Owning a Franchise: 5 Things to Know about Spa Franchise Ownership - MassageLuXe

Owning a Franchise: 5 Things to Know about Spa Franchise Ownership

Owning a franchise is a great way for entrepreneurs to enjoy business ownership with support that increases the likelihood of success. Franchising is an excellent fit for many, and fully understanding the opportunity is crucial as you evaluate business ownership.

What is a Franchise

It’s important to have a comprehensive understanding of what a franchise is. The franchise business model allows a franchisee to operate a ready-made business. The initial franchise fee is essentially the entry fee paid to have the rights to use the franchise brand’s operating systems, trademark, logos, and business model. In exchange, the franchisor provides extensive training to get the franchisee’s location up and running and provides ongoing support. The franchisor is dedicated to the success of its franchisees in order to expand the brand. While there are no guarantees in business, becoming a franchisee does set you up for success with less risk since you have a tested and proven business model to utilize.

Step 1 – Do Your Homework

There are thousands of possible franchise industries to choose from, and you want to lock into a business that you’re excited about, aligns with your interests and beliefs, and is within your skillset. It’s always advantageous to have some business acumen. As you narrow your search, you may want to study recent trends to find a sector with strong growth and profitability.

You will want to have a few target areas in mind that you believe may be successful areas for the franchise you are evaluating. The franchisor will assist you in finding the exact location for your business.

Step 2 – Review the FDD

You will want to review the franchise brand’s franchise disclosure document, also known as the FDD in great detail. This is a legal document that a franchisor must disclose to a prospective franchisee before a franchise may be sold. This document discloses pertinent information about the franchisor, fees, and the legal relationship between franchisor and franchisee. It’s very important to fully understand the intricacies of the company before you sign a franchise agreement — which is your contract — this is a long-term agreement, often 10 years, so understand what you are committing to. That not only means finances and longevity with the franchise but also understanding what your role is. Some franchises insist that the owner work full-time in the operation, others can oversee the business, or some may just be silent partners using the franchise as an investment.

Step 3 – Understand Financials

Business is about the bottom line. Another part of your research needs to be around business performance and financials. It’s in your best interest to understand the total cost of the franchise you are considering, and the financing options that are available for you. Refer to the item 7 of the franchise agreement to see a breakdown of fees, cost of construction and other costs that you may incur. Typically, franchisees will work with a lender to obtain financing for their location. This means your financial history will be checked along with your credit score. Most franchises will require knowing your available liquid cash and will set a minimum net worth standard. Many franchisors include spa performance and performance capabilities in the Item 19 of the FDD. These numbers serve as a resource for you as you start to build out your business plan and can assist you as you evaluate the opportunity.

Step 4 – Know the Franchise’s History

Study the franchise’s history. Research the growth rate, how many new franchise locations have been opened, and how many closed. Take the time to understand how the franchise has positioned themselves over the years and how they differentiate themselves against the competition. The FDD lists the contact information for current franchisees in the system. Reach out them to get their opinion on how the franchise operates and any challenges they have had.

Step 5 – Understand All the Fees

Alongside the estimated cost to get the business open, it’s important that you understand the upfront and ongoing fees the Franchisor requires. Franchises typically charge an upfront fee and then ongoing fees once the franchise location is open. These vary by brand and industry. This franchise fee is typically included in the estimated cost to open the franchise. The franchise fee is paid to cover the guidance and support you will need while getting your franchise open.

There is also a royalty fee paid to the franchisor for the use of the business model. Franchise royalties are usually collected by your franchisor on a monthly basis and based on the percentage of your revenue. They may range from 4% to 12%.

In addition to the royalty fee, there is often a marketing spend requirement or marketing ad fund fee. This fee is usually based on your monthly revenue, although some franchisors have a set fee. For instance, you may pay a 2% fee on your monthly gross income. These dollars go towards driving traffic to your location.

Be sure to spend time comparing the Item 7 in the franchise disclosure document to other options you are evaluating and to fully understand what support you are to receive in exchange for these costs.

Franchising with MassageLuXe

MassageLuXe franchisees are contributing to the health and wellness of their clients by providing a relaxing massage in a beautiful spa setting — but massage is more than that. For many people, massage has positive effects reducing physical pain and stress. Now, more and more people are recognizing the health benefits of massage, which means the demand for massage services is growing, turning massage into a $16 billion industry in the United States. Owning a spa franchise is not just a lucrative business venture compared with other businesses, there is that undeniable element of helping people improve their health that takes the experience to a higher level.

As you learn more about us, you’ll see that MassageLuXe pioneered membership-based massage and facial services. Franchisees have a quick ramp-up, with early profit opportunities thanks to an expanding service line, product offerings, and top-notch grand opening marketing support.

MassageLuXe has an established business model, but you’re in the driver’s seat. The success of your MassageLuXe stems directly from your work and effort. Being your own boss means a greater independence and pride in the business you will build. As your franchisor, it’s our job to help to provide a playbook for your business.

If you are ready to take the next step in satisfying your entrepreneurial dreams of business ownership in a growing field that’s also providing wellness to your patrons, then request more information or fill out the form below, and let’s get the ball rolling.

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