FDD Talk: Spavia Day Spa Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

• Section I – Background information on the Spavia Day Spa franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Spavia Day Spa franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Spavia Day Spa franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Spavia Day Spa outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Spavia Day Spa’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average, median, high, and low monthly gross sales for (i) the 4 Day Spas that were open and operating for more than 36 months as of December 31, 2017 (each, a “Mature Location”); and (ii) the 15 franchised Day Spas that were open between 13 and 36 months as of December 31, 2017

• 2017 actual annual gross sales for (i) the 4 Mature Locations; and (ii) the 15 franchised Day Spas that were open between 13 and 36 months as of December 31, 2017

• 2017 actual gross sales, cost of good sold, gross profit, occupancy costs, other reported operating expenses, royalty, and operating income for the 2 Mature Locations and the 2 franchised Day Spas that were open between 13 and 36 months as of December 31, 2017 that provided Spavia with the appropriate financial statements or information necessary to detail such costs and expenses

Section I – Background Information

10 Things You Need to Know About the Spavia Day Spa Franchise

Opens First Connecticut Location

1.  In September 2018, Spavia opened its first Connecticut location in Stamford. The Stamford Spavia is owned and operated by Kim Barnes. Barnes’ Spavia was well received by the community and several residents stopped in to experience Spavia’s services during the first two weeks the spa was open.

2.  Spavia’s guests are welcomed with a warm neck wrap, a spa robe, and sandals. In addition to a number of different customized massages (including deep tissue, hot stone, maternity, sports, and massage therapy to name a few), the menu of services at Spavia includes corrective skin care, facials, body treatments, waxing, peels, make-up series, and more.

3.  Spavia offers three levels of membership (starting at $79 per month). The monthly wellness programs include massages and treatments, bring-a-guest programs, and discounts on retail products as well as other services. Spavia can also accommodate groups for company gatherings, birthdays, bridal parties, baby showers, and sweet 16 parties.

A Perfect Place for Celebrations

4.  Spavia encourages customers to treat themselves and their families and friends to a spa day with the brand’s “spalebration” packages. Some events that Spavia caters to are bridal parties, bachelorette parties, girls’ night out, birthday parties, baby showers, work retreats, anniversaries, and more.

5.  Spalebration packages are for parties of four or more guests and include the following perks:

• a 10% discount for each guest and treatment;
• 15% off spa boutique items the day of the spalebration;
• refreshments are offered at an additional charge and a menu will be provided;
• guests are also welcome to bring their own beverages and non-cooked foods (to protect the aromatherapy of the spa)

6.  Customers can rent out Spavia’s retreat spaces for their spalebration, which will provide more privacy for the party. A credit card is required to book a spalebration and each spalebration has a 96-hour cancellation policy or is subject to be charged the full amount of treatments requested.

Helping Customers Combat Signs of Aging

7.  While Spavia offers a wide array of spa services, some of its most popular treatments are related to anti-aging. The following are Spavia’s top three anti-aging defense spa treatments:

• Spavia Age Defense Facial Treatment – With the Age Defense Facial Treatment, the top layers of skin are rejuvenated with vitamin-rich enzymes and peptides. Vitamin-rich botanical stem cells and antioxidants plump and hydrate aging skin. This facial targets fine lines and wrinkles, bringing to life a youthful glow with increased elasticity and firmer skin.

• Anti-aging Perfecting Wrap – The Anti-aging Perfecting Wrap focuses on the body’s skin, which is just as important as the face. The wrap starts off with a full-body mask, filled with alpha hydroxy acids to exfoliate and rejuvenate the entire body, creating smooth, glowing skin. The next step in the treatment brings soft and silky skin to life with organic oil hydration. Spavia uses omega-3, omega-6, antioxidants, and vitamins a, b, c, and e to polish skin for a healthy look and feel. Customers can also choose to receive an orange blossom hand and foot treatment in addition to a fijian warm-oil scalp massage to top it all off.

• Hot Stone Massage – While the Hot Stone Massage is not necessarily just for anti-aging purposes, Spavia says that stress can cause premature signs of aging. Stress attacks the body’s muscles, which causes a great lack of both strength and energy. Spavia’s Hot Stone Massage features warm basalt river stones that melt the muscles and withdraw the toxins caused by stress, allowing the body to restore a healthy balance. A Hot Stone Massage at Spavia can help reduce the unwanted outcomes of aging.

Company History

8.  Spavia was founded in 2005 by Allison and Marty Langenderfer in Ann Arbor, Michigan. The Langenderfers wanted to provide a high-quality spa experience at an affordable price. Spavia believes in making a difference in people’s lives by helping them learn how to “relax, escape, and thrive.”

9.  The Langenderfers started franchising the Spavia concept in 2007 and have purposely taken the company’s growth slow. Today, Marty Langenderfer serves as Spavia’s CEO, while Allison Langenderfer is the company’s president.

Entrepreneur’s Franchise 500

10.  Spavia did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Spavia Day Spa franchise costs, based on Item 7 of the company’s 2018 FDD.

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

• Please click here for detailed information on Spavia Day Spa’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  7
• Net Change:  +4

2016

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  18
• Net Change:  +11

2017

• Outlets at the Start of the Year:  18
• Outlets at the End of the Year:  24
• Net Change:  +6

Company-Owned

2015

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2016

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2017

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• Part 1 of this Item 19 discloses the average monthly revenue generated by the following subsets of Day Spas that are operated in a substantially similar manner to the Franchised Business being offered in the Disclosure Document: (i) the 4 Day Spas that were open and operating for more than 36 months as of December 31, 2017 (each, a “Mature Location”); and (ii) the 15 franchised Day Spas that were open between 13 and 36 months as of December 31, 2017.

• For each of the foregoing 2 groups of Day Spas, Spavia will provide the average, median, high, and low monthly Gross Sales generated by the Day Spas in that group over the 2017 calendar year (the “Measurement Period”).

• In Part 1, be advised that the average monthly Gross Sales for each individual Day Spa was calculated by taking the total Gross Sales of that Day Spa over the Measurement Period and dividing that figure by the total number of calendar months that Day Spa was open and operating during the Measurement Period.

• Part 2 of this Item 19 discloses the annual revenue generated as of December 31, 2017 for Day Spas falling within the same subsets as those listed in Part 1 above.

• Part 3 of this Item 19 discloses certain of the operating costs and expenses incurred by 2 Mature Locations and 2 franchised Day Spas that were open between 13 and 36 months over the Measurement Period. In Part 3, Spavia excluded: (i) 15 locations that were open during the Measurement Period because they did not provide the appropriate or necessary information; and (ii) 6 locations that were not open during the Measurement Period.

Part 1 – Monthly Gross Sales Information for 2 Groups of Day Spas (Grouped Based on Number of Months Open as of December 31, 2017)

• The chart below excludes 6 Day Spas that were not open and operating for at least 12 months as of December 31, 2017.

Number of Months in Operation as of December 31, 2017:  Over 36