FDD Talk 2015: The Seva Beauty Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2015 post, you’ll learn the following:

• Section I – Background information on the Seva Beauty franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Seva Beauty franchise, based on Item 7 of the company’s 2015 FDD

• Section III – Presentation and analysis of Seva Beauty’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:

• 2014 average service sales, product sales, labor expenses, occupancy costs, product costs, continuing franchise fees, advertising, other expenses, and operating cash flow for the 7 Seva Studios open and in operation both as of the issuance date of the Disclosure Document and for a period of two or more years as of January 1, 2015, and submitted complete profit and loss statements to the franchisor for the period January 1, 2014 through December 31, 2014

• 2014 average service sales, product sales, labor expenses, occupancy costs, product costs, continuing franchise fees, advertising, other expenses, and operating cash flow for the Seva Studios open and in operation both as of the issuance date of the Disclosure Document and for a period of more than 3 years as of January 1, 2015, and submitted complete profit and loss statements to the franchisor for the period January 1, 2014 through December 31, 2014

Section I – Background Information

Seva Beauty Expands Beyond Walmart’s Walls

Seva Beauty began a new phase of growth in 2014 that enabled the fast-casual drop-in spa business to expand beyond small studios and offer more comprehensive services.

The second phase of Seva’s strategic growth strategy was implemented in September 2014 as the brand moved beyond its hubs in Walmart stores and added larger stores, which could accommodate spa rooms, within shopping centers. This growth plan continues to accommodate the quick-serve Walmart kiosks that target customers who are shopping and can decide to drop in on the spur of the moment.

The company jumped 14 places on Entrepreneur’s 2015 list of Top New Franchises, improving to No. 11 from its No. 25 ranking in 2014. Seva was No. 87 on the Entrepreneur list of 2015 Top Fastest-Growing Franchises, rising from No. 93 in 2014. The chain was No. 429 in 2015 and No. 354 in 2014 on Entrepreneur’s Franchise 500.

Founder Started With Simply Eyebrows

Seva Beauty founder and CEO Vas Maniatis started Simply Eyebrows kiosks in Walmart stores in 2008, after watching his wife get her eyebrows threaded and deciding he could offer more privacy and better ambiance for clients.

Between 2009 and 2010 he sold the Simply Eyebrows brand and converted the Walmart kiosks to Seva Beauty. He chose the name “Seva” because it is a Sanskrit word that means “selfless service.” Seva’s mantra is “Beauty to the People.”

The company, headquartered in Highland Park, Illinois, has about 100 locations open or opening soon in 20 states.

Quick Service at Reasonable Prices

Services at Seva Beauty’s spas include threading or waxing for facial hair removal, as well as brow tinting, eyelash extensions, facials and body waxing. Cost ranges from $2 for hair removal at either the lower lip or the temples to $150 for a full body waxing.

In between are brow shaping starting at $8 and express and facial treatments starting at $25. Lash extensions start at $17. Special bundle pricing is available on the company’s website, pairing such services as brow shaping and brow tinting.

Services are available for both women and men and are provided by trained and licensed estheticians.

Quick-Serve, Full-Serve Formats

Seva franchises come in two models:

• Seva Express is a quick-serve format that offers brow and face services within an open floor plan of 250 to 550 square feet. Major retailers such as Walmart house most of these studios.

• Seva Spa is Seva’s full-service format offering all services; brow and face services are provided in salon chairs, while body waxing and full facials are conducted in the spa rooms. These larger studios are 1,200 to 1,500 square feet and have multiple spa rooms. They are located in shopping centers and strip malls and as stand-alone businesses.

Franchisees can monitor their studios from anywhere in the world via Seva’s iPad POS System and have access to numerous training and information resources through the Seva University system, which provides coaching, conference calls, webinar, technical training and continual education for franchisees.

Section II – Estimated Costs

• Please click here for detailed estimates of Seva Beauty franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis