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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

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

• 2019 average, median, high, and low monthly gross sales for (i) the 18 Spavia Businesses that were open and operating for more than 36 months as of December 31, 2019 (each, a “Mature Location”); and (ii) the 17 Spavia Businesses that were open and operating between 12 and 36 months as of December 31, 2019

• 2019 actual and average total revenue and membership revenue for (i) the 18 Mature Locations; and (ii) the 17 Spavia Businesses that were open and operating between 12 and 36 months as of December 31, 2019

• 2019 average gross sales, cost of good sold, gross profit, occupancy costs, other reported operating expenses, royalty, and operating income for the 13 Spavia Reporting Businesses that were open and operating for more than 36 months as of December 31, 2019, and the 8 Spavia Reporting Businesses that were open and operating between 12 and 36 months as of December 31, 2019

Section I – Background Information

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

Announces Brand Updates

1.  In mid-February 2020, Spavia announced updates to the brand along with the reveal of a new spa brand targeting the millennial market. The new look and feel, colloquially known as Spavia 2.0, was revealed on February 20, 2020 along with the new brand concept from the company.

2.  After a nationwide search and intensive vetting, the Spavia team integrated the best creators and designers in the country to create new and original work that pushes the industry forward. At its core, Spavia 2.0 is focused on further improving the guest experience to create an environment that rejuvenates the body and soul.

3.  According to Spavia CEO Marty Langenderfer, “We’ve identified a continuing need to fill a market gap by delivering a higher level of service. Our goal is to have the right balance of design and technology with focus on a multi-sensory experience. The new Spavia multi-sensory experience will focus on blending art and technology to create a seamless guest experience. Spavia 2.0 will feature new designs, music, scents, and technological innovations to make booking appointments, selecting music, and purchasing memberships even easier.”

4.  For the company’s new brand, the Spavia team took inspiration from the emergent cultural centers of Barcelona, New York, and Southern California. For Langenderfer, “finding the right team of millennials who understood where the culture was going was very important to us to get it right.” The brand blends the art, culture, and relaxed environment of millennial brands with the expertise and experience of Spavia’s national team.

Launches Spavia 2.0

5.  In late February 2020, Spavia launched Spavia 2.0. In addition to revamping spa design, music, and scents within current locations, Spavia 2.0 is also proud to announce a total revitalization that is centered on three destination themes: Caribbean (ocean), Aspen (mountain), and Napa (wine country). These three themes will be included in all Spavia franchise locations opening in late 2020. They will provide guests with an immersive, multi-sensory spa experience that transports them to a unique visual destination as soon as they enter the spa.

6.  Allison Langenderfer, founder and president of Spavia, said, “The moment a guest walks through the door, they begin a visual journey surrounded by the sights, sounds, and smells of an iconic destination. The scents, specifically, will be customized to the season in which guests visit Spavia, further enhancing the guest journey. Each of the sensory experiences applied to a theme has been curated to ensure continuous delivery of the exceptional Spavia experience.”

7.  Spavia’s goal is to have the right balance of design and technology in order to elevate a guest’s multi-sensory journey. Music will be leveraged as an instrumental component to the Spavia 2.0 launch, as playlists will be optimized to sync well with the smells and visuals used in a destination theme.

8.  Langenderfer added, “Each guest experience at Spavia is a journey. Our goal at Spavia is to provide each guest with the opportunity to relax the mind, recenter the body, and renew the soul. Spavia was founded on connecting community, human connection and making a difference with each and every guest.”

Gives Back to First Responders and Healthcare Workers

9.  In early April 2020, Spavia announced that it was donating spa treatments to first responders and healthcare workers serving communities amid the COVID-19 national emergency. “In alignment with Spavia Cares and our mission to make a positive difference in the world, one guest at a time, our objective is to provide first responders and healthcare workers an opportunity to relax, re-center, and renew,” said Allison Langenderfer, president of Spavia. “Community involvement and giving back have always been of great importance to Spavia. It is our way of honoring their heroism on the front lines and expressing our gratitude.”

10.  At many locations, Spavia members are actively donating their own monthly treatments, including Spavia’s premier 60-minute massage and facials. Members and guests are also purchasing and donating Spavia gift cards. A number of franchise owners are personally matching these donations.

11.  At Spavia’s Sparta, New Jersey location owned by Leslie Martin, more than 100 members have already donated monthly membership treatments. Mark and Bridget Chandley, owners of Spavia in Naples, Florida, will match 200 donations. Merirae and Randy Tackett, owners of Spavia in Reno, Nevada, are also personally matching 100 donations.

12.  Paul Groshko, owner of the Lincoln Park Spavia in Chicago, Illinois, is personally matching 100 donations as well. Spa treatments and gift cards will be distributed to the Chicago Police Department and Northwestern Memorial Hospital. Groshko said, “I hope we can help alleviate their stress. I know we can renew their bodies and their spirits in the little ways that are made possible during a session here at Spavia. We want to be able to provide an exceptional experience for them, and to help our front line individuals come back stronger and healthier than ever.”

13.  All donations were collected and distributed to local hospitals, fire departments, and law enforcement agencies. At the time of the announcement, 551 spa treatments and gift cards had been donated so far across fifteen Spavia day spas. Donated spa treatments and services were distributed to first responders and were available for redemption when Spavia re-opened its doors to the community.

Company History

14.  Spavia was founded in 2005 by Allison Langenderfer and her husband Marty in Ann Arbor, Michigan. The Langenderfers started Spavia because they wanted to help clients on their journey to wellness. From the start, Spavia focused on offering high-quality spa services at an affordable price. The Spavia concept was a success and two years after opening the first location, the Langenderfers started franchising.

15.  Over the past decade, Spavia has taken its growth slow and steady. Today, there are locations in California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Utah, Virginia, and Washington.

Entrepreneur’s Franchise 500

16.  Spavia ranked No. 109 on Entrepreneur’s 2021 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

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

2018

• Outlets at the Start of the Year:  24
• Outlets at the End of the Year:  35
• Net Change:  +11

2019

• Outlets at the Start of the Year:  35
• Outlets at the End of the Year:  45
• Net Change:  +10

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:  1
• Net Change:  0

2019

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

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

Part 1 – Average Monthly Gross Sales Generated Amongst Two Groups of Disclosed Spavia Businesses (Grouped Based on Number of Months Open as of December 31, 2019)

• As of December 31, 2019, Spavia had 45 franchised Spavia Businesses in operation and had not yet offered or opened a Sway Business. Because Spavia has no historical financial information on Sway Businesses, Spavia does not know how these businesses will compare to the historical financial information presented in this Item 19 for Spavia Businesses.

• Of the 45 Spavia Businesses, 35 were open at least 12 months as of December 31, 2019.

• Part 1 of this Item 19 discloses the average monthly revenue generated by the following subsets of Spavia Businesses that are operated in a substantially similar manner to the Spavia Business being offered in the Disclosure Document: (i) the 18 Spavia Businesses that were open and operating for more than 36 months as of December 31, 2019 (each, a “Mature Location”); and (ii) the 17 Spavia Businesses that were open between 12 and 36 months as of December 31, 2019 (collectively, the “Disclosed Franchised Businesses”).

• One Mature Location was initially owned and operated by Spavia’s affiliate and sold to a franchisee in July 2019.

• For each of these two groups, Spavia has provided the average, median, high, and low monthly Gross Sales (defined below) generated by the Franchised Businesses in that group over the 2019 calendar year (the “Measurement Period”).

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

Number of Months in Operation as of December 31, 2019:  Over 36 Months