FDD Talk 2020: Waxing the City 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 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 2020 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 2020 FDD

• Section IV – Number of franchised and company-owned Waxing the City outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Waxing the City’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• historical average monthly gross revenues during their first 12 months of operations for the franchised Waxing the City studios that had their first full calendar month of operations between March 2018 and December 2019 (the “Reporting Period”) and that opened their Waxing the City studios between February 2018 and November 2019

• average, median, highest, and lowest gross revenues during their first 12 months of operations for the 91 franchised Waxing the City studios that were in operation for the entire year ended December 31, 2019

• 2019 average, median, highest, and lowest gross revenues for the top 1/3, bottom 1/3, and all 71 franchised Waxing the City studios that were in operation for at least 12 months as of December 31, 2018

• 2019 average, median, highest, and lowest gross revenues per ticket for the 71 franchised Waxing the City studios that were in operation for at least 12 months as of December 31, 2018

• 2019 costs of operation (waxing supplies, wages and payroll, product cost, waxing studio coordinator, rent and CAM, royalties, processing/credit card fees, utilities, insurance, advertising/marketing fund, local advertising, maintenance, technology support, travel and training, miscellaneous), based on expense reports submitted by 64 Waxing the City franchisees

Section I – Background Information

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

Parent Company Unveils $1 Million Relief Fund to Financially Aid Employees of Clubs, Studios Impacted by COVID-19

1.  At the beginning of August 2020, Self Esteem Brands (SEB) unveiled a $1 million SEB Relief Fund to provide direct financial assistance, in the form of one-time $500 grants, to the thousands of franchise employees and corporate studio and club staff across the SEB brand portfolio – including Anytime Fitness, Basecamp Fitness, The Bar Method, and Waxing the City – who have been impacted by pandemic-related layoffs or furloughs.

2.  The SEB Relief Fund is entirely funded through personal donations from SEB co-founders Chuck Runyon and Dave Mortensen, as well as more than $2,000 in personal donations from SEB corporate employees and a donation from key SEB investor Roark Capital Group. No franchise fees were used to build the fund.

3.  According to Chuck Runyon, co-founder and CEO of SEB, “This year has been incredibly challenging for our members, employees, franchise owners and their staffs, and our communities. They’ve endured an unpredictable pandemic and are faced with continued uncertainty over COVID-19, their personal health, their employment, and their economic stability. The SEB Relief Fund is a way that we can help them navigate this uncertainty as our franchise owners, clubs and studios work to adapt to a new normal in the fitness and wellness industry.”

4.  The first round of applications opened July 21, 2020 with more than $150,000 in grants already dispersed at the time of the announcement. Grants will be awarded to eligible applicants on a first-come, first-served basis.

5.  Qualified recipients include franchise employees and independent contractor personal trainers, as well as club and studio employees of corporate-owned Anytime Fitness clubs, Waxing the City studios, Bar Method studios, and Basecamp studios, who were furloughed or laid off as a result of COVID-19 closures and who incurred qualifying financial costs. All applicants must have been employed in good standing at the time of furlough or layoff.

6.  SEB has partnered with America’s Charities, a 501(c)3 nonprofit organization, to review, verify, and administer the fund. America’s Charities will ensure that all grants are tax-free and fulfilled quickly.

Named a Top Franchise in Entrepreneur’s Prestigious Franchise 500 Ranking

7.  In late January 2020, Self Esteem Brands announced that two of its brands, Waxing the City and Anytime Fitness, ranked in Entrepreneur magazine’s Franchise 500, the world’s first, best, and most comprehensive franchise ranking. Placement in the Franchise 500 is a highly sought-after honor in the franchise industry, making it one of the most competitive rankings ever.

8.  Recognized as an invaluable resource for potential franchisees, the Franchise 500 ranks Anytime Fitness and Waxing the City as No. 20 and No. 273, respectively. These rankings are a testament to both companies’ strength as a franchise opportunity while enhancing the Self Esteem Brands portfolio. Key factors that go into the Franchise 500 evaluation include costs and fees, size and growth, support, brand strength, and financial strength and stability.

9.  Playing a dominant role in the beauty industry, Waxing the City continues its aggressive growth trajectory – now boasting 118 locations open and operating at the time of the announcement. Company executives continue to identify strategic franchise partners in 2020, putting a heavy focus on growing the brand’s footprint in key markets across the country.

10.  In addition to franchise growth momentum, Waxing the City also named a new brand president, Nick Herrild, who in 2019 was promoted from his role as vice president of franchise support and brings 15 years of experience growing franchise brands.

11.  Chuck Runyon, co-founder and CEO of Self Esteem Brands, said, “Being recognized in this highly competitive ranking doesn’t just get our team excited, it gets us motivated – because we’re one step closer to our mission of improving the self-esteem of the world. All our brands have tremendous growth potential and provide our members and clients with the finest services available, but the real credit falls on our franchises. We’re not looking to simply grow a franchise brand – we’re searching for local entrepreneurs who share our passion for building relationships and helping others so that we can achieve our vision across the globe.”

Company History

12.  Waxing the City was founded in 2003 by Summer Vasilas, Marilyn Hartshorn, Robin Schoh, and Alex Arlotta in the LoDo neighborhood of Denver, Colorado. Prior to starting her own waxing salon, Vasilas had spent many decades working in various salons and refining her skills. Vasilas was passionate about her work and knew that someday she wanted to open a studio exclusively dedicated to waxing. When Waxing the City opened in 2003, it was the first studio in Colorado that focused on providing facial and body waxing services.

13.  Following the success of the first Waxing the City location, Vasilas and her business partners opened more salons in the Denver area. In 2010, Waxing the City started franchising and began expanding outside of Denver, with the first franchised location opening in Dallas, Texas. Waxing the City continued to grow over the next few years and in 2012, the company was acquired by Self Esteem Brands, parent company of Anytime Fitness, Basecamp Fitness, and The Bar Method.

Entrepreneur’s Franchise 500

14.  Waxing the City ranked No. 273 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Waxing the City franchise costs, based on Item 7 of the company’s 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  65
• Outlets at the End of the Year:  84
• Net Change:  +19

2018

• Outlets at the Start of the Year:  84
• Outlets at the End of the Year:  95
• Net Change:  +11

2019

• Outlets at the Start of the Year:  95
• Outlets at the End of the Year:  107
• Net Change:  +12

Company-Owned

2017

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

2018

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  8
• Net Change:  +7

2019

• Outlets at the Start of the Year:  8
• Outlets at the End of the Year:  9
• Net Change:  +1

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

Part 1 – Historical Average Monthly Revenues of Studios’ Initial 12 Months of Operations – 2018 to 2019 Studio Openings

• The following is a representation of historical monthly Gross Revenues during the first 12 months of operations of the franchised Waxing Studios that had their first full calendar month of operations between March 2018 and December 2019 (the “Reporting Period”) and that opened their Waxing Studios between February 2018 and November 2019.

• Gross Revenue includes all revenue generated by the Waxing Studios, excluding bona fide refunds, credits given or allowed to customers for the return of merchandise, and sales taxes collected and remitted.

2018 Class