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

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

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

Section III – Number of franchised and company-owned Sola Salons 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 Sola Salons franchise opportunity

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

• month 1 to 12 average, median, highest, and lowest occupancy percentage for the Sola Salons franchised locations that: (a) operated in the United States under a Franchise Agreement; (b) had been open and continuously operating for at least 12 months; and (c) submitted all required occupancy reports under the Franchise Agreement during its first 12 months of operations

• December 2023 average, median, highest, and lowest occupancy percentage for the Sola Salons franchised locations that: (a) operated in the United States under a Franchise Agreement; (b) had been open for at least 13 months; and (c) submitted all required occupancy reports under the Franchise Agreement for the month of December 2023

• 2021, 2022, and 2023 average and median gross revenue (full year and by quarter) for the Sola Salons franchised locations that: (a) operated in the United States under a Franchise Agreement; (b) had been open for at least 13 months; and (c) submitted all required revenue reports during 2021, 2022, or 2023, as applicable

• 2023 average, median, highest, and lowest gross revenue and operating profit, and average operating expenses (marketing expense, utility expense, repairs and maintenance expense, Royalty and National Marketing Fund Contribution expense, lease expense, labor expense, and general and administrative expense) for the 61 company-owned Sola Salons locations in the United States that: (a) had been open for at least 13 months; (b) operated continuously throughout 2023; and (c) was not under contract to be purchased by Sola Salons or any of its affiliates at any time during 2023

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

Section I – Sola Salons Franchise Costs

• Initial Franchise Fee:  $55,000
• Travel and Living Expenses:  $2,500 to $4,000
• Site Selection Assistance:  $0 to $3,500
• Rent Manager Property Management Software (6 months):  $744 to $1,044
• Architectural Fees:  $10,000 to $45,000
• Rent or Real Estate:  $30,800 to $121,000
• Design Services:  $3,500 to $5,000
• Improvements/Conversions:  $538,799 to $1,136,784
• Furniture and Fixtures:  $216,336 to $339,627
• Low Voltage:  $6,535 to $63,749
• Signage:  $10,000 to $20,000
• Utilities:  $1,357 to $21,587
• Operating Supplies:  $1,000 to $21,200
• Advertising/Marketing:  $10,900 to $20,000
• Insurance (6 months):  $3,250 to $5,000
• Computer Equipment and Software:  $1,300 to $2,300
• Repairs and Maintenance:  $3,000 to $28,033
• Labor:  $9,000 to $15,000
• Additional Funds for Initial 3 Months:  $20,000 to $50,000
• Total Estimated Sola Salons Franchise Costs:  $924,021 to $1,957,824

Section II – Sola Salons’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $41,000 to $55,000
• Royalty Fee:  5.5% of Gross Revenue, minimum of $500 per month
• National Marketing Fund (“NMF”):  up to 2% of Gross Revenue per month; currently 1.5% of Gross Revenue
• Marketing Cooperative:  as established by Marketing Cooperative, but not to exceed 2% of monthly Gross Revenue

Section III – Number of Franchised and Company-Owned Sola Salons Outlets

Franchised

2021

• Outlets at the Start of the Year:  512
• Outlets at the End of the Year:  555
• Net Change:  +43

2022

• Outlets at the Start of the Year:  555
• Outlets at the End of the Year:  585
• Net Change:  +30

2023

• Outlets at the Start of the Year:  585
• Outlets at the End of the Year:  631
• Net Change:  +46

Company-Owned

2021

• Outlets at the Start of the Year:  30
• Outlets at the End of the Year:  39
• Net Change:  +9

2022

• Outlets at the Start of the Year:  39
• Outlets at the End of the Year:  61
• Net Change:  +22

2023

• Outlets at the Start of the Year:  61
• Outlets at the End of the Year:  66
• Net Change:  +5

Section IV – News Updates on the Sola Salons Franchise

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

Part 1 – Median and Average Occupancy by Month During the First 12 Months of Operations for Franchise Locations Satisfying the New Location Occupancy Reporting Criteria

• The following table includes information regarding the total number of Sola Salons franchise locations in the United States that met or exceeded all of the following criteria as of December 31, 2023 (“New Location Occupancy Reporting Criteria”): (a) operated in the United States under a Franchise Agreement; (b) had been open and continuously operating for at least 12 months; and (c) submitted all required occupancy reports under the Franchise Agreement during its first 12 months of operations.

• The New Location Occupancy Reporting Criteria excludes any Sola Salons locations (i) located outside the United States; (ii) owned, operated, or under contract to be purchased by Sola Salons or any of its affiliates at any time during 2023; (iii) reporting over 100% occupancy (as such reporting may suggest an error in the data); and (iv) first opened for business prior to calendar year 2016 (as month-by-month occupancy data for the first 12 months of operations is not available for locations that opened prior to 2016).

• The characteristics of the Sola Salons franchise locations included in the following table do not differ materially from those of a franchise offered under the Disclosure Document.

• The median and average occupancy information was prepared from the records and reports, as reported by franchisees of each of the Sola Salons franchise locations satisfying the New Location Occupancy Reporting Criteria. Sola Salons has relied solely on the information reported to it by franchisees.

• To calculate the median and average Occupancy, Sola Salons analyzed occupancy records and reports for the first 12 months opening, as reported by franchisees of each of the Sola Salons franchise locations satisfying the New Location Occupancy Reporting Criteria as of December 31, 2023.

Month 1

• Average Occupancy:  48.6%
• Median Occupancy:  44.7%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  2.5%

Month 2

• Average Occupancy:  55.4%
• Median Occupancy:  50.0%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  3.8%

Month 3

• Average Occupancy:  60.2%
• Median Occupancy:  60.3%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  5.0%

Month 4

• Average Occupancy:  64.1%
• Median Occupancy:  65.3%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  3.8%

Month 5

• Average Occupancy:  67.7%
• Median Occupancy:  70.3%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  6.9%

Month 6

• Average Occupancy:  70.1%
• Median Occupancy:  71.9%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  3.1%

Month 7

• Average Occupancy:  72.8%
• Median Occupancy:  75.8%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  7.7%

Month 8

• Average Occupancy:  74.9%
• Median Occupancy:  81.3%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  10.3%

Month 9

• Average Occupancy:  77.0%
• Median Occupancy:  82.7%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  12.1%

Month 10

• Average Occupancy:  78.3%
• Median Occupancy:  85.0%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  12.1%

Month 11

• Average Occupancy:  79.7%
• Median Occupancy:  86.2%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  11.5%

Month 12

• Average Occupancy:  80.9%
• Median Occupancy:  89.1%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  11.5%

• As of December 31, 2023, Sola Salons had 631 Sola Salons franchised locations open and operating in the United States. Of this total, 348 (55.15%) met the New Location Occupancy Reporting Criteria and 283 (44.85%) Sola Salons locations did not meet the New Location Occupancy Reporting Criteria.

Part 2 – Median and Average Occupancy for Franchise Locations Satisfying the Occupancy Reporting Criteria as of December 31, 2023

• The following table includes information regarding the total number of Sola Salons franchise locations in the United States that met or exceeded all of the following criteria as of December 31, 2023 (“Occupancy Reporting Criteria”): (a) operated in the United States under a Franchise Agreement; (b) had been open for at least 13 months; and (c) submitted all required occupancy reports under the Franchise Agreement for the month of December 2023.

• The Occupancy Reporting Criteria excludes any Sola Salons locations (i) located outside the United States; (ii) owned, operated, or under contract to be purchased by Sola Salons or any of its affiliates at any time during 2023; and (iii) reporting over 100% occupancy (as such reporting may suggest an error in the data). Additionally, the Occupancy Reporting Criteria excludes one franchised Sola Salons location that was temporarily closed during 2023 following property damage and business interruption.

• The operations of Sola Salons locations are not seasonal and, in Sola Salons’ experience, occupancy rates in December are consistent with occupancy rates at other times in the year.

• The characteristics of the Sola Salons franchise locations included in the following table do not differ materially from those of a franchise offered under the Disclosure Document.

• The median and average occupancy information was prepared from the records and reports, as reported by franchisees of each of the Sola Salons franchise locations satisfying the Occupancy Reporting Criteria. Sola Salons has relied solely on the information reported to it by franchisees.

• To calculate the median and average Occupancy, Sola Salons analyzed occupancy records and reports for the month of December 2023, as reported by franchisees of each of the Sola Salons franchise locations satisfying the Occupancy Reporting Criteria as of December 31, 2023. Sola Salons then provided the lowest occupancy percentage and the highest occupancy percentage.

• Average Occupancy:  90.6%
• Median Occupancy:  86.8%
• Highest Occupancy Percentage in Range:  100%
• Lowest Occupancy Percentage in Range:  17.4%

• As of December 31, 2023, Sola Salons had 631 Sola Salons franchised locations open and operating in the United States. Of this total, 572 (90.6%) met the Occupancy Reporting Criteria and 59 (9.4%) Sola Salons locations did not meet the Occupancy Reporting Criteria.

Part 2 – Franchised Sola Salons Average and Median Gross Revenue for 2020, 2021, and 2022

• The following table includes 2021, 2022, and 2023 Gross Revenue information regarding the Sola Salons franchise locations in the United States that met or exceeded all of the following criteria as of December 31, 2021 (“2021 Reporting Criteria”), December 31, 2022 (“2022 Reporting Criteria”), or December 31, 2023 (“2023 Reporting Criteria”) as applicable: (a) operated in the United States under a Franchise Agreement; (b) had been open for at least 13 months; and (c) submitted all required revenue reports during 2021, 2022, or 2023, as applicable.

• The 2021, 2022, and 2023 Reporting Criteria exclude any Sola Salons locations (i) located outside the United States, or (ii) owned, operated, or under contract to be purchased by Sola Salons or any of its affiliates at any time during 2021, 2022, or 2023, as applicable.

• The median and average information for Gross Revenue was prepared from the records and reports, as reported by franchisees of each of the Sola Salons locations satisfying the 2021 Reporting Criteria, 2022 Reporting Criteria, or 2023 Reporting Criteria, as applicable.

• Pursuant to the Franchise Agreement, “Gross Revenue” includes the total of all income derived from gross sales and gross receipts, whether the income is received by cash, credit, checks, services, property, or other means of exchange and excludes only those sales taxes that a franchisee must by law collect from customers and that franchisee pays to the government, promotional or discount coupons to the extent that franchisee realizes no income, and employee or lessee receipt of services, if free, or any portion not paid for by an employee or studio lessee.

2021

• Average Q1 Gross Revenue:  $96,346.33
• Average Q2 Gross Revenue:  $102,810.30
• Average Q3 Gross Revenue:  $105,244.11
• Average Q4 Gross Revenue:  $106,549.87
• Average Full Year Gross Revenue:  $410,950.61

• Median Q1 Gross Revenue:  $91,732.57
• Median Q2 Gross Revenue:  $99,501.17
• Median Q3 Gross Revenue:  $101,493.14
• Median Q4 Gross Revenue:  $103,750.00
• Median Full Year Gross Revenue:  $399,254.07

2022

• Average Q1 Gross Revenue:  $105,593.45
• Average Q2 Gross Revenue:  $106,847.62
• Average Q3 Gross Revenue:  $108,110.69
• Average Q4 Gross Revenue:  $107,837.39
• Average Full Year Gross Revenue:  $428,389.14

• Median Q1 Gross Revenue:  $101,635.85
• Median Q2 Gross Revenue:  $101,665.00
• Median Q3 Gross Revenue:  $102,872.00
• Median Q4 Gross Revenue:  $104,580.00
• Median Full Year Gross Revenue:  $407,810.13

2023

• Average Q1 Gross Revenue:  $108,361.87
• Average Q2 Gross Revenue:  $109,198.63
• Average Q3 Gross Revenue:  $108,964.31
• Average Q4 Gross Revenue:  $109,153.72
• Average Full Year Gross Revenue:  $435,678.54

• Median Q1 Gross Revenue:  $104,291.00
• Median Q2 Gross Revenue:  $105,578.49
• Median Q3 Gross Revenue:  $105,179.64
• Median Q4 Gross Revenue:  $104,466.72
• Median Full Year Gross Revenue:  $419,770.13

Part 3 – Company-Owned Sola Salons Average and Median Gross Revenue and Operating Profit for 2023

• The following tables include 2023 Gross Revenue, Operating Profit, and operating expenses figures regarding the company-owned Sola Salons locations in the United States that met or exceeded all of the following criteria as of December 31, 2023 (“Company Reporting Criteria”): (a) had been open for at least 13 months; (b) operated continuously throughout 2023; and (c) was not under contract to be purchased by Sola Salons or any of its affiliates at any time during 2023.

• At the end of Sola Salons’ most recent fiscal year ended December 31, 2023, Sola Salons had a total of 66 company-owned Sola Salons locations. Of those, 61 (92%) met the Company Reporting Criteria. The company-owned Sola Salons locations that met the Company Reporting Criteria operate in Colorado (17), California (23), Maryland (11), and Virginia (10).

• No company-owned Sola Salons locations closed in 2023.

• Number of Sola Salons That Met the Company Reporting Criteria:  61

• Average Gross Revenue:  $487,837.18
• Number/Percentage That Met or Exceeded Average Gross Revenue:  29 / 48%
• Median Gross Revenue:  $484,220.83
• Highest Gross Revenue:  $861,276.55
• Lowest Gross Revenue:  $180,178.63

• Average Operating Profit:  $158,536.50
• Number/Percentage That Met or Exceeded Average Operating Profit:  32 / 53%
• Median Operating Profit:  $163,660.00
• Highest Operating Profit;  $362,452.05
• Lowest Operating Profit:  -$85,809.07

• The following table includes 2023 Gross Revenue and operating expenses data regarding the company-owned Sola Salons locations in the United States that met the Company Reporting Criteria.

• Average Gross Revenue:  $487,837.18 (100%)
• Marketing Expense:  $4,313.03 (0.9%)
• Utility Expense:  $27,256.16 (5.6%)
• Repairs and Maintenance Expense:  $34,264.83 (7.0%)
• Royalty and National Marketing Fund Contribution Expense:  $31,713.35 (6.5%)
• Lease Expense:  $230,705.75 (47.3%)
• Labor Expense:  $887.09 (0.2%)
• General and Administrative:  $3,397.72 (0.7%)

• “Operating Profit” means Gross Revenue minus all ordinary and recurring operating expenses before the deduction of expenses for interest, income taxes, depreciation, and amortization.

• Company-owned Sola Salons marketing expense does not include the fees, wages, or salaries of employees or agencies providing marketing services for these locations. Franchisees may choose to hire an agency or employee to assist with marketing franchised Sola Salons. Some franchise owners elect to provide their own marketing services or have a general manager perform marketing services.

• Franchisees are required to spend a minimum $3,600 per year on local marketing. Sola Salons also recommends franchisees spend an additional minimum of $10,000 towards pre-opening and post-opening marketing in the franchisee’s individual market during the first year of operation.

• The Royalty Fee for company-owned Sola Salons is 5% of Gross Revenue. By contrast, the Royalty Fee for franchisees under the current form of Franchise Agreement is 5.5% of Gross Revenue. Company-owned Sola Salons locations contribute to the National Marketing Fund on the same basis as franchisees: 1.5% of Gross Revenue.

• At the same Royalty Fee paid by new franchisees (5.5% of Gross Revenue) plus the National Marketing Fund contribution paid by franchisees and company-owned Sola Salon locations (1.5% of Gross Revenue), the combined average Royalty and National Marketing Fund Expense for these company-owned Sola Salons locations would have been approximately $34,148.60 for the full 12 months of 2023.

• Lease Expense will vary greatly depending on the area of the country the Sola Salons is located. These company-owned Sola Salons locations that met the Company Reporting Criteria operate in Colorado (17), California (23), Maryland (11), and Virginia (10) and have an average of 6,333 square feet. Sola Salons locations typically range from 4,200 square feet to 9,000 square feet, and the average Sola Salons franchised location is approximately 6,200 square feet.

• Company labor costs does not include wages or salaries of the personnel managing these locations. For both company-owned Sola Salons and franchised Sola Salons, a single employee may manage one or multiple Sola Salons. Multiple company-owned Sola Salons are managed by a single, shared employee.

• Some franchise owners elect to serve as the manager of their Sola Salons franchised location(s); whether or how much such franchise owners paid themselves for such managerial role is left to their sole discretion.

• If each company-owned Sola Salons location were managed by a single site-specific employee, the additional imputed annual labor cost for such manager would be at least $36,000 for a part-time manager and at least $60,000-$66,000 for a full-time manager.

• A franchisee’s labor costs will vary depending on the number of employees the franchisee hires to manage the franchised location(s) as well as prevailing wage rates in that area of the country.

• A franchisee may incur additional costs not described above, including, for example, regarding insurance. Insurance expenses for Sola Salons and its affiliates (including regarding company-owned Sola Salons) are shared and distributed among various affiliates. A franchisee’s insurance expense will be between $6,500 to $10,000 annually for a single location of average size and complexity.

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