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

Section I – Estimated initial investment (franchise costs) for a Phenix Salon Suites franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Phenix Salon Suites franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned Phenix Salon Suites outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the Phenix Salon Suites franchise opportunity

Section V – Presentation and analysis of Phenix Salon Suites’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 average, median, highest, and lowest gross revenue for the 133 franchised Phenix Salon Suites locations that were open for the entire fiscal year ended December 31, 2023 and responded to Phenix’s request for information with respect to gross revenues and adjusted EBITDA

• 2023 average, median, highest, and lowest adjusted EBITDA for the 133 franchised Phenix Salon Suites locations that were open for the entire fiscal year ended December 31, 2023 and responded to Phenix’s request for information with respect to gross revenues and adjusted EBITDA

• average, median, highest, and lowest occupancy rate and number of suites as of December 31, 2023 for the 195 franchised Phenix Salon Suites locations that were open for the entire fiscal year ended December 31, 2023 and responded to Phenix’s request for information with respect to occupancy rates

• 2023 average gross revenue and adjusted EBITDA for the 133 franchised Phenix Salon Suites locations that were open for the entire fiscal year ended December 31, 2023 and responded to Phenix’s request for information with respect to gross revenues and adjusted EBITDA, grouped by salon size (less than 4,500 square feet, 4,501 to 6,000 square feet, greater than 6,000 square feet, and total)

• average occupancy rate as of December 31, 2023 for the 195 franchised Phenix Salon Suites locations that were open for the entire fiscal year ended December 31, 2023 and responded to Phenix’s request for information with respect to occupancy rates, grouped by salon size (under 4,500 square feet, 4,501 to 6,000 square feet, greater than 6,000 square feet, and total)

• 2022 and 2023 average and median annual gross revenue, adjusted EBITDA, and occupancy (as of December 31) for those Phenix Salon Suites locations reporting over each respective period

Section VI – Key ratios, comparables, computations, and analyses for the Phenix Salon Suites franchise opportunity (exclusive content for Platinum subscribers)

Section I – Phenix Salon Suites Franchise Costs

• Initial Franchise Fee:  $52,500
• Site Evaluation Fee:  $3,000
• Real Estate/Rent (first 3 months’ rent, plus security deposit):  $43,711
• Architectural Plans:  $14,713
• Mechanical and Engineering Plans:  $18,637
• Architectural Plan Review Fee:  $3,500
• Engineering Plan Review Fee:  $3,500
• Construction Management Fee:  $6,500
• Utility Deposits:  $5,000
• Leasehold Improvements:  $1,295,312
• Initial Marketing Expenses:  $10,000
• Computer:  $2,000
• Phenix TV:  $1,500
• Furniture, Fixtures, Equipment, Interior Signs, and Furnishings:  $105,432
• Exterior Signs:  $10,476
• Annual Meeting of Franchisees:  $1,699
• Training Expenses (out-of-pocket costs for 2 people):  $1,100
• Insurance (first 3 months):  $1,500
• Professional Fees:  $10,000
• Licenses, Permits, and Business Formation:  $13,509
• Gina’s Platform (including first 3 months of service):  $850
• Additional Funds (first 3 months):  $29,763.94
• Total Estimated Phenix Salon Suites Franchise Costs:  $1,634,201
• Landlord Contributions:  ($353,418)
• Adjusted Estimated Phenix Salon Suites Franchise Costs:  $1,280,785

Section II – Phenix Salon Suites’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $35,000 to $52,500
• Royalty:  $0.33 per square foot
• National Brand Fee:  $0.06 per square foot
• Local Advertising:  $1,000 per month

Section III – Number of Franchised and Company-Owned Phenix Salon Suites Outlets

Franchised

2021

• Outlets at the Start of the Year:  285
• Outlets at the End of the Year:  307
• Net Change:  +22

2022

• Outlets at the Start of the Year:  307
• Outlets at the End of the Year:  326
• Net Change:  +19

2023

• Outlets at the Start of the Year:  326
• Outlets at the End of the Year:  361
• Net Change:  +35

Company-Owned

2021

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  7
• Net Change:  +1

2022

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  15
• Net Change:  +8

2023

• Outlets at the Start of the Year:  15
• Outlets at the End of the Year:  18
• Net Change:  +3

Section IV – News Updates on the Phenix Salon Suites Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Phenix Salon Suites Franchise (Item 19, 2024 FDD)

• The charts below show the annual gross revenue and adjusted EBITDA, occupancy rates, and operating results for fiscal year ended December 31, 2023 (the “Measurement Period”) for certain franchise locations.

• There were 361 franchised outlets open and operating as of December 31, 2023. Of those franchised outlets, Phenix has excluded 37 franchised outlets that opened during 2023 and thus were not open for the entire Measurement Period. Therefore, there are 324 eligible franchised locations for inclusion in Item 19 (“Eligible Franchised Locations”)..

• Additionally, Phenix relies on its franchisees to provide it the data it needs to include in this Item 19. Of the Eligible Franchised Locations, this Item 19 discloses the results of 133 franchised locations that responded to Phenix’s request for information with respect to gross revenues and adjusted EBITDA (the “Disclosed Financial Locations”).

• Of the Eligible Franchised Locations, this Item 19 discloses the results of 195 franchised locations that responded to Phenix’s request for information with respect to occupancy rates (the “Disclosed Occupancy Locations” and with the Disclosed Financial Locations, collectively referred to as the “Disclosed Locations”).

Part 1 – Annual Gross Revenue (of Disclosed Financial Locations)

• Part 1 below reflects the Gross Revenues for the Measurement Period for the Disclosed Financial Locations.

• Average:  $476,722
• Highest:  $1,213,118
• Lowest:  $199,877
• Median:  $422,564
• Average of Top 50%:  $610,079
• Average of Bottom 50%:  $341,344

• “Gross Revenue” is defined as total amount of sales recognized for a reporting period, prior to any deductions.

Part 2 – Annual Gross Revenue (of Disclosed Financial Locations)

• Part 2 shows a breakdown of the Gross Revenues for the Measurement Period for the Disclosed Financial Locations.

• < $200,000:  1 location (0.8%)
• $200,001 to $300,000:  14 locations (10.5%)
• $300,001 to $400,000:  40 locations (30.1%)
• $400,001 to $500,000:  36 locations (27.1%)
• > $500,000:  42 locations (31.6%)

Part 3 – Adjusted EBITDA (of Certain Financial Locations)

• Part 3 below reflects the Adjusted EBITDA for the Measurement Period for the Disclosed Financial Locations.

• Average:  $174,885
• Highest:  $658,065
• Lowest:  $(4,844)
• Median:  $149,436
• Average of Top 50%:  $279,223
• Average of Bottom 50%:  $109,865

• “EBITDA” is defined as Gross Revenues less all operating expenses before interest, taxes, depreciation, and amortization.

• “Adjusted EBITDA” represents EBITDA adjusted for a few non-operational and nonrecurring expenses as reported by franchisees including management fees paid to owners, charges for auto expenses above the cost of operating a salon suite, items that would be capitalized if not for bonus depreciation, offsite storage, and other non-site level charges.

• The information in Part 3 is based on the financial information reported by the Disclosed Financial Locations which, in some cases, includes certain non-operating expenses and other adjustments as outlined above. In those circumstances, adjustments were made to EBITDA in order to report actual salon level operational results.

Part 4 – Occupancy Rates as of December 31, 2023 (of Certain Franchise Locations)

• Part 4 below reflects occupancy rates at the end of 2023 that were reported to Phenix by the Disclosed Occupancy Locations.

Occupancy Rate

• Average:  90%
• Median:  93%
• High:  100%
• Low:  59%
• Average of Top 50%:  96%
• Average of Bottom 50%:  79%

Number of Suites

• Average:  35
• Median:  32
• High:  94
• Low:  17
• Average of Top 50%:  32
• Average of Bottom 50%:  36

• While the figures for occupancy and number of suites correlate to the average and median figures represented above, the figures for high and low occupancy and suites do not. The high and low figures represent the high and low of each respective category.

• For example, the “low” figure of 16 represents the smallest location reporting the number of suites, while the low figure of 37% occupancy is the lowest occupancy rate reported to Phenix.

Part 5 – Operating Results Categorized by Ranges of Salon Size Square Footage

• Part 5 below reflects operating results categorized by ranges of salon size square footage for the Disclosed Occupancy Locations (for Average Occupancy) and Disclosed Financial Locations (for Average Revenue, Adjusted EBITDA, and Adjusted EBITDA/Average Revenue).

Salon Size:  Less Than 4,500 Square Feet

• Number of Units:  14
• Average Occupancy as of December 31, 2023:  92%
• Average Revenue:  $311,747
• Average Adjusted EBITDA:  $103,448 (33%)

Salon Size:  4,501 to 6,000 Square Feet

• Number of Units:  59
• Average Occupancy as of December 31, 2023:  89%
• Average Revenue:  $442,786
• Average Adjusted EBITDA:  $146,431 (37%)

Salon Size:  Greater Than 6,000 Square Feet

• Number of Units:  47
• Average Occupancy as of December 31, 2023:  90%
• Average Revenue:  $603,983
• Average Adjusted EBITDA:  $219,719 (36%)

Total

• Number of Units:  120
• Average Occupancy as of December 31, 2023:  90%
• Average Revenue:  $490,633
• Average Adjusted EBITDA:  $178,971 (36%)

Part 6 – Fiscal Years 2022 and 2023 Annual Gross Revenue, Adjusted EBITDA, and Occupancy

• Part 6 compares the results for those salon suite locations reporting over each respective period. The salon suite locations reporting for each period are not necessarily the same locations year-to-year, since franchisees that submitted information in 2022 were, in some cases, not the same franchisees that submitted information for 2023, but are representative of the locations opened during each respective year accordingly.

• The occupancy results reported in Part 6 reflect the results as of each respective year end.

2022

• Average Annual Gross Revenue:  $467,819
• Median Annual Gross Revenue:  $442,634
• Average Annual Adjusted EBITDA:  $171,885
• Median Annual Adjusted EBITDA:  $148,197
• Average Annual Occupancy (as of December 31, 2022):  92.9%
• Median Annual Occupancy (as of December 31, 2022):  96.4%

2023

• Average Annual Gross Revenue:  $476,722
• Median Annual Gross Revenue:  $422,564
• Average Annual Adjusted EBITDA:  $174,885
• Median Annual Adjusted EBITDA:  $149,436
• Average Annual Occupancy (as of December 31, 2023):  90%
• Median Annual Occupancy (as of December 31, 2023):  93%

• The data is based on the historical results from existing franchisee Businesses as reported to Phenix by its franchisees. Neither Phenix nor an independent accountant has independently audited or verified the information provided in this Item 19.

• Some Businesses have sold this much. Your individual results may differ. There is no assurance you will sell as much.

Section VI – Phenix Salon Suites Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️