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

In this FDD Talk 2017 post, you’ll learn the following:

• Section I – Background information on the Waxing the City franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Waxing the City 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 Waxing the City franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Waxing the City’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• projected revenue, cost of sales, gross margin, operating expenses, and operating income for the second, third, and fifth year of operation of a Waxing the City studio, and the specific assumptions behind these projections

• historical monthly gross revenues during the first 6 months of operations of the 30 franchised Waxing the City studios that had their first full calendar month of operations between February 2016 and February 2017 (the “Reporting Period”) and that opened their Waxing the City studios between January 2016 and February 2017

Section I – Background Information

12 Things You Need to Know About the Waxing the City Franchise

Launches New Makeup Line

1.  In May, Waxing the City announced that it would be launching a complete line of eyebrow products, called “Brows that Wow,” which includes pencils, powder, highlighter pencil, gel, brush, and sharpener. The products come in multiple color palettes so customers can custom blend the perfect color for their desired brow look. Additionally, Waxing the City said that the line of products is clinically-tested, dermatologist-approved, paraben-free, and hypoallergenic. The makeup line, which was launched on June 1, is available exclusively at all Waxing the City studios.

2.  Angela Jaskolski, brand president of Waxing the City, said, “The product line is small, but very versatile and it will allow every user to create multiple looks. Our Cerologists™ are experts in brow shaping, and when you marry their techniques with the meticulously-crafted pieces in the makeup line, every Waxing the City client is sure to have ‘Brows that Wow.’”

3.  In addition to the new products, the brand also improved its brow service training for its “Cerologists,” Waxing the City’s licensed aestheticians that specialize in waxing services. The updated training ensures each Cerologist expands their brow artistry with courses developed to perfect their technique, after-wax care, and product knowledge.

Launches New “Wax Honest” Ad Campaign

4.  In early October, Waxing the City announced that it was launching a new ad campaign called “Wax Honest” that focuses on honesty, approachable expertise, and body positivity. The company’s rebranding efforts came about under the direction of Chief Marketing Officer Meredith Jurek, who joined Waxing the City in November 2016.

5.  In addition to the brand’s new focus on the truth about waxing, Waxing the City said that it will also use real and relatable bodies in all of its future marketing and advertising materials. Jurek added, “We understand that waxing can be an anxious and sometimes awkward experience for many people, especially first-time clients. Sincerity – and humor – put people at ease. But when you want someone to trust you, you don’t simply say, ‘trust me.’ You need to earn their trust by being open and honest. That’s what ‘Waxing Honest’ is all about.”

6.  Waxing the City worked with Minneapolis-based advertising agency Friends and Neighbors to
develop a Cerologist Oath, quirky and informative “Wax Honestisms,” humorous holiday advertisements, and other amusing marketing pieces. The brand says that every piece was created with the intent to be more relatable and inviting, and to spark a conversation while adding levity to waxing. Some of the “Wax Honestisms” include “A Brazilian is breezier than you think,” “Good brows hide a multitude of sins,” and “Smooth backs save marriages.”

New Locations

7.  Over the past two years, Waxing the City has focused on national expansion. It opened several new locations in 2017 (Winona, Minnesota; Del Ray, Virginia; and Katy, Texas). The location in Katy, Texas was opened sometime in April and is the third location in the greater Houston, Texas area. The Winona and Del Ray studios were opened in early January.

8.  Waxing the City of Winona is owned and operated by Dan Kern and Mike Tonsager, who already own four Anytime Fitness centers in the southern Minnesota area (Anytime Fitness is the sister company of Waxing the City). Kern and Tonsager decided to open the studio in the downtown La Crosse area of Winona because “there was nothing around specifically dedicated to waxing.”

9.  The owners of the Del Ray location chose the area for their Waxing the City studio because it is so close to Washington, D.C., Arlington, and Maryland.

Company History

10.  Waxing the City was founded in 2003 by Summer Hartshorn Vasilas, Marilyn Hartshorn, Robin Schoh, and Alex Arlotta in the LoDo neighborhood of Denver, Colorado. The company grew slowly and by 2010, there were three locations in the greater Denver area. That same year, Waxing the City started franchising and the company expanded into Dallas, Texas.

11.  In 2012, Waxing the City partnered with Anytime Fitness to grow the brand nationally. Today, there are over 75 Waxing the City studios across the United States.

Entrepreneur’s Franchise 500

12.  Waxing the City has appeared on Entrepreneur’s annual Franchise 500 list three times since the company began franchising in 2010. The company’s highest rank was No. 89 in 2017, while its
lowest rank was No. 484 in 2015.

Section II – Estimated Costs

• Please click here for detailed estimates of Waxing the City 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 Waxing the City’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

• The following are statements of projected revenues and earnings for a franchised Waxing the City studio. These projections are for a second, third, and fifth year of operation, to show the anticipated ramp up for a Waxing the City studio.

• Waxing the City does not make any projections for the first year because it expects first year results to vary significantly, depending on a large number of factors, including the population in your market and immediate trade area, nearby competition, the number of aestheticians you initially hire and whether they have any existing customers, the extent of promotion you initially do for your Waxing the City studio, and the continued promotion you do during your first year of operation.

• The revenues and number of services in these statements are based on the revenues and number of services achieved by the 25 Waxing the City studios that have been open for more than 2 years (5 Waxing the City studios that were operated by the principals of the franchisor’s predecessor, 19 franchised Waxing the City studios, and 1 company-owned Waxing the City studio); the 12 Waxing the City studios that have been open for more than 3 years (the 5 Waxing the City studios that were operated by the principals of the franchisor’s predecessor, 6 franchised Waxing the City studios, and 1 company-owned Waxing the City studio); and the 5 Waxing the City studios that were operated by the principals of the franchisor’s predecessor that have been open for more than 5 years.

• The expenses projected below are based on the actual expenses incurred by the 66 Waxing the City studios open as of December 31, 2016, including 5 Waxing the City studios that were operated by the principals of the franchisor’s predecessor, 60 franchised Waxing the City studios, and 1 company-owned Waxing the City studio.

• The assumptions made in compiling these projections are detailed following the projections. Any changes in these assumptions would require material alterations to the projections.

• These figures are only estimates of what Waxing the City thinks you can earn based on the assumptions described below. Your results may differ. There is no assurance that you will sell as many services or earn as much.

• These figures were prepared without an audit. Prospective franchisees or sellers of the franchises should be advised that no certified public accountant has audited these figures or expressed his/her opinion with regard to the content or form.

Part 1 – Statement of Annual Projected Revenues and Earnings for a Waxing the City Studio

Year 2