FDD Talk 2021: Massage Heights 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 Massage Heights franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Massage Heights 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 Massage Heights franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Massage Heights 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 Massage Heights’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average annual gross revenue, annual gross revenue per treatment area, member base (as of December 31, 2020), and annual service units for the 95 franchised Massage Heights locations that (a) were in operation for 12 months or longer as of December 31, 2020; and (b) were operating a Retreat with at least eight treatment areas for the period from January 1, 2020 to December 31, 2020

• 2019 average annual gross revenue, annual gross revenue per treatment area, member base (as of December 31, 2019), and annual service units for the 102 franchised Massage Heights locations that (a) were in operation for 12 months or longer as of December 31, 2019; and (b) were operating a Retreat with at least eight treatment areas for the period from January 1, 2019 to December 31, 2019

• 2021 initial reporting period (January 1 to April 15, 2021) average gross revenue, gross revenue per treatment area, member base (as of April 15, 2021), and annual service units for the 95 franchised Massage Heights locations that (a) were in operation for 12 months or longer as of July 31, 2021; and (b) were operating a Retreat with at least eight treatment areas

• 2021 extended reporting period (January 1 to July 31, 2021) average gross revenue, gross revenue per treatment area, member base (as of July 31, 2021), and annual service units for the 95 franchised Massage Heights locations that (a) were in operation for 12 months or longer as of July 31, 2021; and (b) were operating a Retreat with at least eight treatment areas

Section I – Background Information

17 Things You Need to Know About the Massage Heights Franchise

Announces Top Performers at Annual Conference in Miami

1.  In early January 2020, Massage Heights held its annual conference in Miami Beach, Florida, where top performing franchisees were awarded for their significant accomplishments and contributions throughout the year. Shane Evans, co-founder and chief executive officer of Massage Heights, said, “It’s always an amazing experience when we’re all able to come together and celebrate each other’s accomplishments. Without the passion and commitment from our Strategic Partners and their employees, we wouldn’t be where we are today, and it’s important to recognize the hard work that each of our incredible team members apply to their businesses every day.”

2.  Top award winners included:

• Strategic Partner of the Year Award – Jen Burlington, owner of Massage Heights Leon Springs, Massage Heights Bandera, and Massage Heights Alamo Heights: This award is presented to the top-performing franchise owner who shows consistent growth, strong Retreat performance, and great commitment to the system in helping other strategic partners and corporate initiatives.

• Rookie of the Year Award – Joe Terracina & Group, owner of Massage Heights Mueller: This award is presented to the top-performing strategic partner who had the highest KPI’s for Retreats that have been open for less than one full year.

• Hall of Fame Award – Brad and Lisa Moore, co-owners of Massage Heights Centerra: This award is presented to the top-performing strategic partner who received the highest revenue over the year.

3.  As part of its growth strategy, Massage Heights is targeting franchise development in Nashville, Chicago, St. Louis, South Florida, and Las Vegas. Prospective franchisees should have $175,000 in liquid assets and a minimum net worth of $400,000 per location, as well as experience in sales or retail management and managing hourly wage employees.

New Location

4.  Despite the ongoing COVID-19 pandemic, Massage Heights continues to open new locations in the U.S. One of its most recent openings was in Alamo Ranch, Texas in late October 2020. The Alamo Ranch location marks the brand’s 52nd retreat in the state and highlights the brand’s overall mission to elevate the mind, body, and spirit of its guests.

5.  To celebrate its grand opening, the Alamo Ranch Retreat offered $35 1-hour custom massages and membership specials for the first 90 days, which includes free hot stone therapy for a year, plus three complimentary 1-hour massages when you become a member.

6.  Massage Heights Alamo Ranch is owned and operated by first-time franchisees Mike and Tammy Busch. Mike currently works for an IT company and before joining the Massage Heights family, Tammy was a registered nurse. The duo made the transition to own a Massage Heights Retreat full-time when they discovered the same passion to help others.

7.  According to Tammy Busch, “We fell in love with the brand when we became members several years ago, and are thrilled to join the Massage Heights family. People need self-care now more than ever, and we’re excited to safely introduce the brand to the Alamo Ranch community and share our passion to elevate the lives of others. Alamo Ranch is booming in population and has so much potential. We can’t wait to share our mission with this thriving community.”

Celebrates Massage Heights Women

8.  In early March 2020, around International Women’s Day, Massage Heights joined the world in celebrating women’s achievements and helping to forge a gender equal world. In a blog post, Massage Heights said that it was fortunate to have inspiring female leaders, franchisees, and team members who have helped to make Massage Heights the great brand that it is today. Massage Heights wanted to give special recognition to a few of the many women who have worked hard to be successful business owners and entrepreneurs and those who make Massage Heights a welcoming environment for all women to be a part of.

9.  Having a predominantly women-owned business is a great advantage because it’s the synonymous passion that is felt for helping others that motivates each franchise owner to work hard. To Kasey Kohtala, owner of Massage Heights Decatur, this passion was apparent. “I loved the vibe, the people, the teams, the culture, the vision…all of it. And I loved that the founder was also a woman – and not a rich woman to start with and here she had built an empire!”

10.  Being passionate and compassionate is what drives Massage Heights owners to do more for members and guests and find the best ways to help people heal and feel better. Jen Burlington who owns three locations in San Antonio, Texas was recognized in 2019 for being the top-performing franchise owner who shows consistent growth, strong Retreat performance, and great commitment to Massage Heights and for helping other owners.

11.  Shane Evans, co-founder and CEO of Massage Heights, said, “Without the passion and commitment from our Strategic Partners and their Team Members, we wouldn’t be where we are today. It’s important to recognize the hard work that each of our incredible team members apply to their businesses every day.”

12.  Massage Heights opened three new locations that are co-owned and operated by women during the first few months of 2020. One of the newest being Massage Heights North Thornton located in Thornton, Colorado owned by Manda Watkins and Ben Heinz. “We’ve wanted to own our own business for years and after researching Massage Heights further and meeting with the corporate team, the choice was obvious to us,” said Manda Watkins, owner of Massage Heights North Thornton.

13.  One of the most important things in a national brand is that each woman supports one another and lifts each other up. Manda Watkins had a successful grand opening in February of 2020 that was assisted by Colorado franchisee Lisa Moore, who owns three Retreats, and area director Emily Bratten.

14.  After almost 16 years of hard work and franchising, Shane Evans has turned her first Massage Heights location into a successful franchise brand that has over 135 locations nationwide and that is made up of ~63% female business owners. Massage Heights has been able to positively impact millions of lives and without all of the women at this company and all of its great female owners, Massage Heights would not be where it is today.

Company History

15.  Massage Heights was founded in 2004 by Shane Evans and her husband Wayne in San Antonio, Texas. Shane Evans got the idea to start an affordable massage therapy business after she injured her back when she was 20 years old. After trying other methods to alleviate her pain, Evans turned to massage therapy, but was unsatisfied by the massage she received and its $200 price tag. Evans then decided that a membership concept was the best way to expand this type of pain-management solution and make massage therapy accessible to more people.

16.  After writing up her own business plan, Evans opened the first Massage Heights. Less than a year later, Evans opened a second location and continued to open additional Massage Heights in the San Antonio, Texas area over the next few years. Eventually, Evans started franchising the Massage Heights concept and brought in other members of her family to help her run the business. Today, there are Massage Heights locations across the U.S. and Canada.

Entrepreneur’s Franchise 500

17.  Massage Heights did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Massage Heights 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 Massage Heights’ 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:  134
• Outlets at the End of the Year:  128
• Net Change:  -6

2019

• Outlets at the Start of the Year:  128
• Outlets at the End of the Year:  121
• Net Change:  -7

2020

• Outlets at the Start of the Year:  121
• Outlets at the End of the Year:  108
• Net Change:  -13

Company-Owned

2018

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  4
• Net Change:  +2

2019

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

2020

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

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

• This Item 19 provides historical financial information for franchised Massage Heights Businesses (“Franchised Locations”) that operate under Massage Heights’ current System.

• In 2019, Massage Heights implemented a new layout model that reduces the footprint of its Retreat. All franchises sold under the current Franchise Disclosure Document will operate under this new layout.

• Massage Heights has excluded Franchised Locations with less than eight treatment areas from the reporting groups described below, because under its current layout model, Retreats will have at least eight treatment areas.

• The financial performance information in this Item 19 was prepared from sales records and reports of the Franchised Locations in the 2021 Reporting Group, 2020 Reporting Group, and 2019 Reporting Group (collectively, “Reporting Groups”). The numbers have not been audited but Massage Heights has no reason to doubt their accuracy.

Part 1 – Average Gross Revenue and Other Selected Statistics for the 2020 Reporting Group During the 2020 Reporting Period

• As of December 31, 2020, Massage Heights had 108 Franchised Locations.

• This Item 19 also provides a historical financial performance representation for the 95 Franchised Locations that (a) were in operation for 12 months or longer as of December 31, 2020; and (b) were operating a Retreat with at least eight treatment areas (“2020 Reporting Group”) for the period from January 1, 2020 to December 31, 2020 (“2020 Reporting Period”).

• A total of 17 Franchised Locations that closed during the 2020 Reporting Period have been excluded from the 2020 Reporting Group.

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