In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Phenix Salon Suites franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Phenix Salon Suites 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 Phenix Salon Suites franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned Phenix Salon Suites 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 Phenix Salon Suites’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average, median, highest, and lowest gross revenue for 58 franchised Phenix Salon Suites locations in the U.S. that were in operation for over one year as of December 31, 2019
- 2019 average, median, highest, and lowest adjusted EBITDA for 58 franchised Phenix Salon Suites locations in the U.S. that were in operation for over one year as of December 31, 2019
- average, median, highest, and lowest occupancy rate and number of suites at the end of 2019 for 47 franchised Phenix Salon Suites locations in the U.S. that were open as of December 31, 2018
- 2019 average gross revenue and adjusted EBITDA for 58 franchised Phenix Salon Suites locations in the U.S. that were in operation for over one year as of December 31, 2019, grouped by salon size (less than 4,500 square feet, 4,501 to 6,000 square feet, greater than 6,000 square feet, and total)
- average occupancy rate at the end of 2019 for 47 franchised Phenix Salon Suites locations in the U.S. that were open as of December 31, 2018, grouped by salon size (under 4,500 square feet, 4,501 to 6,000 square feet, greater than 6,000 square feet, and total)
Section I – Background Information
17 Things You Need to Know About the Phenix Salon Suites Franchise
Attracts Multi-Unit Developers Amid Booming Suite Leasing Industry
1. In mid-September 2020, Phenix Salon Suites said that it was continuing to add volume to its system with new multi-unit developers and entrepreneurial lifestyle professionals. The brand, founded by salon industry icon and A-list stylist Gina Rivera, announced a 20% increase in new salon openings along with 21 new signed multi-unit franchise agreements in 2020 alone. A number of these have been in new markets for the brand including New York, New Jersey, Houston, Sarasota, and Pittsburgh, just to name a few.
2. The momentum comes amidst independent health, wellness, and beauty professionals’ increasing demand for the safety and security offered by individualized suites for rent available through the Phenix model. In fact, Phenix Salon Suites has seen a 78% increase in inquiries from salon and lifestyle professionals in recent months. The increase is largely due to the attractive qualities offered by Phenix Salon Suites including free laundry services, 24/7 access, customizable, private suites, and highly competitive rates.
3. As the opportunity for leasing these co-working spaces grows, Phenix is attracting new franchisees with varying backgrounds, from restaurant owners to C-suite executives. With a robust pipeline in place, the brand anticipated signing 50 new deals before the end of 2020 and 80-100 additional deals by the end of 2021.
4. Brian Kelley, president and COO of Phenix Salon Suites, said, “Now is the perfect time to franchise with Phenix Salon Suites. The salon industry has proven its resiliency time and time again and, given the increased safety and security of the private suite-based model, we’ve seen a strong rise in inquiries from salon professionals and franchise candidates over the last few months. As Phenix Salon Suites has experienced incredible growth throughout 2020 with 19 new salons opening since March alone, we’re very excited with the accelerated growth planned for the brand through 2021.”
5. Phenix Salon Suites was one of the first boutique salon suite concepts to offer luxury, spacious suites for independent salon and lifestyle professionals to rent on a month-to-month basis and become their own boss. Founded by Gina Rivera, a salon industry veteran and stylist herself, Phenix Salon Suites created the most robust mobile app in the industry. The app, called Gina’s Platform after the company’s founder, was created with the salon professional in mind with more features and benefits than any of its competitors. Since its launch in 2019, Phenix Salon Suites’ mobile app has grown 400%.
6. Alongside the health, wellness, and beauty industry that has been consistently growing 15-20% annually, opportunities to own a Phenix Salon Suites franchise continue to arise. Most recently, Phenix Salon Suites was ranked in the top 100 on Entrepreneur magazine’s first Top Growth Franchises list. This list recognizes the 150 companies with the greatest positive franchise unit growth in North America over a three-year period, based on data submitted for Entrepreneur’s Franchise 500 ranking.
7. As Phenix Salon Suites continues its growth, the brand has its sights set on expanding both nationally and internationally with experienced multi-unit franchise operators. Attractive growth markets include various cities and states throughout the country including Houston, Chicago, Columbus, Detroit, Boston, Upstate New York, and New York City. Phenix Salon Suites also has room to grow in Washington, Oregon, Louisiana, Mississippi, Alabama, and Northern California.
Signs 15-Unit Deal with Successful Multi-Business Owner
8. In early November 2020, Phenix Salon Suites announced a 15-unit development deal with multi-business owner Doug Cox. Operating under the business entity Providence Salon Group, Cox is expanding the brand’s presence across Tennessee and Kentucky, with specific growth plans for the Nashville, Knoxville, and Lexington regions. The group’s first co-working complex for salon and wellness professionals was expected to open in Hendersonville by early 2021.
9. Doug Cox, who is leading Providence Salon Group alongside president and COO Spencer Harp, said, “Having grown many businesses over the years, Phenix Salon Suites stuck out as an extremely attractive concept to invest in. As talented, independent beauty professionals seek alternative salon settings, individual suite concepts are primed for long-term success. The design is optimal as it allows me to build relationships with my tenants and give them a safe, intimate and socially-distanced space to work. I’m thrilled to lead the brand’s southern growth with support from a robust, innovative corporate team.”
10. Cox, a Nashville resident for more than 25 years, has successfully developed and currently operates five businesses across four states. His portfolio ranges from ventures such as nursing homes, assisted living facilities, and consulting firms. As he diversifies with Phenix Salon Suites, he looks forward to creating opportunities for aspiring entrepreneurs, while creating a real estate legacy for his family and employees.
11. Brian Kelley, president of Phenix Salon Suites, added, “We’re excited to have a seasoned businessman like Doug on board with Phenix Salon Suites as we expand our reach into Tennessee and Kentucky. The suite-based model has proven to be beneficial as it offers lifestyle professionals the safety and security of their own individual space allowing them to continue servicing their clients on a one-on-one basis. Phenix Salon Suites is a sustainable investment for those looking to expand their portfolio with a business model designed specifically to meet today’s challenges surrounding social distancing in the multi-billion-dollar health, wellness and beauty industry. I’m confident that Doug’s strong ownership background will pair well with our model and that he will play an essential role in establishing a strong local brand presence.”
Bolsters Multi-Unit Growth in 2020
12. In early January 2021, Phenix Salon Suites wrapped up a monumental year with more than 30 new openings, 57 signed agreements, and a robust pipeline for new growth slated for 2021. A strong influx of signed franchise agreements has attracted high caliber investors looking to diversify their franchise portfolios. Notable multi-unit agreements include the one with Doug Cox for 15 salons in the Knoxville and Nashville markets, and multiple 3-4-unit deals in Pittsburgh, Pennsylvania, Florida, and New Jersey. In addition, the brand has a number of openings on the immediate horizon in Texas, Tennessee, and California.
13. According to Brian Kelley, president and COO of Phenix Salon Suites, “2020 has been a whirlwind of a year but the salon industry has proven to be resilient, once again. Phenix continues to thrive under every circumstance. From the influx of salon professional inquiries to the almost 60 signed agreements by well-established multi-unit franchisees, Phenix Salon Suites has solidified itself as the top salon suite brand. Our growth across the country, and most recently our rapid expansion across the Northeast, expands our footprint to nearly 300 locations! I’m excited to see this momentum continue into the new year with the robust pipeline we already have in place.”
14. Phenix Salon Suites was founded in 2007 by Gina Rivera in California. Rivera grew up in the hair salon business as her family has been in the industry since 1929, owning their own salons. Rivera attended beauty school and established her own brand as a hair stylist in booth renter salons. After many years in the industry, Rivera realized that not all salons are created equal and a majority of booth renters are provided very little support to ensure their success.
15. Rivera became an advocate for supporting the goals of Lifestyle Professionals who had the desire to operate their own salons but perhaps lacked the financial resources. She felt that there was room in the industry to refine the options available for sole proprietors in the beauty industry and she developed the idea for Phenix Salon Suites. Under Phenix Salon Suites’ business model, hair stylists can own and operate a business at a fraction of the cost of traditional salon settings.
16. Rivera started franchising Phenix Salon Suites in 2010 and there are now locations all across the United States.
Entrepreneur’s Franchise 500
17. Phenix Salon Suites ranked No. 64 on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Phenix Salon Suites 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 Phenix Salon Suites’ 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: 148
- Outlets at the End of the Year: 189
- Net Change: +41
- Outlets at the Start of the Year: 189
- Outlets at the End of the Year: 224
- Net Change: +35
- Outlets at the Start of the Year: 224
- Outlets at the End of the Year: 255
- Net Change: +31
- 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: 4
- Net Change: +3
- Outlets at the Start of the Year: 4
- Outlets at the End of the Year: 5
- Net Change: +1
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
- The charts below show the annual gross revenue and adjusted EBITDA, occupancy rates, and operating results for fiscal year ended December 31, 2019 for certain franchise locations that were in operation for over one year as of that date, and the occupancy rates at the end of 2019 that were reported to Phenix by its franchisees for certain franchise locations that were open as of December 31, 2018.
- Not all franchisees or developers with franchise locations that have operated more than one year as of December 31, 2019 or were open as of December 31, 2018 have supplied Phenix with their financial information and/or occupancy information.
- In fact, franchisees or developers have supplied Phenix with their gross revenues and EBITDA for only 58 franchise locations that have operated more than one year as of December 31, 2019, representing 25.7% % of the franchise locations that have operated more than one year as of December 31, 2019, and the occupancy rates for only 47 franchise locations that were open as of December 31, 2018, representing approximately 21% of the 224 franchise locations that were open as of December 31, 2018.
- Accordingly, Phenix only used the information provided by these franchisees or developers to prepare these charts.
Part 1 – Annual Gross Revenue (of Certain Franchise Locations)
- Part 1 below reflects the annual gross revenues for fiscal year ended December 31, 2019, for 58 franchise locations in the U.S. that were in operation for over one year as of that date.
- “Gross Revenue” means all money generated by the business, without taking into account any part of that total that has been or will be used for expenses.