Massage Envy is a “feel-good” franchise with a large presence. You’ve likely seen Massage Envy in your local mall or town. Massage Envy currently operates approximately 1,181 outlets with locations in every state and recently expanded to Australia. Massage Envy franchisees employ over 25,000 employees who have served more than 1.64 million members and guests. Massage Envy is a leading force in the health and beauty industry with total revenue of over $1B. How did the franchise start and what propelled its industry dominance?
The Story Behind the Rise of Massage Envy
Massage Envy was founded in 2002 in Scottsdale, Arizona by John Leonesio and Shawn Haycock. By the time Massage Envy opened, Leonesia was already an industry veteran. The health and fitness entrepreneur owned and operated a chain of health clubs throughout Arizona. John and his brother Frank started their first health franchise in 1969 when they were only in their 20s.
Their health club chain grew into over 40 outlets before they sold the rights. The brothers would go on to found several more health clubs in the decades leading up to 2002. John’s brother Frank founded Scandinavian Sports Clubs, which later merged with Bally’s Total Fitness. Frank also established Q The Sports Clubs, a franchise with 50,000 sq. ft. facilities across the nation. The health clubs featured therapeutic massage areas – the genesis of Massage Envy.
John Leonesio and Shawn Haycock, a licensed massage therapist, decided to partner on a new business venture – Massage Envy. Massages were typically performed in pricey spas, medical offices, or in-house. The founders envisioned a company that could provide affordable massages and was open nights and weekends. The duo finally established their first location through a sublease clause and were open for business. Massage therapists flocked to the company in droves. Massage Envy is now the leading employer of massage therapists in the world.
The franchise was sold in 2008 to an Indian conglomerate and sold to a private equity firm, Sentinel Capital Partners in 2009. Soon after, the franchise expanded its service beyond massages to offer facials and various spa remedies. In that time, the number of locations increased rapidly and average revenue increased from $815,000 in 2009 to $1.25 million in 2011. Roark Capital Partners purchased Massage Envy in 2012 for undisclosed amount and continues to own the franchise. Beth Stiller is the current CEO of Massage Envy and the first female to be selected for the position.
Why Do Franchisees Envy Massage Envy?
1. Growing Customer Base
Massage Envy offers a strong and growing national membership base across the United States, currently standing at approximately over 1.64 million. Specifically, the business operates 1,181 franchise locations across 49 states and the District of Columbia. This means that franchisees have a large and built-in customer base already familiar with the brand on a national level.
2. Recurring Revenue Through Its Membership Model
The company employs a membership model that offers discounted rates for members compared to non-members. For example, a 60-minute session typically costs $50 for a member compared to $99 for non-members while a 90-minute session costs $75 for members compared to $149 for non-members.
Members also pay $119 for a 120-minute session compared to $199 for non-members. Monthly membership at Massage Envy starts at $60 per month. This membership model offers franchisees a predictable and consistent source of revenue on a consistent basis in addition to revenue brought in by non-members.
3. Robust Market Share
Massage Envy prides itself on being both the largest and first spa/massage franchise in the world, holding a roughly 50% market share in the franchised day spa market. In turn, this offers franchisees a brand with national name recognition and a large slice of a growing market sector in high demand.
4. Strong Franchisor Support
The company also boasts a strong corporate support system for its franchisees that includes a robust training session. Massage Envy offers an in-depth reporting structure focus on unit-level economics and profit coaching for their franchisees.
The company also offers a five-day training course that includes about 38 hours of classroom instruction to prepare franchisees for business operations as well as training in skin care services and products, plus 10 days of job training.Total training lasts approximately three-weeks, with refresher courses also offered by the company.
5. Retail Growth Opportunities
Massage Envy also offers franchisees opportunities for retail growth through its partnership with major skincare leaders. For example, the company recently launched exclusive partnerships with skincare brands Obagi and Jan Marini.
Initial Franchise Fee: $45,000
Per item 5 of Massage Envy’s FDD, franchisees must pay an initial franchise fee of $45,000 when opening a location. For franchisees opening a second or subsequent location, the fee is reduced down to $35,000.
Royalty Fees: 6.0%
The royalty fee is a percentage of gross sales from the previous week. The fee is due once per week on a day specified by the franchisor. Gross sales is defined by Massage Envy as the total of all revenue and receipts derived from the operation of the business including all amounts received at or away from the site of the business and revenue from products sold at Massage Envy.
Estimated Initial Investment Costs: $481,400 – $898,700
This cost defines what the franchisee will have to pay to start their franchise. The various startup fees are listed below:
Revenue Range: $979,493 – $898,700
This range is based on the sales, earnings and profits of some Massage Envy locations. It should be stressed that this is only an estimation of how much an individual franchisee can potentially make, as actual results may differ greatly. There is no guarantee a franchisee will sell or earn this much.
Massage Envy has enjoyed strong growth since its establishment in 2002. The health and beauty spa industry is also seeing robust growth year-over-year, with revenue climbing to $17.5 billion in 2018.
For more information on Massage Envy, check out their client page.