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FDD Talk 2016: The Elements Massage Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on August 11, 2016

in FDD Talk 2017: Service Franchises, Franchise Earnings, Massage Franchise

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Elements Therapeutic Massage Exterior

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Elements Massage franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for an Elements Massage franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Elements Massage’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average annual revenue, average gross profit percentage, average number of gift cards sold, average percent with a hired manager, and average number of massage rooms for Elements Massage studios in the system open as of December 31, 2015 and open for at least 12 months as of January 1, 2015
  • 2015 average new client trials per month and average membership conversion rate for the Elements Massage studios that were open and had operated for 1 month or longer as of December 31, 2015 (“Designated Studios”)
  • average monthly revenue for the period of January 1, 2011 to December 31, 2015 for the Designated Studios that completed all of their first year of operations before December 31, 2015

Section I – Background Information

Elements Massage Surpasses 200 Units, Plans 40 for 2016

2015 was a big year for Elements Therapeutic Massage. The company surpassed 200 locations, had revenues of more than $100 million, finished the year with more than 80,000 members in the Elements Wellness Program, and opened 28 new studios.

“We couldn’t be more excited entering 2016 knowing what is ahead for us,” CEO Jeff Jervik said in a news release. “By focusing simply on providing a great massage experience for each and every client, our franchise owners have been able to create loyalty and trust with clients, with the sum of that focus being brand recognition and sustainable growth.”

Elements predicts 40 new locations in 2016 as the company celebrates 10 years of franchising. The chain currently has more than 210 studios in 36 U.S. states. The company is headquartered in Highland Ranch, Colorado.

Chain Breaks 200 in Franchise 500

Elements Massage ranked in the No. 182 spot in Entrepreneur’s 2016 Franchise 500 list, its best spot yet on the list. The company, whose position improved from No. 208 in 2015, finished 2015 with 207 units and had a net gain of 50 units (a 24.2 percent unit change) over three years and a one-­year gain of 28 units (13.5 percent).

Company Started Small

The national massage chain got its start in 2000 when founder Michele Merhib started offering massages in rented space at a country club. She later opened up her own studio in Aurora, Colorado, and shortly thereafter added a second unit in Centennial. Merhib partnered with Fitness Together Holdings (now WellBiz Brands) in 2006 to franchise the company.

Elements Massage provides therapeutic massage and wellness services in a welcoming upscale environment. Retail products are also available for purchase. The business offers a variety of membership options and pricing.

The therapeutic massage services at Elements are personalized to target customers’ needs, from easing aching muscles and minimizing stress to boosting immunity and addressing issues that stem from injuries or illnesses. A number of therapeutic massage techniques are used to address different issues, from traditional Swedish massage to deep tissue to acupressure and more. Add-ons such as hot stones and aromatherapy are available.

Elements Honored as Fourth­-Fastest Growing Company in Denver

In October 2015, the Denver Business Journal recognized Elements Massage as Denver’s fourth-fastest growing company among the top flight of companies (those with 2014 revenues of $55 million or more).

Elements has posted strong growth and revenue increases, along with the 2015 addition of a customer satisfaction guarantee it calls The Elements Promise. The guarantee says that if a massage does not meet a customer’s expectations, the next massage is free. According to a company press release, Elements is the only massage franchise that offers a customer­ satisfaction guarantee.

Studios Honored by Cancer Nonprofit

LifeSpark Cancer Resources, a nonprofit based in Colorado, honored thirteen Elements Massage studios in the Denver metro area with the Partner of the Year award. The honor was presented during LifeSpark’s Day of Gratitude Event in June 2016 in Aurora, Colorado.

Nearly 100 partners, donors and volunteers received awards for helping LifeSpark with its mission of healing and hope for people with cancer.

“This is an amazing partnership.” said Sandy Priester, Executive Director of LifeSpark. “The Elements studios donate the use of their massage rooms during non­-busy times. Our volunteers love the opportunity to work out of their spa-­like environment. Participants with cancer benefit from the healing space which fosters deep relaxation, and supports the LifeSpark sessions. We are very appreciative of the generosity of the Elements franchise owners.”

The collaboration between LifeSpark and Elements began in October 2015 when LifeSpark, which provides free Reiki and Healing Touch sessions, expanded its reach by collaborating with Elements franchisees in the Denver metro area. Reiki and Healing Touch can alleviate stress, depression, pain and fatigue in cancer patients.

Of 64 LifeSpark participants who completed surveys, 63 rated Elements as excellent.

MS Patient Praises Results at Elements Studio

Therapeutic massage has numerous health and wellness benefits and is not the typical day­ spa experience. Deanna Cimino, who has multiple sclerosis, is a customer of an Elements Massage studio in Warren, New Jersey. She has received dramatic positive results, including easing of pain and muscle spasms, since starting with her therapist in 2013.

Cimino, who also has fibromyalgia, chose massage therapy over physical therapy.

“Massage therapy significantly reduced the pain and anxiety of this terrible disease that I have been battling for over a decade,” Cimino told TAP Into Warren. “In addition, it has helped me to relax, improve my sleep and blood circulation. I not only feel relief right after a massage but over time I have felt my MS is more manageable with regular treatments. My therapist Natasha at Elements Massage literally “saved me” in helping me cope and sustain a much more normal lifestyle.”

“We are happy to help customers, such as Deanna, who suffer with MS with our massage treatments,” Elements Massage owner Ferry Firmansjah told the publication. “With all our customers, we customize-design a therapy program. In Deanna’s case, we found Swedish massage was helpful in relieving her symptoms of MS, but each client’s situation is unique, and different techniques or therapists may be needed.”

Massage therapy is not a substitute for physical therapy, but it can relieve muscle spasms, pain and anxiety, and improve blood circulation in people who suffer from MS.

Section II – Estimated Costs

  • Please click here for detailed estimates of Elements Massage franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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