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

• Section I – Estimated initial investment (franchise costs) for an IMAGE Studios franchise, based on Item 7 of the company’s 2022 FDD

• Section II – Initial franchise fee, royalty fee, and marketing fee for an IMAGE Studios franchise, based on Items 5 and 6 of the company’s 2022 FDD

• Section III – Number of franchised and company-owned IMAGE Studios outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

• Section IV – Background information on the IMAGE Studios franchise opportunity, including relevant news updates

• Section V – Presentation and analysis of IMAGE Studios’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average revenue, key operating expenses (accounting, advertising, cleaning supplies, insurance, janitorial, legal, office supplies, rent and NNN/CAMS expense, repairs and maintenance, utilities), royalty expense (royalty expense, brand development fund expense), and net income after expenses for the 16 franchisee-owned IMAGE Studios salon suites businesses that were in operation from January 1 through December 31, 2021 and who met IMAGE Studios’ reporting requirements

• average total square feet under lease, number of studios, hard costs, soft costs, furniture, fixtures and equipment, total construction costs, tenant improvement allowance amount, net construction costs after tenant improvement allowance, and total costs per studio equivalent for the 6 franchisee-owned IMAGE Studios salon suites businesses that were developed and built out in the 2021 year, all of which met IMAGE Studios’ reporting requirements, compared to 2021 total revenue of the 16 outlets disclosed in Part 1

• annual base rent, NNN/CAMS expenses, and free rent for the 25 franchisee-owned IMAGE Studios salon suites businesses that had signed a lease on or before December 31, 2021, all of which met IMAGE Studios’ reporting requirements, compared to 2021 total revenue of the 16 outlets disclosed in Part 1

• Section VI – Key ratios, comparables, computations, and analyses for the IMAGE Studios franchise opportunity (exclusive content for Platinum subscribers)

Section I – IMAGE Studios Franchise Costs

• IMAGE Studios franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $54,750
• Site Development Administration Fee:  $6,500
• Business Formation:  $1,000 to $3,000
• Rent/Real Estate (first month’s rent and security deposit):  $20,000 to $45,000
• Initial Floor Plan Layout:  $350 to $1,000
• Utility Deposits:  $0 to $3,500
• Architectural Plans and Engineering:  $15,150 to $34,000
• Licensing and Permits:  $3,500 to $23,000
• Leasehold Improvements:  $582,000 to $1,200,000
• Furniture, Fixtures, and Equipment:  $110,000 to $225,000
• Initial Training Expenses:  $0 to $2,500
• Computer Equipment:  $1,500 to $3,000
• Insurance (annual basis):  $1,200 to $3,500
• Additional Funds for 3 Months:  $35,000 to $50,000
• Miscellaneous Opening Costs and Grand Opening:  $1,500 to $5,000
• Advertising and Marketing for First 3 Months:  $6,000 to $18,000
• Operating Supplies:  $1,000 to $2,500
• Total Estimated IMAGE Studios Franchise Costs:  $839,450 to $1,986,250

Section II – IMAGE Studios’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• IMAGE Studios’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Franchise Fee:  $54,750
• Royalty:  5.5% of gross revenue, or $250 per week minimum, whichever is greater
• Brand Development Fund:  up to 2% of gross revenue
• Local Marketing Requirement:  $2,000 each month minimum, until you reach greater than 70% occupancy. The minimum will reduce to $400 per month after you reach greater than 70% occupancy.

Section III – Number of Franchised and Company-Owned IMAGE Studios Outlets

Franchised

2019

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  10
• Net Change:  +3

2020

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  23
• Net Change:  +13

2021

• Outlets at the Start of the Year:  23
• Outlets at the End of the Year:  24
• Net Change:  +1

Company-Owned

2019

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

2020

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

2021

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

Section IV – Background Information on the IMAGE Studios Franchise

11 Things You Need to Know About the IMAGE Studios Franchise

Sells More Than 150 Locations

1.  In mid-January 2022, IMAGE Studios reached an important milestone awarding its 150th location, opening 16 new markets and 6 new states. Jason Olsen, founder and CEO of IMAGE Studios, said, “We are a unique real estate investment opportunity, attracting the highest caliber franchisees from coast to coast. In 2021, IMAGE opened locations across Colorado, Florida, Texas, North Carolina, Tennessee, Oregon, and Utah. 2022 will see an additional 40 locations open, with Ohio, New Jersey, Kentucky, Wisconsin, Georgia, and Missouri welcoming their first IMAGE locations. We appreciate every IMAGE Owner who joins this incredible journey with us!”

2.  With 150+ locations in development, 2022 is another monumental year for IMAGE Studios. Shaun Olsen, founder and vice president of IMAGE Studios, stated, “Each IMAGE Studios location equates to 30 new entrepreneurs opening their business in their communities, most of which are women-owned businesses. We will continue to invest heavily in the future of our IMAGE Professionals, which not only helps them open their own business successfully, but also with ease. We’re excited to welcome thousands of entrepreneurs to IMAGE Studios!”

3.  IMAGE recently announced the growth of its leadership and support team with the addition of a vice president of operations, expanded construction project management, and a doubling of the franchise development team. COO Taylor Lamont celebrated, “IMAGE has experienced transformative growth, awarding 66 locations in 2021 alone! IMAGE Owners and Professionals alike have the support and education to empower them to the next level of their careers. We design modern salon suites that elevate our professionals’ entrepreneur experience – with business training, community, and support offered every step of the way.”

Ranked on Inc. Magazine’s Annual List of Best Workplaces for 2022

4.  In mid-May 2022, IMAGE Studios announced that it had been named to Inc.’s annual Best Workplaces list. The list results from a comprehensive measurement of American companies that have excelled in creating exceptional workplaces and company culture, whether operating in a physical or virtual facility.

5.  IMAGE Studios recently opened its new corporate experience center and HQ in Salt Lake City, bringing together its highly passionate and talented corporate leaders. The brand is shaping the future of entrepreneurs in the beauty, health, and wellness industries. Team members’ insights, support, and innovation empower the nationwide group of franchisees and the local small business owners at each of the locations.

6.  After collecting data from thousands of submissions, Inc. announced the highest-ranking companies. Each company that was nominated took part in an employee survey, conducted by Quantum Workplace, which included topics such as management effectiveness, perks, fostering employee growth, and overall company culture. The organization’s benefits were also audited to determine overall score and ranking.

7.  Jason Olsen, founder and CEO of IMAGE Studios, celebrated, “This is an impressive recognition and speaks to the caliber of our team and company culture. At IMAGE, we firmly believe in the power of creating “space” – space for connection, space for support, space for beauty, and above all, space to be yourself. Our people are paramount to our success, and our collective vision, internal connections, and corporate environment nurture and evolve the culture at IMAGE.”

8.  Taylor Lamont, COO of IMAGE Studios, commented, “The focus at IMAGE is on our people, diversity, culture, ideas, and the investment in our employees. Every layer of our company is entrenched in support, education, and empowerment, from our professionals to owners, to employees. IMAGE is best-in-class in training and professional development so our employees can thrive in success and fulfillment in their careers. I am so proud of our people and what we’ve created together.”

Company History

9.  IMAGE Studios was founded in 2009 by brothers Jason and Shaun Olsen in Salt Lake City, Utah. The Olsens decided to open a co-working salon space after realizing that many hairstylists and beauty professionals were interested in starting their own business but lacked the resources and business background to get started. A year after developing a business plan, the Olsens opened the first IMAGE Studios salon suite space in Draper, Utah.

10.  Following the success of the first location, the Olsens continued to open more salons around Utah. In 2015, the Olsens began franchising the IMAGE Studios concept and by 2019, the company sold more than 100 franchises. Despite selling so many franchises, there are only a few dozen IMAGE Studios locations currently in operation around the U.S.

Entrepreneur’s Franchise 500

11.  IMAGE Studios did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the IMAGE Studios Franchise (Item 19, 2022 FDD)

• The financial performance representations shown in the tables below contain the historical data for the 2021 calendar year for certain franchisee-owned IMAGE Studios salons who met IMAGE Studios’ reporting requirements.

• The first table shows average information for total revenue and net income after key operating expenses and royalty expenses during the reporting period for the 16 franchisee-owned IMAGE Studios salons that were in operation from January 1 through December 31, 2021 and who met IMAGE Studios’ reporting requirements.

• The second table presents average construction cost information for the 6 outlets that were developed and built out in the 2021 year, all of which met IMAGE Studios’ reporting requirements, compared to 2021 total revenue of the 16 outlets disclosed in the first table.

• The third table presents average rent expense information for 25 outlets that had signed a lease on or before December 31, 2021, all of which met IMAGE Studios’ reporting requirements, compared to 2021 total revenue of the 16 outlets disclosed in the first table.

• See the notes following the tables for additional information.

• These IMAGE Studios salons are located in urban or suburban areas.

• The data comes from actual historical financial performance information reported to IMAGE Studios by its franchisees. Note that these figures have not been audited or prepared in accordance with generally accepted accounting standards and do not meet professional or other standards for complete financial statements.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

Part 1 – Total 2021 Revenue and Net Income (Averages)

Total 2021 Revenue:  $373,779 (100.00%)

Key Operating Expenses

• Accounting:  $4,247 (1.14%)
• Advertising:  $7,299 (1.95%)
• Cleaning Supplies:  $1,373 (0.37%)
• Insurance:  $2,827 (0.76%)
• Janitorial:  $8,240 (2.20%)
• Legal:  $442 (0.12%)
• Office Supplies:  $2,609 (0.70%)
• Rent & NNN/CAMS Expense:  $141,650 (37.90%)
• Repairs and Maintenance:  $6,620 (1.77%)
• Utilities:  $17,135 (4.58%)
• Total Key Operating Expenses:  $192,442 (51.49%)

Net Before Royalties:  $181,336 (48.51%)

Royalty Expense

• Royalty Expense (5.5%):  $20,558 (5.50%)
• Brand Development Fund (2.0%):  $7,476 (2.00%)
• Total Royalty Expense:  $28,033 (7.50%)

2021 Net Income After Expenses:  $153,303 (41.01%)

• There were 16 IMAGE Studios salons that were open for the entire January 1 to December 31, 2021 reporting period and who met IMAGE Studios’ reporting requirements; 2 outlets were excluded because they did not report sufficient data and 5 outlets were excluded because they left the system during the reporting period.

• “Total Revenue” consists of all receipts derived by a salon from gross rental receipts and other revenue, whether the receipts are evidenced by cash, credit, checks, services, property, or other means of exchange.

• “Key Operating Expenses” include the primary and material expenses that IMAGE Studios salons incur in the operation of their franchised business.

• “Royalty Expense” is the 5.5% Royalty Fee and 2.0% Brand Development Fee that you will be required to pay to IMAGE Studios according to your Franchise Agreement.

• “Net Income After Expenses” is calculated by subtracting the Total Key Operating Expenses and the Total Royalty Expense from Total Revenue.

• The current Royalty amount is 5.5% and the current amount for the Brand Development Fund is up to 2%.

• IMAGE Studios has imputed the 5.5% Royalties and 2% Brand Development Fund contributions for all salons in the table, though some of these franchised salons did not actually pay this amount. You will be expected to pay the Royalties and Brand Development Fund contributions required in your Franchise Agreement.

• IMAGE Studios allowed some franchisees whose data was used to create this table to spend less than the minimum local marketing expenditures. You will be expected to meet your local marketing requirements.

Part 2 – Construction Costs and Total Revenue (Averages)

• Total Square Feet Under Lease:  5,414
• Number of Studios:  30
• Hard Costs:  $745,899
• Hard Cost Per Square Foot:  $138.59
• Soft Costs:  $133,924
• Soft Cost Per Square Foot:  $28.75
• Furniture, Fixtures, and Equipment (FF&E):  $154,403
• FF&E Per Square Foot:  $30.45
• Total Construction Costs:  $1,051,880
• Total Construction Costs Per Square Foot:  $195.36
• Tenant Improvement Allowance (TIA) Amount:  $254,319
• TIA Amount Per Square Foot:  $47.66
• New Construction Cost After TIA:  $797,561
• New Construction Cost After TIA Per Square Foot:  $147.82
• Total Cost Per Studio Equivalent:  $26,734
• Total Revenue:  $373,779

• The Construction Costs and associated data used in the table above comes from those 6 IMAGE Studios salons that were developed and built out during the 2021 calendar year.

• The “Total Revenue” data comes from the 16 IMAGE Studios salons that were open for the entire January 1 to December 31, 2021 reporting period and who met IMAGE Studios’ reporting requirements; 2 outlets were excluded because they did not report sufficient data and 5 outlets were excluded because they left the system during the reporting period.

• “Hard Costs” consist of all leasehold improvements less furniture, fixtures, and equipment.

• “Soft Costs” consist of architectural, engineering, permitting, general contractor overhead and profit, insurance, etc.

• “FF&E” is furniture, fixtures, and equipment, which also includes signage.

• “Total Construction Costs” is Hard Costs plus Soft Costs plus FF&E.

• “TIA Amount” is “Tenant Improvement Allowance” dollars that may be given by the landlord to assist franchisees with their buildout costs.

• “Total Cost Per Studio Equivalent” is the total net construction cost after TIA divided by the total number of studios for each location.

• “Total Revenue” consists of all receipts derived by a salon from gross rental receipts and other revenue, whether the receipts are evidenced by cash, credit, checks, services, property, or other means of exchange. This data comes from the 16 IMAGE Studios salons that were open for the entire January 1 to December 31, 2021 reporting period and who met IMAGE Studios’ reporting requirements.

Part 3 – Rent Expense and Total Revenue (Averages)

• Base Rent Annually:  $102,047
• Base Rent Per Square Foot:  $20
• NNN/CAMS Annually:  $31,660
• NNN/CAMS Per Square Foot:  $6
• Free Rent Days:  144
• Free Rent Value in Dollars:  $52,202
• Total Revenue:  $373,779

• The Rent Expense and associated data used in the table above comes from the 25 IMAGE Studios salons that signed a lease on or before December 31, 2021.

• The “Total Revenue” data comes from the 16 IMAGE Studios salons that were open for the entire January 1 to December 31, 2021 reporting period and who met IMAGE Studios’ reporting requirements; 2 outlets were excluded because they did not report sufficient data and 5 outlets were excluded because they left the system during the reporting period.

• “Base Rent” means the standard monthly amount that a franchisee must pay to the landlord for base rent according to the relevant lease.

• “NNN/CAMS” refers to property tax, insurance, and common area maintenance fees and costs that franchisees must pay or share according to the relevant lease.

• “Free Rent” is sometimes given by landlords to tenants and is usually negotiated for a period to cover the time it takes to construct the salon. Free Rent value in dollars is the amount of rent expenses not charged to the tenant during the free rent period (if applicable) during the initial term of their lease agreement.

• “Total Revenue” consists of all receipts derived by a salon from gross rental receipts and other revenue, whether the receipts are evidenced by cash, credit, checks, services, property, or other means of exchange. This data comes from the 16 IMAGE Studios salons that were open for the entire January 1 to December 31, 2021 reporting period and who met IMAGE Studios’ reporting requirements.

Section VI – IMAGE Studios Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️