In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Hand & Stone Massage and Facial Spa franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Hand & Stone Massage and Facial Spa 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 Hand & Stone Massage and Facial Spa franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned Hand & Stone Massage and Facial Spa 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 Hand & Stone Massage and Facial Spa’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average gross sales and number of members for the 324 Hand & Stone Massage and Facial Spa franchised outlets that were open 24 months or more as of December 31, 2019
- 2019 annual gross sales and number of members for the one subsidiary-owned Hand & Stone Massage and Facial Spa franchised outlet open 24 months or more as of December 31, 2019
- 2019 average gross sales and number of members for the 52 Hand & Stone Massage and Facial Spa franchised outlets that were open between 12 and 24 months as of December 31, 2019
- 2019 annual gross sales and number of members for the one subsidiary-owned Hand & Stone Massage and Facial Spa franchised outlet open between 12 and 24 months as of December 31, 2019
- 2019 average gross sales for the 376 Hand & Stone Massage and Facial Spa franchised outlets that were open greater than 12 months as of December 31, 2019, by year of opening (2008 to 2019)
- 2019 average facial sales for the 376 Hand & Stone Massage and Facial Spa franchised outlets that were open greater than 12 months as of December 31, 2019, by year of opening (2008 to 2019)
- 2019 annual facial sales for the two subsidiary-owned Hand & Stone Massage and Facial Spa franchised outlets that were open greater than 12 months as of December 31, 2019
- 2019 average product sales for the 376 Hand & Stone Massage and Facial Spa franchised outlets that were open greater than 12 months as of December 31, 2019, by year of opening (2008 to 2019)
- 2019 average gift card sales for the 376 Hand & Stone Massage and Facial Spa franchised outlets that were open greater than 12 months as of December 31, 2019, by year of opening (2008 to 2019)
- average size, first year net rent, and tenant improvement allowance for the 47 Hand & Stone Massage and Facial Spa franchised outlets that opened in 2019
Section I – Background Information
24 Things You Need to Know About the Hand & Stone Massage and Facial Spa Franchise
Lobbies for Massage Industry to Be Considered Essential
1. In mid-August 2020, amid the ongoing COVID-19 pandemic, Hand & Stone Massage and Facial Spa CEO Todd Leff was working hard to plan for the future. In the face of another possible shutdown, Leff is collaborating with CEOs of other major players in the massage franchise space as they lobby for massage to be considered an essential service. That way, if there’s another event like COVID, Hand & Stone can stay open. The efforts are gaining traction state by state, with therapeutic massage already being designated as an essential business in Wisconsin and Texas.
2. This effort comes after Hand & Stone worked tirelessly during COVID to support franchisees, their employees and members. In addition to covering the basics like enhanced communication efforts to ensure that everyone was aware of the latest COVID-19 information as well as the spa brand’s operating procedures, Hand & Stone went above and beyond to support its local business owners. The brand rolled out resources and guidance on preserving cash flow, negotiating loans and leases, and offering at-home massage and facial tips to keep customers engaged; and also provided social media and blog content surrounding COVID for local franchisee use.
3. Nicole Alburger, senior director of franchise development for Hand & Stone, said, “One of the biggest benefits that franchisees have over other entrepreneurs is a built-in support system. As a franchisor, it’s our responsibility to help our franchise owners in times like these. In the massage and facial industries, this support includes engaging our local owners’ current and prospective massage therapists to ensure that they can build their businesses once COVID-19 is behind us.”
4. Another major advantage for Hand & Stone franchisees is the brand’s membership model, which provides franchisees with recurring revenue regardless of the economic climate. The leadership team has heard time and time again from franchisees that many customers refused to cancel their memberships, resulting in an easier transition now that spas are starting to reopen.
5. Alburger added, “It’s been so inspiring to hear stories of members reaching out to their local franchisees to ensure that their membership packages are still active. Our spa owners go above and beyond to become integral parts of the local communities that they call home, and it’s amazing to see those communities come together in the middle of this crisis.”
6. While there’s still a lot of uncertainty surrounding the lasting impact that COVID-19 will have on businesses across all industries, Hand & Stone has successfully reopened 97% of spas. “For any business looking to reopen, it is important to have an in-depth plan that covers capacity, sanitation protocols, staffing and more,” said Alburger. “Sharing best practices and thoughts with other business owners who have already opened can also help franchisees succeed through the process. Patrick Burton, a franchisee in Utah, recently reopened his Hand & Stone spa and he says he has already seen a great deal of success thanks to the support, the help of his staff and a thorough plan in place.”
7. New protocols at recently reopened Hand & Stone locations include: requirement of all staff to wear PPE, requirement of estheticians to wear a face mask and face shield, requirement of customers to wear face masks, employee temperature checks prior to services, and requirement of massage therapists to wash their hands before and after services.
8. Hand & Stone hasn’t stopped franchise development either. The brand has had four virtual discovery days in the U.S. and one in Canada since the COVID-19 pandemic started. Moving forward, available real estate, an increased labor pool, and easier financing are the three main areas that franchisors are starting to see as potential incentives for development opportunities. Hand & Stone has seen an increase in conversions as they take over former spa competitor locations that have closed, creating an easier and more streamlined opening process for franchisees.
9. Now, as more stores and salons begin to reopen amid COVID-19 with new safety guidelines in place, the massage industry is thriving thanks to pent-up demand and an increased focus on wellness. To continue this level of support now and long after the pandemic, Hand & Stone will continue to collaborate with other leaders in the industry to lobby for essential status. As more states approve, franchisees will have the confidence that, should anything like COVID-19 happen again, they will be able to stay open. With this, Hand & Stone is providing franchisees with certainty during a time when it is hard to come by.
Appoints New President
10. In mid-August 2020, Hand & Stone Massage and Facial Spa announced that John Teza had been added to the team as president and chief development officer. Teza has C-level experience in the restaurant and franchise space including his time as chief development officer of Jersey Mike’s Subs where he directed all aspects of brand expansion for the NJ-based chain of 1,750+ units and $1.2 billion in system-wide sales. Most recently, Teza was a principal at NRD Capital Management leading operational and strategic functions for a number of restaurant and retail concepts.
11. Teza will immediately head all franchise, real estate, and business development efforts for Hand & Stone. He will also supervise legal and compliance matters and have full responsibility for company store operations. Based on his prior Canadian franchise experience, Teza will also oversee the 31-spa Canadian operation, working in conjunction with the brand’s current Canadian president.
12. Todd Leff, CEO of Hand & Stone, said, “We are excited to have an executive of John’s caliber and experience join the Hand & Stone team. As we position the Company for continued accelerated growth and transition, we need executives like John who bring high energy and tested leadership skills to the business.”
13. Teza added, “I am very excited about this opportunity and to join this team. The current group under the leadership of CEO Todd Leff has made Hand & Stone the fastest growing concept in a very dynamic industry and I am confident that my background and expertise can help extend this growth even further.”
14. Separately, Cindy Meiskin has been elevated to chief experience officer where she will continue to be responsible for the brand experience through franchisee training, consumer research and feedback platforms, brand compliance, and other consumer experience functions. Meiskin joined Hand & Stone in 2012 and was most recently the vice president of brand experience.
15. Todd Leff, CEO of Hand & Stone, said, “Especially during the recent COVID period, Cindy has demonstrated an amazing ability to synthesize various processes across the company into one very clear direction for our consumer experience. She worked exhaustively in analyzing local, state and federal requirements and combining those with our own and outside industry expert analysis to help develop our reopening guidelines. She was the driving force behind our post-opening COVID strategy that is not only the envy of others in our space but the envy of the entire retail segment.”
Partners with Therabody
16. In late August 2020, Therabody, formerly known as Theragun, the global leader in tech wellness and percussive massage therapy, announced the official launch of its education division, Therabody University. Therabody University will provide best-in-class education courses for industry professionals including personal trainers, group fitness instructors, strength and conditioning coaches, massage therapists, chiropractors, and physical therapists.
17. In addition, Therabody announced that Hand & Stone Massage and Facial Spa has selected Therabody University as its professional education partner, providing clients across the U.S. in select cities with access to top-trained licensed experts in the percussive massage therapy space.
18. Dr. Jason Wersland, founder and chief wellness officer of Therabody, said, “I’m thrilled for the official launch of Therabody University. Education has been at the core of Theragun, now Therabody, from the very beginning – it’s central to what we do and is an opportunity for us to provide education that connects and inspires. Therabody University allows us to have a personalized education approach to various professionals, each with its own needs and protocols. As we conduct more research and have studies published, it is important to us that we share those findings and properly educate our community on the many applications and benefits of our whole-body wellness offerings.”
19. Hand & Stone officially launched exclusive Therabody services in October 2020, offering its community and clients an add-on percussive therapy massage service. This add-on treatment focuses on easing muscle tension, soreness, tightness, and calming the nervous system and providing a whole-body healing experience.
20. According to Todd Leff, CEO of Hand & Stone, “We selected Therabody University as our exclusive Professional Education partner because they are leading the way in not only percussive therapy, but also in all things wellness. We’ve already educated hundreds of our Licensed Massage Therapists via their scalable live and digital offerings and have not found another company that has the experience, research, and elite Master Trainer team like Therabody University.”
21. With more than 40 global Master Trainers in over 12 countries, Therabody University delivers courses through a multitude of options including live virtual education and digital on-demand sessions, with in-person education slated to resume in 2021. To date, Therabody University has trained more than 2,000 professionals worldwide and will continue to build upon its established global presence. Following the completion of select courses, each graduate receives a certificate of completion as well as continuing education credits (NASM, AFAA, PTA Global, ISSA, NSCA, CanFitPro, CSCCa, NCSF, or NCBTMB based on the course type).
22. Hand & Stone Massage and Facial Spa was founded in 2004 by John Marco, a former physical therapist, in Toms River, New Jersey. Marco had over 25 years of experience working as a physical therapist and was always entrepreneurial. While working as a physical therapist, Marco saw the fragmentation of the massage industry firsthand and it became clear that there was a lack of accessible retail massage spa locations. Marco set out to change the industry with Hand & Stone Massage and Facial Spa. He wanted to offer luxury services at an affordable price, under one roof.
23. Marco’s concept was a success and by 2007, he had grown Hand & Stone Massage to three locations. Over the next decade, Hand & Stone Massage and Facial Spa continued to grow and by 2017, the brand had grown to 300 locations. Today, Hand & Stone Massage and Facial Spa is the second largest massage franchise, behind Massage Envy.
Entrepreneur’s Franchise 500
24. Hand & Stone Massage and Facial Spa ranked No. 151 on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Hand & Stone Massage and Facial Spa 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 Hand & Stone Massage and Facial Spa’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
- Outlets at the Start of the Year: 307
- Outlets at the End of the Year: 354
- Net Change: +47
- Outlets at the Start of the Year: 354
- Outlets at the End of the Year: 404
- Net Change: +50
- Outlets at the Start of the Year: 404
- Outlets at the End of the Year: 454
- Net Change: +50
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 1
- Net Change: 0
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 1
- Net Change: 0
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 2
- Net Change: +1
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
- This Item presents certain historical data as provided by Hand & Stone’s franchisees and subsidiary-owned outlets. Hand & Stone has not audited this information, nor independently verified this information.
- The information is for the period January 1, 2019 through December 31, 2019.
- As of December 31, 2019, Hand & Stone had 425 franchised outlets open in the United States (including two subsidiary-operated businesses) and 31 franchise locations in Canada.
- The following tables present the Average Gross Sales submitted to Hand & Stone by 376 United States franchisees and Hand & Stone’s two subsidiary-operated businesses in Hamilton, New Jersey and Englewood, New Jersey, which are substantially similar to those being offered through the Franchise Disclosure Document and were open and operating for at least 12 months as of December 31, 2019.
- Tables #1 through #6 exclude 47 United States franchised outlets that were not open more than 12 months as of December 31, 2019, and 31 franchises located in Canada.