In this FDD Talk 2015 post, you’ll learn the following:
- Section I – Background information on the Massage Envy franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Massage Envy franchise, based on Item 7 of the company’s 2015 FDD
- Section III – Presentation and analysis of Massage Envy’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
- 2014 average gross sales for franchised Massage Envy Clinics (Spa and non-Spa Units) in the United States that have been open at least two full years as of December 31, 2014, segmented by cohort (number of years the Clinics have been open)
- 2014 average gross sales for franchised Massage Envy Spa Units in the United States that have been open at least two full years as of December 31, 2014, segmented by cohort (number of years the Spa Units have been open)
- 2014 average gross sales for franchised non-Spa Massage Envy Units in the United States that have been open at least two full years as of December 31, 2014, segmented by cohort (number of years the non-Spa Units have been open)
Section I – Background Information
Massage Envy is the clear leader when it comes to chain spa services.
The man who brought franchised massage spas to America was John Leonesio. Leonesio owned a chain of health clubs in Arizona. His locations also offered massages to patrons with sore muscles, and he couldn’t help but note how those therapy rooms were always fully booked. That’s when he realized that the membership model of health clubs would make a good business model for massage therapy as well.
In 2002 he and licensed massage therapist Shawn Haycock opened their first membership-based massage clinic. Leonesio sold off his chain of health clubs and used only about $75,000 of that money to get the new business started.
Knowing that affordable one-hour massages would be popular, he hoped he would be able to book 400 massages in the first month. When he hit 1,400 within the first 30 days, he knew he was onto something.
One year later, after honing the business model, he started franchising the concept. With more than 1,000 locations in 49 states and more than 1.5 million members, here’s how Massage Envy continues to expand its market share in the massage and spa services segment:
Massage Envy has delivered more than 80 million massages and over 3 million facials. In meeting its simple mission, To provide a pathway to wellness through professional, convenient and affordable massage therapy and spa services, Massage Envy is clearly doing well while doing good, reaching an average unit volume for a franchise location of $1.35 million.
Changes in Ownership
In 2008 Leonesio sold Massage Envy for an undisclosed sum to Veria, a Texas-based health-focused multimedia company operating as a unit of Indian conglomerate The Essel Group. Veria then sold the franchise in 2010 to Sentinel Capital Partners, a New York-based private-equity firm that at the time owned Taco Bell, Pizza Hut, Church’s Chicken and other franchises.
But in 2012 Sentinel Capital Partners sold Massage Envy to private equity firm Roark Capital Partners. What’s impressive here is that Massage Envy has been able to maintain its upward trajectory in spite of so many changes in ownership.
Through its national partnership with the Arthritis Foundation, Massage Envy Spa has raised more than $3 million in four, one-day Healing Hands for Arthritis events. On the designated day each year, the chain donates $10 to the foundation for every one-hour massage or facial delivered to customers.
In 2014, that day was September 17, and the total raised on that single day was $1,051,000.
It is estimated that more than 50 million people, including 300,000 children, live with the pain and debilitating effects of arthritis.
Everyone loves to pamper mom on Mother’s Day, and Massage Envy made it easy with innovative promotions. Individual locations have the autonomy to handle such special occasions as they see fit.
In Philadelphia, patrons could enter the Mother’s Day Facial Tweetstakes by re-tweeting promotional messages.
At the Chicagoland location, a new membership leading up to Mother’s Day got you tickets to Chicago’s record-breaking musical, Million Dollar Quartet, at the Apollo Theater, featuring the music of Elvis Presley, Jerry Lee Lewis, Johnny Cash, and Carl Perkins.
In Santa Clarita, Calif., kids could write an essay or draw a picture of why their mom deserves a free massage.
Section II – Estimated Costs
- Please click here for detailed estimates of Massage Envy franchise costs, based on Item 7 of the company’s 2015 FDD (updated).