IMAGE Studios Franchise: Average Sales ($385K) vs. Cost ($868K-$1.74M)

In this exclusive Franchise Chatter 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 2023 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 2023 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 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the IMAGE Studios franchise opportunity

Section V – Presentation and analysis of IMAGE Studios’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 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 20 franchisee-owned IMAGE Studios salon suites businesses that were in operation from January 1 through December 31, 2022 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 cost after tenant improvement allowance, and total cost per studio equivalent for the 13 franchisee-owned IMAGE Studios salon suites businesses that were developed and built out in the 2022 year, all of which met IMAGE Studios’ reporting requirements, compared to 2022 total revenue of the 20 outlets disclosed in Part 1

• annual base rent, NNN/CAMS expenses, and free rent for the 13 franchisee-owned IMAGE Studios salon suites businesses that opened during the 2022 calendar year, all of which met IMAGE Studios’ reporting requirements, compared to 2022 total revenue of the 20 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 2023 FDD:

• Initial Franchise Fee:  $64,500
• 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:  $500 to $1,000
• Construction Project Management Fee:  $25,000
• Utility Deposits:  $0 to $3,500
• Architectural Plans and Engineering:  $15,150 to $36,080
• Licensing and Permits:  $3,500 to $32,640
• 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):  $1,500 to $5,500
• Additional Funds for 3 Months:  $35,000 to $75,000
• 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:  $868,150 to $1,747,370

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 2023 FDD:

• Franchise Fee:  $64,500
• Royalty:  5.5% of gross revenue, or $250 per week minimum, whichever is greater
• Brand Development Fund:  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

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

2022

• Outlets at the Start of the Year:  24
• Outlets at the End of the Year:  37
• Net Change:  +13

Company-Owned

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

2022

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

Section IV – News Updates on the IMAGE Studios Franchise

• IMAGE Studios Salon Suites Expands to 200 Territories Awarded Nationwide

• IMAGE Studios Salon Suites Shines Again, Now Into the Utah Business 2022 Fast 50 List

• IMAGE Studios Salon Suites Named as Top Influencers of 2022

• IMAGE Studios Salon Suites CEO Tops Franchise List

• IMAGE Studios Salon Suites Sees Explosive Growth Past 150 Locations

• IMAGE Studios Did Not Rank on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the IMAGE Studios Franchise (Item 19, 2023 FDD)

• The financial performance representations shown in the tables below contain the historical data for the 2022 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 20 franchisee-owned IMAGE Studios salons that were in operation from January 1 through December 31, 2022 and who met IMAGE Studios’ reporting requirements.

• The second table presents average construction cost information for the 13 outlets that were developed and built out in the 2022 year, all of which met IMAGE Studios’ reporting requirements, compared to 2022 total revenue of the 20 outlets disclosed in the first table.

• The third table presents average rent expense information for the 13 outlets that opened during the 2022 calendar year, all of which met IMAGE Studios’ reporting requirements, compared to 2022 total revenue of the 20 outlets disclosed in the first table.

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

• There was one company-owned outlet that opened in 2022 whose financial data is not included in the financial performance representations.

• 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 2022 Revenue and Net Income (Averages)

Total 2022 Revenue:  $385,848 (100.00%)

Key Operating Expenses

• Accounting:  $3,763 (0.98%)
• Advertising:  $7,116 (1.84%)
• Cleaning Supplies:  $1,319 (0.34%)
• Insurance:  $2,863 (0.74%)
• Janitorial:  $8,724 (2.26%)
• Legal:  $627 (0.16%)
• Office Supplies:  $2,451 (0.64%)
• Rent and NNN/CAMS Expense:  $146,541 (37.98%)
• Repairs and Maintenance:  $8,669 (2.25%)
• Utilities:  $18,920 (4.90%)
• Total Key Operating Expenses:  $200,992 (52.09%)

Net Before Royalties:  $184,856 (47.91%)

Royalty Expense

• Royalty Expense (5.5%):  $21,219 (5.50%)
• Brand Development Fund (2.0%):  $7,716 (2.00%)
• Total Royalty Expense:  $28,935 (7.50%)

2022 Net Income After Expenses:  $155,921 (40.41%)

• There were 20 IMAGE Studios salons that were open for the entire January 1 to December 31, 2022 reporting period and who met IMAGE Studios’ reporting requirements; 2 outlets were excluded because they did not report sufficient data and 16 outlets were excluded because they opened after January 1, 2023 or 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:  5,710
• Number of Studios:  28
• Hard Costs:  $839,950
• Hard Cost Per Square Foot:  $148
• Soft Costs:  $145,210
• Soft Cost Per Square Foot:  $26
• Furniture, Fixtures, and Equipment (FF&E):  $199,919
• FF&E Per Square Foot:  $35
• Total Construction Costs:  $1,185,080
• Total Construction Costs Per Square Foot:  $210
• Tenant Improvement Allowance (TIA) Amount:  $257,678
• TIA Amount Per Square Foot:  $45
• New Construction Cost After TIA:  $927,401
• New Construction Cost After TIA Per Square Foot:  $165
• Total Cost Per Studio Equivalent:  $34,168
• Total Revenue:  $385,848

• The Construction Costs and associated data used in the table above comes from those 13 IMAGE Studios salons that were developed and built out during the 2022 calendar year.

• The “Total Revenue” data comes from the 20 IMAGE Studios salons that were open for the entire January 1 to December 31, 2022 reporting period and who met IMAGE Studios’ reporting requirements, as disclosed in Part 1 above.

• “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 20 IMAGE Studios salons that were open for the entire January 1 to December 31, 2022 reporting period and who met IMAGE Studios’ reporting requirements.

Part 3 – Rent Expense and Total Revenue (Averages)

• Base Rent Annually:  $129,391
• Base Rent Per Square Foot:  $22.17
• NNN/CAMS Annually:  $35,232
• NNN/CAMS Per Square Foot:  $6.00
• Free Rent Days:  106
• Free Rent Value in Dollars:  $43,103
• Total Revenue:  $385,848

• The Rent Expense and associated data used in the table above comes from the 13 IMAGE Studios salons that opened during the 2022 calendar year.

• The “Total Revenue” data comes from the 20 IMAGE Studios salons that were open for the entire January 1 to December 31, 2022 reporting period and who met IMAGE Studios’ reporting requirements, as disclosed in Part 1 above; 25 outlets were excluded because they opened prior to December 31, 2021.

• “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 20 IMAGE Studios salons that were open for the entire January 1 to December 31, 2022 reporting period and who met IMAGE Studios’ reporting requirements.

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