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The beauty of it all

Industry’s looking healthy


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$6,100 — The amount the U.S. spends on health care per person each year.

$2,700 — The average amount spent by other leading industrialized countries per person each year.

31 — The percentage of Americans who are obese.

15 — The percentage of people considered obese on average in other industrialized countries.

Source: Health magazine, September 2007

Consumers who struggle to shed unwanted pounds, stave off the inevitable impact of aging and seek refuge at the spa from the stress of daily life are creating healthy opportunities for beauty and fitness franchises.

The fitness, beauty and spa industries are comprised of products and services from kick-butt workouts to soothing massages tailored to get us in shape mentally, physically and emotionally.

According to FranNet, a consultancy that matches would-be business owners with potential franchise opportunities, these concepts are among the hottest segments in franchising.

From corner barbershops to trendy nail salons, the number of people employed in the 313,000 beauty-related businesses jumped 24 percent from 1999 to 2003 to a whopping 1.6 million, according to the National Accrediting Commission of Cosmetology Arts and Sciences.

The Virginia-based trade group, which conducts its study every four years, also reported the number of workstations and chairs in the $56 billion professional salon industry jumped 9 percent while employee turnover decreased by 12 percent and new hires shot up 37 percent.
The industry’s earning power is significant too: according to the most recent research, full-time salaries averaged about $53,000 for salon owners and $36,000 for all other professionals within the business.

More than one-third of the licensed beauty salons and spas in the U.S. are franchise-related with initial fees ranging from less than $20,000 to close to $50,000, while capital requirements vary widely, from a low of about $30,000 to well over $1 million, according to industry leaders.

The average cost runs about $150,000 with royalty fees around 5 to 6 percent, similar to other segments of franchising.

Great Clips Inc., Glamour Secrets and Planet Beach Franchising Corporation, for instance, have all witnessed exponential growth in recent years, according to the International Franchise Association (IFA).

Great Clips has 2,600 franchise units that cost between $100,000 and $200,000 to start; Glamour Secrets has 72 units with start-up costs ranging from $80,000 to $110,000 and Planet Beach has 250 units that range from $133,000 to $470,000 to launch.

Pampering services also ranks high for Americans with healthy amounts of disposable income to spend.

The spa industry’s 14,000 facilities generate more than $9.7 billion in annual revenue, according to the International Spa Association (ISPA).

“Similar to restaurants, hotels and fitness centers, spas play a significant role in today’s culture,” said ISPA President Lynne Walker McNees.

“One in four American adults have been to a spa and know what they want from a quality spa experience,” said McNees. “The trends are being driven by educated spa-goers who actually see them as expectations.”

Hand & Stone Massage Spas has three units, with 100 planned openings for 2008.

Ken Stein, senior development manager for Hand & Stone Massage Spas in New York, believes people are seeking more than just a pampering visit. The franchise exec believes it has to do somewhat with overall health and wellness, which is a growing $10 billion industry.

“More than 2 million Americans received massages last year,” said Stein. “There is a real demand for affordable massage services.”

The lobby area of a Hand & Stone Massage Spa.

The American Massage Therapy Association agrees. The trade group found that 30 percent of Americans who rely on spas do so for medical reasons such as injury recovery and pain reduction.

Launched in 2004, Hand & Stone Massage Spas boasts its high-end luxury services, including hot stone treatments, at affordable rates. So far, the franchisor has three units, 14 under development and more than 100 planned openings for 2008.

The company says it will succeed by offering consumers flexible hours, convenient locations, introductory pricing and affordable membership rates along with a variety of packages.

Stein says franchise units range in size from 1,500- to 3,000-square feet and are located in shopping centers alongside popular retailers.

Each franchise unit, which costs between $187,000 and $389,000 to launch, employs a combination of customer service staff and experienced massage therapists.

The retail area of a Hand & Stone Massage Spa in New Jersey.

“We’re a feel-good business. And there is not a lot of moving parts like a fast-food franchise might have,” said Stein. “You go to the auto shop because your car needs to be repaired, but you’re probably not going to be happy with the price associated with fixing it. But you go to Hand & Stone Massage Spas to pamper yourself and don’t mind the low cost.”

Stein says Hand & Stone relies on its signature hot stone massage and repeat business for its significant revenue stream. The company also offers membership packages that start at $60 per month. Massage therapy can run from $39 on up for 50 minutes or more with a membership.

Maggie Brown opened a Hand & Stone Massage Spa in Arizona earlier this year and despite the growing number of day spas and luxury resort facilities in Scottsdale, the competition doesn’t worry her.  In fact, she is banking on the competition to succeed.

“Three new massage centers just opened within a mile of me and there are at least a half dozen high-end destination resorts near me that offer massage services,” said Brown.
“Our prices and menu of services appeals to a wide group of people,” she said. “We’re just another choice for the tourists that come here, but we’re an affordable option.”

Chris Bruno, Lite for Life CEO, sits in front of a rendering of Dr. Seale Harris, who developed the program on which Lite for Life is based.

Weight loss and fitness centers have benefited in recent years as consumers continue the never-ending quest for beauty and health.

With an estimated two-thirds of U.S. adults—and 15 percent of children—believed to be overweight, there is a strong incentive for health-related franchises to tap into the market.
One of the fastest growing fitness companies is Colorado-based Fitness Together, a chain of one-on-one personal training studios. The company was founded in 1996 and currently has 370 locations throughout the U.S. and a handful of other countries. It also deals in place to open another 160.

The initial investment for a Fitness Together franchise ranges from $150,450 to $201,700, including a $34,000 franchise fee. The royalty is 6 percent.

Another growing franchise is Lite for Life, which has 10 locations in Northern California and plans for 250 by 2010.

The company helps people lose weight by promoting healthy eating habits, active lifestyles and stable blood sugar. It was founded in 1978 by Maureen Sullivan. Her son, Chris Bruno, now runs the chain as its chief executive officer.

Tris Harms was already familiar with the diet market before she opened her Lite for Life franchise in San Carlos in 2004. A former customer of the chain, she traveled 25 minutes each direction for regular meetings with a counselor for her own health issues.

“People are not just losing weight because they want to look good, but because it’s a health issue later in life,” said Harms. “Our clients don’t want to face surgery or other problems later in life so they would rather deal with it now.”

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