In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Salons by JC franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Salons by JC franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Salons by JC franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Salons by JC outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Salons by JC’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average and median total square feet, net rent per square foot, free rent (days), free rent total dollars, tenant improvement allowance, total leasable square footage, leasable square footage %, construction cost per square foot, and gross sales for the 95 franchised Salons by JC businesses that were (a) open and actively operating as of December 31, 2020, and (b) leased and built out their respective facility and provided Salons by JC with the requested data

• 2020 actual gross sales for each of the 3 franchised Salons by JC businesses that purchased the facilities for their Salons by JC businesses

• 2020 actual, average, and median gross sales for the 10 affiliate-owned Salons by JC facilities that were open and operating throughout the entire 2020 calendar year

• tenant occupancy rate for each of the 10 affiliate-owned Salons by JC facilities as of the end of 2020, along with the average and median year-end tenant occupancy rate

Section I – Background Information

15 Things You Need to Know About the Salons by JC Franchise

Welcomes New Jersey to the Salon Suite Franchise System

1.  In mid-November 2020, Salons by JC announced that New Jersey was the newest home of the franchise. Garret and Mike Bedrin, the 2017 Franchisees of the Year and owners of The Bedrin Organization based in New Jersey, opened the first salon suite in Bergen County in Wyckoff, NJ in November. “We are beyond thrilled to bring seasoned beauty professionals of New Jersey the opportunity to own their own business,” said Garret Bedrin.

2.  The Bedrins are third-generation retailers and commercial real estate developers and have had their pulse on New Jersey’s small business economy for over 70 years. “There is no doubt that professionals in the beauty, health, and wellness industry are some of the hardest working and talented professionals who deserve the right to own their own business. We have fought for these rights in Newark at the State Board of Cosmetology and in Trenton at the Department of Consumer Affairs. Even after 5 years of doors slamming in our faces, we never gave up. We are excited to open our doors and share Salons by JC with our local neighborhoods.” In addition to Wyckoff, the Bedrins plan on opening locations in Paramus and Ridgewood in 2021.

3.  Meanwhile, in the Southern part of New Jersey, Jim McGuiness is working to develop locations in Shrewsbury, Middletown, and Marlboro. “We are very excited to open up new Salons by JC locations in New Jersey. This is a great market for salon suites given the population density, household incomes, and the number of salons. Most surrounding states already embrace salon suites. New Jersey is late to the game and beauty professionals have been waiting for our state to adopt similar practices like New York, Connecticut, and Maryland,” said McGuiness.

4.  The New Jersey Cosmetology board received many requests from salon suite providers and in 2019 decided it was a good idea to approve the “newest” concept in salon ownership. “The approval requires adherence to specific guidelines and requirements. We feel the opportunity to enter the market and provide salon ownership is a great opportunity and responsibility. The pre-opening interest in our Shrewsbury location is excellent and we look forward to creating the premier salon suite design and opportunity for beauty professionals to build their business and free themselves from the traditional salon model. This is an exciting time and we are proud to enable this change,” added McGuiness.

5.  Steve Griffey, president of Salons by JC, said, “We are thrilled that the State of New Jersey has opened up the opportunity for salon suites to expand. We have three of the best Salons by JC franchisees in the country that are developing the state.”

6.  Garret and Mike Bedrin are former Franchisees of the Year recipients for their work in North Carolina. “They own 3 beautiful salon suite locations that have been incredibly successful. Their goal is to open 16 salons in Northern New Jersey. In the Southern part of the state, Jim McGuiness has stores in development in Shrewsbury, Middletown, and Marlboro. Jim and his family have developed 3 successful salons in Maryland and Connecticut. They will bring an incredible amount of experience and support to the salon community in New Jersey,” added Griffey.

7.  Drew Johnston, vice president of operations for Salons by JC, added, “Salons by JC is committed to bringing the best in facilities and customer service to salon professionals across the country. The Bedrin and McGuiness families are fully committed to delivering on the vision and mission of Salons by JC in their home state of New Jersey.”

Names Ten Peaks Media as Agency of Record

8.  In late April 2020, Ten Peaks Media, a full-service marketing and advertising agency, announced that it had been named agency of record by Salons by JC, the industry-leading salon suite leasing and franchising company that provides solutions for salon professionals, customers, and franchises. Ten Peaks Media’s services include digital marketing, paid and organic social media, and marketing strategy and management.

9.  Steve Griffey, president of Salons by JC, said, “We’re fortunate to be able to continue our work in a time of such global uncertainty. Within the last month, we’ve been able to do a full audit and hit the reset button with new strategies, and bringing on the talented team at Ten Peaks Media was an obvious next step to support our continued growth in the market.”

10.  Salons by JC is outsourcing its chief marketing officer role to Josh Cates, founder and CEO of Ten Peaks Media, who has more than 20 years of experience in media and advertising. In 2019, Cates was named Businessman of the Year by the Greater Boerne Chamber of Commerce and won an American Advertising Federation ADDY award for his work.

11.  Cates said, “Salons by JC, ranked as the #1 salon suite in the industry for two years running by Entrepreneur Magazine’s Franchise 500, is known for helping prospective franchise owners launch a successful business. Our team is committed to expanding the quality of their paid digital media and elevating their franchisees and company expertise to the masses.”

Company History

12.  Salons by JC was founded in 1998 by Jack Griffey and Cecil Miller in Dallas, Texas. Griffey first learned about the salon suite concept after the salon that his wife worked at closed and she had to find a way to relocate her clientele. Instead of seeking work at a traditional salon again, Mrs. Griffey rented a space at a salon suite. While the space was no bigger than a closet, it gave Mrs. Griffey the freedom to be her own boss.

13.  After checking out her new space, Jack Griffey was impressed and realized the potential of a salon suite business. Griffey spent time researching the concept and turned to his good friend and fellow retail businessman, Cecil Miller, for help. The first Salons by JC was a success and a second location opened in 2001 when Griffey’s son moved to San Antonio and asked his father and Miller if they were interested in opening a location in the city.

14.  In 2008, Griffey and Miller officially started franchising the Salons by JC concept and there are now locations around the United States and Canada.

Entrepreneur’s Franchise 500

15.  Salons by JC ranked No. 401 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Salons by JC franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Salons by JC’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  74
• Outlets at the End of the Year:  82
• Net Change:  +8

2019

• Outlets at the Start of the Year:  82
• Outlets at the End of the Year:  89
• Net Change:  +7

2020

• Outlets at the Start of the Year:  89
• Outlets at the End of the Year:  102
• Net Change:  +13

Company-Owned

2018

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  10
• Net Change:  0

2019

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  10
• Net Change:  0

2020

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  10
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• Part 1 of this Item 19 discloses certain historical data regarding the premises and construction costs, as well as Gross Sales and certain other information, for the 95 franchised Salons by JC Businesses that were (a) open and actively operating as of December 31, 2020, and (b) leased and built out their respective Facility and provided Salons by JC with the requested data that is detailed in Part 1A (the “Part 1 Franchised Facilities”).

• Part 1A excludes 4 of the first franchised Salons by JC Businesses that are governed by a different form of franchise agreement that does not require them to report the relevant information to Salons by JC (the “Non-Reporting Franchisees”).

• Three franchised Salons by JC Businesses purchased the Facilities for their Salons by JC Businesses. Because of this, these three franchised Salons by JC Businesses are not included in Part 1A, but Salons by JC has included their Gross Sales information in Part 1B.

• Part 2 of this Item 19 discloses the average Gross Sales generated by the affiliate-owned Salons by JC Businesses (“Affiliate-Owned Facilities”). The Affiliate-Owned Facilities were open and operating throughout the entire 2020 calendar year.

• The Affiliate-Owned Facilities do not pay Royalty Fees, Fund Contributions, and are not subject to the Local Advertising Requirement, which a franchised Salons by JC Business will have to pay. Salons by JC does not currently charge the Technology Fee.

• The Affiliate-Owned Facilities included in this financial performance representation offer similar services and face a similar degree of competition anticipated for the franchised Salons by JC Businesses offered under the Franchise Disclosure Document.

• Part 3 of this Item 19 discloses the average tenant occupancy rate for all 10 Affiliate-Owned Facilities as of the end of 2020, as well as an average overall tenant occupancy rate for each Affiliate-Owned Facility.

Part 1A – Premises, Lease and Construction Cost and Gross Sales Information for Part 1 Franchised Facilities During the 2020 Calendar Year

Average

• Average Total Square Feet:  7,309
• Average Net Rent Per Square Foot:  $23.10
• Average Free Rent (Days):  113
• Average Free Rent Total Dollars:  $55,948.84
• Average Tenant Improvement Allowance:  $272,258.22
• Average Total Leasable Square Footage:  4,319
• Average Leasable Square Footage %:  59%
• Average Construction Cost Per Square Foot:  $103.31
• Average Gross Sales During 2020 Calendar Year:  $335,361.97

Median

• Median Total Square Feet:  7,122
• Median Net Rent Per Square Foot:  $21.00
• Median Free Rent (Days):  120
• Median Free Rent Total Dollars:  $41,835.00
• Median Tenant Improvement Allowance:  $249,000.00
• Median Total Leasable Square Footage:  4.236
• Median Leasable Square Footage %:  59%
• Median Construction Cost Per Square Foot:  $101.86
• Median Gross Sales During 2020 Calendar Year:  $334,255.50

Part 1B – Gross Sales for the 3 Franchised Facilities That Purchased Their Facility for the 2020 Calendar Year

• Facility No. 1 (Opened 2/12/2016):  $402,649.91
• Facility No. 2 (Opened 5/12/2016):  $589,726.71
• Facility No. 3 (Opened 12/5/2017):  $285,294.93

• “Total Square Feet” means the total amount of square feet that a given Part 1 Franchised Facility has under management, including: (i) portions of a premises that are leased as an individual suite to potential customers (each, a “Suite”); and (ii) all other square footage that makes up the Facility for the Part 1 Franchised Facility.

• “Net Rent Per Sq. Ft.” means the net rent charged per square foot under the lease for the premises of each Part 1 Franchised Facility. Net Rent for a given Part 1 Franchised Facility (i) does not account for the corresponding Free Rent or Tenant Improvement Allowance, if any, that the landlord provided to the franchise owner of that Facility (and as disclosed more fully in the table above), and (ii) is not the same as “triple net” rent.

• “Free Rent (Days)” means the number of days, if any, that the landlord for the premises of a given Part 1 Franchised Facility (each, a “Lessor”) agreed not to charge the owner of that Facility as part of the negotiations to incentivize the owner to enter into the lease.

• If a Part 1 Franchised Facility has Free Rent (Days), then the term “Free Rent Total Dollars” means the dollar value of the Free Rent over that number of Days, which is calculated by taking the applicable rent per day and multiplying it by the number of Free Rent (Days).

• “Tenant Improvement Allowance” means the total dollar amount that the Lessor for the premises of a given Part 1 Franchised Facility agreed to pay, contribute, or credit in connection with gross construction costs associated with building out that Facility as part of the negotiations to incentivize the franchise owner to enter into a lease for that premises.

• “Leasable Square Footage” for a given Part 1 Franchised Facility means the actual square footage at that Facility that can be leased/subleased to a third party (rather than the Total Square Footage).

• “Leasable Square Footage %” for each Part 1 Franchised Facility is calculated by taking the total Leasable Square Footage for that Facility, and dividing that figure by the Total Square Feet for that Facility.

• “Construction Cost Per Sq. Ft.” for a given Part 1 Franchised Facility is calculated by taking: (i) the gross construction costs incurred in connection with leasehold improvements made at that Facility, as well as costs incurred in connection with obtaining and/or installing fixtures, laundry room equipment (washers and dryers), break room equipment, vending machines, exterior signage, common area chairs, access key entry system, and standard office equipment at that Facility; and (ii) dividing this figure by the Total Square Feet for that Facility.

• Please be advised that these construction costs for the Part 1 Franchised Facilities were incurred prior to the time that Facility first opened and commenced operations. The gross construction costs that you incur in connection with building out your Salons by JC Business at this time may be higher due to inflation, increases in costs of labor/materials, and other factors.

• “Gross Sales” means the total revenue generated by your Salons by JC Business, including all revenue generated from leasing salon suites at your Facility and all amounts paid by Operators and/or their clientele for vending, laundry, and any other Approved Products or Approved Services offered at your Facility, whether such revenues are evidenced by cash, check, credit, charge, account, barter, or exchange.

• Gross Sales does not include the sale of products or services for which refunds have been made in good faith to customers, the sale of equipment used in the operation of the Salons by JC Business, any sales tax or other taxes collected from customers by you and paid directly to the appropriate taxing authority, or any reduction in revenue due to coupon sales.

Part 2 – Actual, Average, and Median Gross Sales During the 2020 Calendar Year for the 10 Affiliate-Owned Facilities

• Facility No. 1:  $338,684.15
• Facility No. 2:  $324,406.71
• Facility No. 3:  $556,989.12
• Facility No. 4:  $386,233.36
• Facility No. 5:  $622,329.21
• Facility No. 6:  $285,226.49
• Facility No. 7:  $230,551.59
• Facility No. 8:  $522,567.77
• Facility No. 9:  $389,862.05
• Facility No. 10:  $436,317.24
• Average Gross Sales:  $409,316.77
• Median Gross Sales:  $389,862.05

Part 3 – Tenant Occupancy Rate as of the End of 2020 and Average and Median Year-End Tenant Occupancy Rate for the 10 Affiliate-Owned Facilities

Facility 1

• Open Date:  9/1/1998
• Number of Suites:  40
• Tenant Occupancy Rate as of the End of 2020:  85%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  88.30%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  88.0%

Facility 2

• Open Date:  2/1/2000
• Number of Suites:  37
• Tenant Occupancy Rate as of the End of 2020:  78%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  89.85%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  91.89%

Facility 3

• Open Date:  5/1/2002
• Number of Suites:  56
• Tenant Occupancy Rate as of the End of 2020:  100%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  99.04%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  99.0%

Facility 4

• Open Date:  5/1/2004
• Number of Suites:  42
• Tenant Occupancy Rate as of the End of 2020:  93%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  91.82%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  92.86%

Facility 5

• Open Date:  6/1/2007
• Number of Suites:  55
• Tenant Occupancy Rate as of the End of 2020:  96%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  95.18%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  95.00%

Facility 6

• Open Date:  7/1/2010
• Number of Suites:  31
• Tenant Occupancy Rate as of the End of 2020:  81%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  86.04%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  84.00%

Facility 7

• Open Date:  12/1/2012
• Number of Suites:  32
• Tenant Occupancy Rate as of the End of 2020:  75%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  80.00%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  75.00%

Facility 8

• Open Date:  3/10/2014
• Number of Suites:  44
• Tenant Occupancy Rate as of the End of 2020:  100%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  90.24%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  88.00%

Facility 9

• Open Date:  12/2/2014
• Number of Suites:  44
• Tenant Occupancy Rate as of the End of 2020:  75%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  71.0%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  70.0%

Facility 10

• Open Date:  7/1/2011
• Number of Suites:  40
• Tenant Occupancy Rate as of the End of 2020:  93%
• Average Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  91.90%
• Median Year-End Tenant Occupancy Rate (for the Number of Years It Was Open):  92.00%

• The “Tenant Occupancy Rate” for each Affiliate-Owned Facility was calculated by taking the total number of Suites leased by that Facility as of December 31 of the calendar year, and dividing that number by the total number of Suites that Facility has available to lease at its respective Facility.

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