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...

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FDD Talk 2017: What You Need to Know About the Massage Envy Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on August 7, 2017

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

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Massage Envy Franchise Interior Photo

In this FDD Talk 2017 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 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Massage Envy franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Massage Envy’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 high, low, average, and median net sales for the 1,052 franchised Massage Envy Locations (909 Total Body Care Locations and 143 Traditional Locations) in the United States that were in operation continuously throughout fiscal year 2016 and had been open and operating for at least two full calendar years, segmented by cohort (number of years the franchised Massage Envy Locations have been open)
  • 2016 average total net sales, cost of sales, personnel expenses, facility (occupancy) expenses, insurance expenses, marketing expenses, general and administrative expenses, total operating expenses, and EBITDA for the 887 franchised Massage Envy Locations in the United States that were open continuously during the company’s fiscal years 2015 and 2016 and provided the franchisor with financial information for the full fiscal year 2016 sufficient for the franchisor to complete this financial performance representation

Section I – Background Information

14 Things You Need to Know About the Massage Envy Franchise

New Services and Store Design

1.  In May, Massage Envy announced that the company had plans to remodel more than 700 of its franchised locations and increase its product offerings in order to become a total body care service.

2.  The company will remodel 150 to 200 stores a year over the next 3 to 4 years. The brand plans to add a total body stretch as one of its three core services – Massage Envy already offers facial and massage services. Microderm Infusion and chemical peel services will also be offered at all locations by the end of 2017.

3.  Lee Knowlton, Massage Envy’s Senior VP for Global Sales & International, said that the goal of the remodel is to upgrade the overall look and feel of the massage rooms and the stores themselves. Massage Envy hopes that new fixtures, furniture, and art work will elevate the brand’s aesthetic.

4.  In addition to the redesigned locations, Massage Envy also unveiled a new logo that focuses on “ME” while de-emphasizing the word massage.

Official Marketing Partner of PGA TOUR

5.  In late June, Massage Envy and the PGA TOUR announced a four-year partnership designating Massage Envy as an Official Sponsor of the PGA TOUR and PGA TOUR Champions. Massage Envy will also be the Official Total Body Care Sponsor of the Player Performance Centers, as well as the TOUR’s mobile training and wellness trailers.

6.  The deal is Massage Envy’s first major sports partnership. At the time of the announcement, Massage Envy also introduced its new service called Total Body Stretch. As part of the partnership, Massage Envy has built relationships with the following 10 PGA TOUR members: Jonas Blixt, Patrick Cantlay, Bud Cauley, Tony Finau, Smylie Kaufman, Jamie Lovemark, Patrick Rodgers, Brandt Snedeker, Henrik Stenson, and Justin Thomas.

7.  Derek Detenber, Massage Envy’s Senior VP of Marketing, said that Massage Envy’s relationships with these athletes will help the brand “tell the story of how proactive body care services, such as massage and assisted stretching, can boost performance and maintain the bodies of all athletes – from the professional to the weekend warrior – so they can do more of what they love to do.”

New Total Body Stretch

8.  At the end of July, Massage Envy launched its newest service called Total Body Stretch. The proprietary assisted stretching service is designed to help people perform at their best, ease the muscle pain and tension that comes with activity, and resist injuries.

9.  Total Body Stretch was developed for Massage Envy by an acclaimed chiropractor, massage therapist, and ergonomist, and is performed by a stretching professional. According to Massage Envy CEO Joe Magnacca, “assisted stretching is on target with consumer trends” and the service is an important part of Massage Envy’s strategy to grow with new services and products.

Company History

10.  Massage Envy was founded in 2002 by John Leonesio and Shawn Haycock in Scottsdale, Arizona. Leonesio, who owned a chain of health clubs in Arizona, teamed up with Haycock, a licensed massage therapist, to start an affordable membership-based massage clinic.

11.  Massage Envy began franchising a year later and today, there are over 1,180 locations across 49 states and two international spas. The first international location opened in 2016 in Australia.

12.  Massage Envy is currently owned by Roark Capital Group, a U.S. private equity firm whose portfolio includes Anytime Fitness, Arby’s, Jimmy John’s, and CKE Restaurants, among others.

Entrepreneur’s Franchise 500

13.  Massage Envy has appeared on Entrepreneur’s annual Franchise 500 list ever year in the last decade. The company’s highest rank was No. 17 in 2017, while its lowest rank was No. 149 in 2007.

14.  Massage Envy also ranked at No. 23 on Entrepreneur’s 2010 Fastest Growing Franchises list, No. 2 on the 2008 Top New Franchises list, and No. 32 on the 2008 Fastest Growing Franchises list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Massage Envy franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Massage Envy’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

  • For purposes of this Item 19, collectively, Total Body Care Locations and Traditional Locations are referred to as “ME Locations.”

Part 1 – Statement of Average Net Sales for Fiscal Year 2016 Segmented by Cohort (Number of Years the Franchised Massage Envy Locations Have Been Open)

  • The data presented in Part 1 was derived from sales revenues reported to the franchisor automatically through franchisees’ point-of-sale system during fiscal year 2016.
  • The data presented in Part 1 relates only to ME Locations in the United States. Satellite Locations are not included in this financial performance representation. Satellite Locations are expected to generate lower sales results due to the size of the facility and location.
  • As of December 31, 2016, there were a total of 1,159 franchised ME Locations open and operating and, of that number, 1,052 ME Locations were in operation continuously throughout fiscal year 2016 and had been open and operating for at least two full calendar years.
  • Of these 1,052 ME Locations, 909 were Total Body Care Locations (including 42 Locations which offered skin care conversions during 2015 and 2016) and 143 were Traditional Locations.
  • The data below excludes 107 ME Locations which, as of December 31, 2016, had not been open and operating continuously since at least January 1, 2015 or which were located outside the United States.
  • The franchised ME Locations included in Part 1 below are of substantially the same size and layout as the Total Body Care Locations that the franchisor expects franchisees to develop.
  • These figures do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the Net Sales figures to obtain your net income or profit.
  • “Net Sales” means the total of all revenue and receipts derived from the operation of the ME Location, but excluding only (1) sales taxes collected from customers and paid to the appropriate taxing authority, (2) all customer refunds and credits your business actually makes, and (3) tips received by massage therapists and aestheticians.

Opened in 2014 (2 Full Years in Operation)

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