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FDD Talk 2019: My Salon Suite/Salon Plaza Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

  • Section I – Background information on the My Salon Suite/Salon Plaza franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a My Salon Suite/Salon Plaza franchise, based on Item 7 of the company’s 2019 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a My Salon Suite/Salon Plaza franchise, based on Items 5 and 6 of the company’s 2019 FDD
  • Section IV – Number of franchised and company-owned My Salon Suite/Salon Plaza outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
  • Section V – Presentation and analysis of My Salon Suite/Salon Plaza’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
  • 2018 average occupancy, square footage, number of suites, income, general operating expense, rent expense, royalties, and EBITDA for the 40 franchisee and associate-owned My Salon Suite/Salon Plaza outlets that were open for at least one full year as of December 31, 2018 (5,000 SF and up, less than 5,000 SF, and all outlets)
  • 2018 average occupancy, square footage, number of suites, income, general operating expense, rent expense, royalties, and EBITDA for the 3 corporate-owned My Salon Suite outlets that were open for at least one full year as of December 31, 2018 (5,000 SF and up, less than 5,000 SF, and all outlets)
  • 2018 average occupancy, square footage, number of suites, income, general operating expense, rent expense, royalties, and EBITDA for the 19 affiliate-owned Salon Plaza outlets that were open for at least one full year as of December 31, 2018 (5,000 SF and up, less than 5,000 SF, and all outlets)
  • 2018 average occupancy, by maturity, for the 106 franchise, associate, corporate, and affiliate My Salon Suite/Salon Plaza units that were open and operating as of December 31, 2018

Section I – Background Information

22 Things You Need to Know About the My Salon Suite/Salon Plaza Franchise

Celebrates 100th Location Milestone

1.  In early November 2018, Suite Management Franchising, a salon suite franchise housing both My Salon Suite and Salon Plaza, announced its milestone achievement of reaching 100 open locations. The 100th location is owned and operated by Cheryl Cannon, Wade Dempsey, and JT Fauber of Richmond, Virginia. The 100th location shares the same opening date as the first My Salon Suite location in Metairie, Louisiana in 2010.

2.  Ken McAllister, CEO of Suite Management Franchising and president of My Salon Suite, said, “When we first launched in 2010, we knew this strong business model would thrive in markets across the country and officially hitting 100 locations proves just that. We’re inspired by everyone involved in taking Suite Management Franchising to this new level, from our members to our franchise partners. Together we have the ambition and expertise to continue this momentum for years to come.”

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3.  In the same press release, Suite Management Franchising said that it has plans to add 200 franchise partners and 300 My Salon Suite and Salon Plaza units over the next few years. Expanding at a rapid rate of one new location opening per week, My Salon Suite currently has 35 locations in development and 50 more in the site selection phase.

4.  The buildup to this significant milestone was honored specifically at the 2018 convention held in New Orleans. Themed “100 Reasons to Celebrate,” the convention highlighted the brand approaching the opening of its 100th location, and served as a special time for My Salon Suite and Salon Plaza franchise partners to recognize their exponential growth and achievements. From the start of 2018 to the date of the press release, the brand had opened 21 units and signed 18 new franchise partners.

Announces Partnership with St. Jude Children’s Research Hospital

5.  In mid-November 2018, Suite Management Franchising, the nation’s premier salon suite franchise housing both My Salon Suite and Salon Plaza, announced a partnership with St. Jude Children’s Research Hospital.

6.  Franchise partners of My Salon Suite and Salon Plaza now have an opportunity to give back to the community by opting into the Suite Relief Fund, which partly benefits St. Jude Children’s Research Hospital to give back and help families in need. Part of the Suite Relief Fund will also go to support Salon Plaza and My Salon Suite’s members in times of disaster or tragic life events.

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7.  My Salon Suite and Salon Plaza franchise partners who opt into the program will donate a monthly fixed amount to the collective fund. Members have the option to donate monthly into the fund as well. During the first year of rolling out the initiative, 100 percent of the donations will go to St. Jude Children’s Research Hospital. By the conference in February 2019, the brand had a goal of raising more than $50,000 for St. Jude.

8.  Ken McAllister, president of My Salon Suite, said, “We’re excited to launch our Suite Relief Fund and have a partner like St. Jude Children’s Research Hospital to give back to kids who need it the most. Not only will this fund give to a great cause, but part of the fund will also go to our own members who have fallen on hard times, and that show of support in our own system is crucial to us.”

9.  St. Jude Children’s Research Hospital is leading the way the world understands, treats, and defeats childhood cancer and other life-threatening diseases. It is the only National Cancer Institute-designated Comprehensive Cancer Center devoted solely to children. Treatments invented at St. Jude have helped push the overall childhood cancer survival rate from 20 percent to more than 80 percent since the hospital opened more than 50 years ago.

10.  St. Jude freely shares the discoveries it makes, and every child saved at St. Jude means doctors and scientists worldwide can use that knowledge to save thousands more children. Families never receive a bill from St. Jude for treatment, travel, housing, or food – because all a family should worry about is helping their child live.

11.  McAllister added, “As we look to surpassing 165 locations come the end of 2019, it’s important to us that we continue to find ways to support the communities we serve as well as our members who might find themselves in hard times. Introducing the Suite Relief Fund has given us an opportunity to come together as a whole franchise to do good. We look forward to watching the Suite Relief Fund develop as we expand our footprint across the country.”

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Celebrates 2018 Milestones and Looks Toward the Future at 2019 Annual Conference

12.  In early February 2019, Suite Management Franchising, the parent company of My Salon Suite and Salon Plaza, brought franchise partners together for its annual convention and awards ceremony. The three-day event was held from February 5 to 8 in Las Vegas, Nevada.

13.  Themed “A Full House,” the conference focused on the brands’ milestone of surpassing 100 locations. With plans in place to add more than 50 stores in 2019, franchisees, corporate staff, and vendor partners of My Salon Suite and Salon Plaza came together to celebrate the brands’ achievements and introduce new initiatives to support the growth, franchisee operations, and salon suite members.

14.  Ken McAllister, CEO of Suite Management Franchising and president of My Salon Suite, said, “Bringing everyone together is a powerful experience. We have a great team of franchise partners and corporate staff that together have built the brand to what it is today – opening a new location every week in 2019. The conference is a time to collaborate and learn from one another while sharing our plans and initiatives for the future. It’s a great time to be a part of the suite movement – we’re still just getting started.”

15.  Under Suite Management Franchising, there are more than 100 salon suite locations between My Salon Suite and Salon Plaza (at the time of the conference). In the past year, the brand has opened 38 new locations. Additionally in 2018, existing locations saw a record high in occupancy rates signaling the continued demand for salon suites.

16.  In addition to seeing significant growth in the past 12 months, the brand’s Net Promoter Score has increased by 11 points, bringing its score to a solid 82, which is well above average.

Company History

17.  My Salon Suite was founded in 2010 by hairstylists Al Ferrigno and Alan D’Alessandro in New Orleans, Louisiana. Ferrigno and D’Alessandro, who are affectionately called Al and Alan in the company’s official history, have a combined experience of 75 years in the salon industry. Before starting My Salon Suite with Ferrigno’s niece Alanna McAllister and her husband Ken, Ferrigno and D’Alessandro owned and operated over 40 traditional salon locations.

18.  The first My Salon Suite location was so popular that a second location was opened just down the street six months after the original salon suite opened its doors. Following the success of those two locations, a third My Salon Suite was opened in Sarasota, Florida. Franchising of the My Salon Suite concept officially started in 2012 and over the next few years, the brand grew slowly around the southern region of the United States.

19.  In 2015, My Salon Suite partnered with Ratner Companies, the nation’s largest family-owned collection of salons and the owners of Salon Plaza, to drive the expansion of My Salon Suite and Salon Plaza throughout North America.

20.  Ratner Companies was originally founded in 1974 by Dennis and Ann Ratner, who were both hairstylists. Like Ferrigno and D’Alessandro, the Ratners owned a number of salons, under the Hair Cuttery brand. After growing Hair Cuttery to hundreds of locations, the Ratners began acquiring smaller salon chains, including Salon Plaza.

21.  Today, My Salon Suite and Salon Plaza are franchised together under Suite Management Franchising. There are now My Salon Suite and Salon Plaza locations in over 13 U.S. states and Canada.

Entrepreneur’s Franchise 500

22.  My Salon Suite/Salon Plaza ranked No. 313 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of My Salon Suite/Salon Plaza franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on My Salon Suite/Salon Plaza’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Associates/Franchises

2016

  • Outlets at the Start of the Year:  27
  • Outlets at the End of the Year:  34
  • Net Change:  +7

2017

  • Outlets at the Start of the Year:  34
  • Outlets at the End of the Year:  45
  • Net Change:  +11

2018

  • Outlets at the Start of the Year:  45
  • Outlets at the End of the Year:  76
  • Net Change:  +31

Company-Owned

2016

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  2
  • Net Change:  0

2017

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  3
  • Net Change:  +1

2018

  • Outlets at the Start of the Year:  3
  • Outlets at the End of the Year:  4
  • Net Change:  +1

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

  • The following tables provide information regarding the average occupancy, square feet, number of suites, income, certain expenses, and net profit, as defined below.
  • Information is provided for all locations open one year or more, locations that are 5,000 square feet and larger, and locations less than 5,000 square feet.

Part 1 – Franchised Outlets and Associate Group

All Locations

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