named a Hot Franchise Pick by Entrepreneur magazine for three consecutive years and this year ranked No. 330 on the magazine’s Franchise 500.

MassageLuXe

Massage Luxe Photo from Massage Luxe

MassageLuXe, a relative newcomer to the massage franchise industry, was founded by Todd Beckman in 2008 and began franchising that same year. Its current number of locations reflects its status as a young company. However, even with only 22 units, 15 of them franchises, the company was still one of six massage franchises that made Entrepreneur’s Franchise 500 this year, taking spot No. 373.

Based in Fenton, Missouri, the company stresses a monthly membership program for massage services in a luxurious setting. A sister concept, FaceLuXe, offers the option of facials and waxing services.

Beckman developed the company’s “membership-pricing model” over some 15 years after founding The Tan Company in 1994.

In recent years, MassageLuXe has undergone a re-branding effort, which included a redesign of unit interiors, a new logo (emphasizing the X), outdoor advertising, branding for its Facebook page and an extensive array of print collateral.

The company claims to have as many as 500 franchise units signed and under development.

Hand & Stone Massage and Facial Spa

Hand and Stone Massage and Facial Spa

Hand & Stone Massage and Facial Spa is considered to be one of the fastest growing spa franchises in the United States. In 2013, it opened 45 new locations and signed 72 new franchise agreements, according to a company release.

The company also reported that same-store sales grew an impressive 25 percent in 2013 for all stores open 24 months or more. The chain achieved more than $85 million in system-wide sales.

Todd Leff, president and CEO of the brand, is a franchising veteran. He joined Hand & Stone in July 2009 and immediately embarked upon an ambitious nationwide expansion. Since he assumed the role of president, the company has quadrupled its size and been able to expand into new areas.

The company was launched in 2004 by experienced physical therapist John Marco, who continues to serve as Hand & Stone’s chief operating officer.

The brand is centered around bringing massage therapy and quality facial services to the masses, affordably and conveniently. It now has locations in 20 states and Canada.

The Woodhouse Day Spa

Woodhouse Day Spa Photo by WoodhouseColumbus

Woodhouse Spa Corporation opened its first location in Victoria, Texas in 2001. Two years later, the company began franchising and currently has 36 locations in the United States. Considered a high-end spa service, compared to franchise models that stress affordability, Woodhouse offers services ranging from massages, facials and microdermabrasion, to waxing and body wraps.

Woodhouse differentiates itself further by using a variety of organic products, long before it became a trend within the industry as a whole.

Although it offers high-end services, Woodhouse’s prices are typically lower than those of resort spas, a factor that benefited its franchisees during the recession, according to IBISWorld.

It currently has a market share of about 2 percent in the day spa and nail salon franchises industry, but the company has said it plans to expand its operations significantly. With a goal of adding about 125 spa locations throughout the United States during the next few years, it will also take steps to expand abroad with plans for 100 international locations throughout Canada, Mexico and India during the next decade.

Competition to Come

Analysts agree that the sector will continue experiencing robust growth with new companies entering the market that will give Massage Envy franchises a run for their money.



Franchise Matching Quiz



{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: