In this FDD Talk 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 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Elements Massage franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Elements Massage outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Elements Massage’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average, median, highest, and lowest revenue; average and median gross profit percentage; average and median number of gift cards sold; average and median number of massage rooms; and average and median number of members as of December 31, 2018 for the (1) franchised Elements Massage studios that were open as of January 1, 2018, and operated throughout 2018; (2) franchised Elements Massage studios that were open for at least 1 year as of January 1, 2018, and operated throughout 2018; and (3) franchised Elements Massage studios that were open for at least 5 years as of January 1, 2018, and operated throughout 2018

• 2018 average new client trials per month and average membership conversion rate for the 41 Elements Massage studios that were opened between January 1, 2016 and December 31, 2018, were open as of December 31, 2018, and had operated for 1 month or longer

Section I – Background Information

22 Things You Need to Know About the Elements Massage Franchise

Fuels Growth by Investing in Research and Development

1.  In mid-December 2018, Elements Massage announced that 2018 was on track to be the company’s best ever year of performance as measured by studio revenue, client growth, and customer satisfaction. The brand’s top performing studios are generating nearly $1.5 million in annual revenue and the system has experienced double-digit same store sales growth over the past decade.

2.  Customers consistently report an impressive 76 percent Net Promoter Score, reflective of the high-quality, personalized experience. In recognition of Elements Massage’s best-in-class customer service, Newsweek awarded the brand with the No. 1 ranking on its “2019 America’s Best Customer Service” list.

3.  Furthermore, Elements Massage hit several business milestones in 2018, including signing 33 franchise agreements, and adding three new markets: Bethesda, Maryland; Cary, North Carolina; and Cypress, Texas. The brand also hit another major milestone last year by providing over 2 million massages during the year.

4.  Jeremy Morgan, then-CEO of Elements Massage (now president of Elements’ parent company, WellBiz Brands), said, “As a brand, we remain focused on creating a best-in-class personalized massage experience for every client who walks through our doors. We understand that to stand out from the sea of sameness, we must stay committed to innovation, which we approach through a two-way dialogue, focused on collaboration between franchise owners and our support center team.”

5.  Also in 2018, Elements Massage launched Innovation Labs across the country to test ideas such as Float Pods, Compression Therapy, and Cupping. The Cupping concept has garnered the most attention and interest with close to 70 studios currently offering this service.

6.  Additionally, Elements Massage is the first in the industry to appoint a chief wellness officer, a role critical to its R&D program. Tapped for this role, Eric Stephenson is focused on implementing culture and education programs for use by the nearly 3,500 massage therapists employed by the independently-owned and operated studios. In 2019, Stephenson will lead the new “Elements Elite University,” an online and in-person graduate school-inspired concept, enabling massage therapists to develop their skills and grow their careers.

7.  In April 2018, as a result of the research and testing conducted in its Innovation Labs, the brand launched AromaRitual, a new line of exclusive aromatherapy treatments. With AromaRitual, Elements clients can experience a personalized, immersive aromatic treatment choosing from three custom scents – Energize, Refresh, and Calm. The essences are all-natural and exclusive to the Elements Massage brand. This new service features application of these aromatherapy essences to powerful pulse points and utilizes traditional inhalation therapy.

8.  As part of its investment and commitment to its comprehensive research and development program, the brand also launched Elements Corporate Ventures (ECV) in April to purchase, operate, and build corporately-owned Elements Massage studios. ECV serves as a real-time innovation lab for the brand where new concepts can be tested before sharing with the entire franchise system nationwide. ECV now has eight Colorado studios.

9.  Elements Massage also commissioned a study to examine the look, feel, and design of its studios. Working from a research-centered framework, the next-generation studio design – which is expected to roll out in 2019 – will enhance the client’s experience from the moment they walk through the door.

Becomes Nation’s First Massage Franchise Brand to Offer Hemp-Infused Therapeutic Massage

10.  In early April 2019, Elements Massage announced the introduction of CBD Herbal Ritual, the brand’s newest line of exclusive hemp-infused therapeutic massage treatments. CBD Herbal Ritual launches at participating Elements Massage studios nationwide on May 20 and can be added as an additional upgrade to any massage session for clients seeking a deeper level of relief.

11.  According to Eric Stephenson, Elements Massage’s chief wellness officer, “The intention of CBD Herbal Ritual is to offer a simple, therapeutic and effective full-body massage service to our clients that also incorporates the wellness benefits of CBD. Our approach combines massage with CBD oil to help reduce pain and inflammation and calming the fight or flight stress response.”

12.  Studies show that CBD derived from hemp may help alleviate pain and ease soreness. Elements Massage uses a custom CBD-infused massage oil that is THC-free and is from organically-farmed hemp plants, which means clients will receive the anti-inflammatory benefits without any psychoactive effects.

13.  Applied topically, the whole-hemp CBD oil is a natural plant therapy blend that also includes aloe vera, ginger extract, and rosemary oil. The CBD oil is vegan, GMO-free, cruelty-free, and uses organic ingredients, so you can feel at ease trying this signature new treatment.

14.  According to Elements Massage, the new CBD Herbal Ritual is great for individuals dealing with the following conditions: localized pain, muscle soreness, tension, inflammation, and muscle spasms.

15.  Susan Lintonsmith, the newly-appointed CEO of Elements Massage, said, “The introduction of CBD Herbal Ritual builds on our rich history of providing innovative, personalized massage services that address our clients’ needs and contribute to their overall wellness. We understand that the application of CBD may be new to many of our clients, but we’re confident that this is a safe and effective service offering that should provide results for many. We’re proud to be the first massage franchise brand to offer this service nationally.”

Introduces New Aromatherapy Treatment in Time for Valentine’s Day

16.  At the beginning of February 2019, Elements Massage introduced its Rose Petal AromaRitual essence, the newest addition to the brand’s line of exclusive aromatherapy treatments. Available this past February, while supplies lasted, the Rose Petal AromaRitual infused the uplifting aroma of roses and was the perfect way to treat yourself or someone special on Valentine’s Day. Comprised of grapeseed oil, vitamin E, jojoba, rose absolute, and palmarosa, this combination of ingredients provides immense health benefits.

17.  Eric Stephenson, chief wellness officer for Elements Massage, said, “Our new Rose Petal scent was formulated to not only help leave you feeling relaxed and rejuvenated, but also provide health benefits that may decrease symptoms caused by stress and anxiety and help to increase your overall energy. Who needs a dozen roses or a box of chocolates when you can give someone the long-lasting positive effects of a Rose Petal AromaRitual treatment.”

18.  With AromaRitual, Elements clients experience a personalized, immersive aromatic treatment. In addition to this new service offering, Elements also offers three additional AromaRitual essences – Energize, Refresh, and Calm. AromaRitual is available at all Elements Massage locations nationwide and can be added as an upgrade to any massage session for clients seeking additional benefits from their massage session.

Company History

19.  Elements Massage was founded in 2002 by Michele Mehrib in Aurora, Colorado. Mehrib had previously worked as an occupational therapist, but switched to massage therapy after her massage therapist decided to retire and suggested that Mehrib buy the business. After going to massage therapy school, Mehrib opened her own practice in a local country club, but had to look for her own space when the club decided to stop offering massage services.

20.  Mehrib found a 750-square-foot space and hired someone she went to massage school with as another massage therapist. Within just a few years, Mehrib and her other massage therapist were doing 650 massages a month out of a four-room studio. Mehrib decided it was time to expand and opened a second location in 2005.

21.  A year later, Mehrib signed a franchising agreement with Fitness Together – now Wellbiz Brands – which has helped Elements Massage grow. Today, there are Elements Massage locations across the United States.

Entrepreneur’s Franchise 500

22.  Elements Massage ranked No. 340 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Elements Massage franchise costs, based on Item 7 of the company’s 2019 FDD.

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

• Please click here for detailed information on Elements Massage’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  220
• Outlets at the End of the Year:  233
• Net Change:  +13

2017

• Outlets at the Start of the Year:  233
• Outlets at the End of the Year:  245
• Net Change:  +12

2018

• Outlets at the Start of the Year:  245
• Outlets at the End of the Year:  237
• Net Change:  -8

Company-Owned

2016

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

2017

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

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  8
• Net Change:  +8

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

Part 1 – Average Annual Revenue and Gross Profit Percentage (Franchised Studios Open as of January 1, 2018 and for 1 Year and 5 Years as of January 1, 2018)

• Part 1 describes 2018 Average Annual Revenue, Average Gross Profit Percentage, Average Number of Gift Cards Sold, Average Number of Massage Rooms, and Average Number of Members for three categories of franchised Studios that were open as of January 1, 2018, and operated throughout 2018: (1) all franchised Studios that were open as of January 1, 2018, and operated throughout 2018; (2) franchised Studios that were open for at least 1 year as of January 1, 2018, and operated throughout 2018; and (3) franchised Studios that were open for at least 5 years as of January 1, 2018, and operated throughout 2018.

• As of December 31, 2018, there were 237 franchised Studios in operation in the United States. Of those 237 franchised Studios: (1) 232 were open as of January 1, 2018, and operated throughout 2018; (2) 214 were open for at least 1 year as of January 1, 2018, and operated throughout 2018, and (3) 98 were open for at least 5 years as of January 1, 2018, and operated throughout 2018.

• Studios are categorized in the tables below based upon annual revenue.

• The Average Annual Revenue amounts are based upon actual data the franchisor requires its franchisees to submit to it on a monthly basis and are defined in the same manner as gross receipts are defined under the Franchise Agreement.

• “Gross receipts” include all of your revenue and receipts, including those taken by cash, credit card, debit card, check, trade, barter or exchange, electronic funds transfer, or any other means of credit, which are derived from the operations of your Studio, including the sale of memberships, massage and bodywork services, gift cards which are not sold under the franchisor’s national gift card programs, merchandise, or any other products or services sold by you, whether sold at your Studio location or from an off-site location. Gross receipts also include the gross amount of redemptions for gift cards sold under the franchisor’s national gift card program.

• Gross receipts exclude sales, use, or privilege taxes paid to the appropriate taxing authority, refunds made to clients, tips received by massage therapists, and gross redemption amount of gift cards sold under any of the franchisor’s national gift card programs.

• In addition, should your business be interrupted for any reason and you are receiving business interruption insurance payments, the gross amount of these payments will be considered to be gross receipts and will be subject to the Royalty.

• The Same Studio Average Revenue Increase measures the increase in revenue on a same-Studio basis, comparing annual revenue for the 2017 calendar year to the 2018 calendar year, for all studios open at least 1 year prior to January 1, 2018. Because this category compares year-over-year revenue, Elements Massage has not included 18 of the 232 franchised Studios that were open as of January 1, 2018, because they did not operate during the entirety of 2017.

• The Average Gross Profit Percentages are calculated by first subtracting the annual cost of wages paid to therapists and Royalties from annual revenues reported and then dividing the result by total annual revenues. Royalties are calculated at 6% and wages paid to therapists are compiled from Studio records available to the franchisor. No other costs or expenses are considered in the calculation of gross profit reported in the table below. However, you will incur other costs and expenses in connection with the operation of your Studio.

• Average Number of Members as of December 31, 2018, represents the number of participants in the franchisor’s wellness membership program who paid a monthly membership fee in December 2018.

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