FDD Talk 2020: My Salon Suite/Salon Plaza 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 My Salon Suite/Salon Plaza franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a My Salon Suite/Salon Plaza 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 My Salon Suite/Salon Plaza franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned My Salon Suite/Salon Plaza 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 My Salon Suite/Salon Plaza’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average, median, high, and low total occupancy percentage, square footage, number of suites, gross revenues, general operating expense, rent expense, royalties, and EBITDA for the 63 My Salon Suite and Salon Plaza franchise locations in the United States that had been open and continuously operating for at least 12 full months as of December 31, 2019; submitted all required reports under the Franchise Agreement during 2019; and were not under contract for purchase at any time during 2019

• 2019 average occupancy, by maturity (open 12+ months, open 7-12 months, open 0-6 months), of the 115 My Salon Suite and Salon Plaza franchise locations in the United States that were open and operating as of December 31, 2019

Section I – Background Information

22 Things You Need to Know About the My Salon Suite/Salon Plaza Franchise

Celebrates Year of Record-Breaking Growth

1.  In mid-December 2019, Suite Management Franchising, the parent company of My Salon Suite and Salon Plaza, wrapped up its biggest year of growth with more than 40 new franchise locations. In 2019, to support the brands’ location growth, Suite Management Franchising added key team members, including a director of franchise operations, director of construction, and regional manager, to its corporate team.

2.  In 2019, 42 new locations were opened – a 20% increase from the previous year. Among the most notable openings was the first of many locations in the Detroit region led by multi-unit investor and NBA champion Chauncey Billups. It was also the first year that the brand earned a top 1000 ranking on the Inc. 5000 list.

3.  Ken McAllister, CEO of Suite Management Franchising and president of My Salon Suite, said, “I feel an immense sense of pride when looking back at this past year and everything we have been able to achieve. It all comes back to how strong and hard-working our corporate team and franchise partners are. We have a busy, but exciting year ahead of us. We’re all looking forward to continue building our legacy in the beauty and wellness industry.”

4.  The previous 12 months also brought on new partnerships with beauty industry companies like Redken and the launch of Square. The latter allows My Salon Suite and Salon Plaza members to set up booking and payment with their clients while letting them earn rewards.

5.  Suite Management Franchising also continued its partnership with St. Jude Children’s Research Hospital which first began in 2018. In 2019, the brand held its first annual campaign for St. Jude in honor of Childhood Cancer Awareness Month where more than $17,000 was raised throughout the month of September.

6.  Continuing with its growth plans, Suite Management Franchising is on track to open 74 new locations in 2020. With the brand’s upcoming 10-year anniversary, a new website along with a brand refresh was scheduled to be released within the first few months of the year as a way to celebrate the company’s accomplishments and momentum.

Celebrates Opening of 100th Location

7.  At the end of August 2019, My Salon Suite announced the opening of its 100th franchise location. Conveniently located within the Tampa Commons Shopping Center, the new Westshore My Salon Suite includes a collection of private, spacious suites for a variety of beauty, barber, and wellness professionals.

8.  This is local resident Heather Tomasello’s third My Salon Suite location in the Tampa market. She is using her background and complementary skills to recruit and lease suites to a variety of established beauty and health professionals, who My Salon Suite warmly refers to as its members.

9.  Members are provided with local and national marketing support, business operations support, all suite and building maintenance, and support with business development, among other services. Members also have access to Square, a scheduling, point-of-sale platform used in the salon and spa industry.

10.  Tomasello said, “Opening this Westshore location was already a huge milestone for me and knowing that it is the 100th store for the brand makes it feel even more special. I’m excited that I get to be a part of this accomplishment and it makes me proud to be a My Salon Suite owner. Now, I am ready more than ever to open our doors to start providing opportunities for beauty professionals.”

11.  Tomasello continued, “The Tampa community has already given us such a warm welcome. It has been the perfect market for me to grow my My Salon Suite businesses. With this third location, my hope is we can continue making the dreams of Tampa’s talented independent estheticians, nail technicians, hair stylists and other beauty professionals come true. They deserve the opportunity to be their own bosses while not sacrificing the privacy and high-end experience their customers deserve.”

Raises More Than $17,000 During First Annual Campaign for St. Jude Children’s Research Hospital

12.  In September 2019, Suite Management Franchising, the parent company of My Salon Suite and Salon Plaza, launched its systemwide fundraising effort to benefit St. Jude Children’s Research Hospital. In honor of Childhood Cancer Awareness Month, the brands collectively raised $17,545.61 for the lifesaving mission of St. Jude: Finding cures. Saving children.

13.  More than 130 My Salon Suite and Salon Plaza locations took part in this initiative by hosting a variety of fundraising events throughout the month of September. The locations were divided by regions and set to reach a common goal to raise awareness for childhood cancer.

14.  This initiative would not have been possible without the efforts made at each location and their members. Here are some of the most notable contributions:

• Top Raising Region: West (over $4,780)
• Top Raising Suite Management Franchise Location: My Salon Suite of Las Vegas Silverado Ranch ($2,017)
• Top Raising Suite Management Franchising Corporate Member: Leigh Welch, Director of Franchise Operations ($1,130)

15.  Ken McAllister, CEO of Suite Management Franchising and president of My Salon Suite, said, “It was such an honor to partner with St. Jude Children’s Research Hospital during the month of September. We were happy to see our franchise partners connect during the initiative and help raise awareness during Childhood Cancer Awareness Month. This was our first annual fundraising initiative with St. Jude and we are looking forward to next year, where we hope to surpass this year’s donations to further benefit St. Jude.”

16.  Suite Management Franchising started its partnership with St. Jude in 2018, as they launched the Suite Relief Fund to support St. Jude Children’s Research Hospital with fundraising and to help franchise members in times of disaster. Suite Management Franchising will continue to advance its partnership with St. Jude and help bring awareness to childhood cancer.

17.  St. Jude Children’s Research Hospital is leading the way the world understands, treats, and defeats childhood cancer and other life-threatening diseases. St. Jude freely shares the discoveries it makes, and every child saved at St. Jude means doctors and scientists worldwide can use that knowledge to save thousands more children. Families never receive a bill from St. Jude for treatment, travel, housing, or food because all a family should worry about is helping their child live.

Company History

18.  My Salon Suite was founded in 2010 by hair stylists Al Ferrigno and Alan D’Alessandro in New Orleans, Louisiana. Ferrigno and D’Alessandro had been in the salon industry for a combined 75 years and had owned and operated over 40 traditional salons. To start My Salon Suite, Ferrigno and D’Alessandro partnered with Ferrigno’s niece, Alanna McAllister and her husband Ken.

19.  Following the success of the first My Salon Suite location, Ferrigno, D’Alessandro, and the McAllisters started opening a few more locations in the area. In 2012, they officially launched a franchise program for My Salon Suite. Over the next few years, My Salon Suite opened new locations mostly around the southern United States.

20.  In 2015, My Salon Suite partnered with Ratner Companies, the nation’s largest family-owned collection of salons and the owners of Salon Plaza. Ratner Companies was founded in 1974 by Dennis and Ann Ratner, who were both hair stylists. Similar to Ferrigno and D’Alessandro, the Ratners also owned a number of traditional salons before acquiring smaller salon chains, including Salon Plaza.

21.  Today, My Salon Suite and Salon Plaza are franchised under the same parent company, Suite Management Franchising, and there are locations across the United States as well as Canada.

Entrepreneur’s Franchise 500

22.  My Salon Suite and Salon Plaza ranked No. 279 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of My Salon Suite/Salon Plaza 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 My Salon Suite/Salon Plaza’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:  35
• Outlets at the End of the Year:  48
• Net Change:  +13

2018

• Outlets at the Start of the Year:  48
• Outlets at the End of the Year:  79
• Net Change:  +31

2019

• Outlets at the Start of the Year:  79
• Outlets at the End of the Year:  115
• Net Change:  +36

Company-Owned

2017

• Outlets at the Start of the Year:  27
• Outlets at the End of the Year:  26
• Net Change:  -1

2018

• Outlets at the Start of the Year:  26
• Outlets at the End of the Year:  30
• Net Change:  +4

2019

• Outlets at the Start of the Year:  30
• Outlets at the End of the Year:  30
• Net Change:  0

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

• The figures below represent the median and average occupancy and net profit reported in accordance with the typical monthly royalty and occupancy reporting procedure for 2019 by My Salon Suite and Salon Plaza franchise locations that satisfied the Reporting Criteria.

• The following chart includes information regarding the total number of My Salon Suite and Salon Plaza franchise locations in the United States that met or exceeded all of the following criteria as of December 31, 2019 (“Reporting Criteria”):

• (a) operated in the United States under a Franchise Agreement;
• (b) had been open and continuously operating for at least 12 full months as of December 31, 2019;
• (c) submitted all required reports under the Franchise Agreement during 2019; and
• (d) was not under contract for purchase at any time during 2019.

• As of December 31, 2019, there were 115 My Salon Suite and Salon Plaza franchised locations open and operating in the United States under a Franchise Agreement (“Franchise Group”). Of this total, 63 locations met the Reporting Criteria and represent the reporting group (“Reporting Group”).

• The median and average information was prepared from the records and reports, as reported by franchisees of each of the franchise locations satisfying the Reporting Criteria. The franchisor has relied solely on the information reported to it by franchisees. The franchisor does not know of an instance, nor does it have reason to believe, that any franchisee would misstate its information. However, these reports have not been audited and the franchisor has not independently verified these numbers.

• Some My Salon Suite and Salon Plaza Businesses have earned this amount. Your individual results may differ. There is no assurance you’ll earn as much.

Part 1 – Average, High, and Low Total Occupancy, Square Footage, Number of Suites, Gross Revenues, Certain Expenses, and EBITDA

• The following Part 1 provides information regarding the average occupancy, square footage, number of suites, gross revenues, certain expenses, and EBITDA, as defined below. Also shown are the percent of locations that meet or exceed the average for each category.

Total Occupancy Percentage