Detailed Estimates of Phenix Salon Suites Franchise Costs Based on Item 7 (Estimated Initial Investment) of Phenix Salon Suites’ 2020 Franchise Disclosure Document
1. Initial Franchise Fee: $49,500
- The initial franchise fee for each additional franchise is $40,500. The initial franchise fee for each franchised business developed by a qualified veteran is $30,000.
2. Site Evaluation Fee: $2,750
3. Real Estate/Rent (first 3 months): $10,000 to $95,000 (3 months’ rent plus security deposit)
- A Phenix Salon Suites Business occupies a minimum of 2,000 square feet of space and contains 14 to 60 suites. A Phenix Salon Suites Business can be located in a strip shopping center, lifestyle center, free standing unit, and other venues in commercial areas and in residential areas.
- Phenix anticipates that you will rent the Business premises. Rent is expected to range from $2,500 to $25,000 per month, depending upon geographic location, size, local rental rates, current economic environment, businesses in the area, site profile, and other factors, with a security deposit of $2,500 to $20,000.
- Generally, the first month’s rent and a security deposit are payable upon the execution of the lease and then rent is payable on a monthly basis. However, Phenix is usually able to negotiate 1-6 months free rent following issuance of a certificate of occupancy.
- In lieu of renting, you might choose to buy real estate on which a building suitable for the Business is already constructed or can be constructed. Real estate costs depend on location, size, visibility, economic conditions, accessibility, competitive market conditions, and the type of ownership interest you are buying.
- Rent or purchase price is normally considerably higher in large metropolitan areas than in more suburban or small-town areas.
4. Architectural Plans: $5,000 to $30,000
- The architect will provide architectural services relating to the build-out of the Business location. At your option, you may engage either one of Phenix’s approved architects or an approved architect of your choice that meets Phenix’s qualifications to provide a space plan for your property.
5. Layout and Design Approval: $500
6. Construction Management Fee: $6,500
7. Utility Deposits: $0 to $5,000
8. Leasehold Improvements: $165,000 to $1,000,000
- Leasehold improvement costs, including floor covering, wall treatment, counters, ceilings, painting, plumbing, HVAC systems, window coverings, electrical, carpentry and similar work, and architect’s and contractor’s fees, depend on the site’s condition, location, and size; the demand for the site among prospective lessees; the site’s previous use; the build-out required to conform the site for your Business; and any construction or other allowances the landlord grants.
- The lower figure assumes that you remodel a minimum size unit in an existing building; the higher figure assumes a remodel of a larger size unit in an existing building.
9. Initial Marketing Expenses: $10,000 to $35,000
- This item represents the out-of-pocket costs that you will incur in marketing your location, which may include banners, signs, postcards, social media plans, and other direct mail advertisements.
10. Initial Inventory (Optional): $0 to $20,000
- If you operate a Phenix Salon Store at your salon, then you must purchase an initial inventory of Phenix’s proprietary and private label products from Phenix before the Business opens.
11. Meet and Greet Event Request Fee (Optional): $0 to $2,500
12. Meet and Greet Event (Optional): $0 to $5,000
- Phenix recommends that you conduct a Meet and Greet Event when your property is at least 70% occupied. The cost of the Meet and Greet Event ranges from $3,000 to $5,000. The fee for founder Gina Rivera’s attendance at the Meet and Greet Event, which is optional, is $2,500.
13. Computer System: $2,000 to $3,000
14. POS System: $0 to $2,000
- If you operate a Phenix Salon Store at your salon, then you must purchase and utilize a POS system.
15. Phenix TV (first 3 months): $180 to $240
16. Furniture, Fixtures, Equipment, Signs, and Furnishings: $40,000 to $90,000
- These amounts include the equipment that you must purchase from Phenix’s designated supplier. Phenix will determine the amount of equipment that you will need to purchase, based upon the number of suites at your location.
- The lower figure assumes that you are purchasing the minimum required to operate a Phenix Salon Business with 14 suites. The higher figure assumes that you are purchasing equipment for a Business with 60 suites.
17. Signs: $6,500 to $8,500
18. Annual Meeting of Franchisees: $250 to $500
19. Training Expenses (out-of-pocket costs for 2 people): $1,500 to $2,500
20. Insurance (first 3 months): $600 to $2,680
- You must obtain and maintain certain types and amounts of insurance. Insurance costs depend on policy limits, types of policies, nature and value of physical assets, gross revenue, number of employees and lifestyle professionals, square footage, location, business contents, and other factors bearing on risk exposure.
- The estimate contemplates insurance costs for 3 months.
21. Professional Fees: $0 to $5,000
- If you engage an attorney or other professional to review and assist you to negotiate the lease, the fee for these services typically ranges from $1,000 to $5,000.
- This item includes the cost of forming your business entity and obtaining necessary licenses and permits.
22. Licenses, Permits, and Business Formation: $100 to $1,000
23. Gina’s Platform: $250
- You must use the Gina’s Platform app to manage the business and the collection of rents, including credit card processing, and provide resources to your licensees. The one-time set up fee is $250 per location.
24. Additional Funds (first 3 months): $7,500 to $20,000
- This item estimates your expenses during the initial period of operation of your Business (other than the items identified separately in the table). Phenix estimates that you will need $7,500 to $10,000 of additional funds.
- These expenses include payroll costs, but not any draw or salary for you. These figures also do not include the costs of any optional leasehold improvements or any expenses that are based upon your Gross Sales, such as your local advertising expenses, the royalty and national brand fee, which are based upon the number of square feet of space that you lease at the Approved Location.
- These figures are estimates, and Phenix cannot guarantee that you will not have additional expenses starting the business.
25. Total Estimated Initial Investment: $308,130 to $1,387,420
- Phenix relied on its affiliates’ over ten years of experience in operating Phenix Salon Suites businesses to compile these estimates.