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Merle Norman Cosmetics Franchise Cost & Fees

Date of Incorporation: 1931
Franchising Since: 1934
Headquarters: Los Angeles, California

Business Description: The franchisor is Merle Norman Cosmetics, Inc.(MNC). A Merle Norman Studio is an independently-owned retail store licensed to use the Merle Norman name, which specializes in the sale of multiple lines of high quality skin care, color and other cosmetic products and offers customers free individualized instruction relating to skin care and the use of Merle Norman Products.

Franchise Offer: Two types of franchise offers:

  1. Merle Norman Studio: The franchisee will operate a retail store which sells Merle Norman cosmetic products.
  2. Studio Branch Bonus Program:Merle Norman offers incentive programs to its Studio Owners to encourage the opening of additional Studios. The franchisee will receive a $2,500 credit on their Studio account for every branch Studio they open (an initial credit of $1,000 when the Studio opens and the remaining $1,500 credit when the branch Studio is approved for the Gold Medallion Program).

Financial Assistance: The franchisor offers the following financing programs:

For New Studio Owners
Item Financed Amount Financed Down Payment Term (Months) Apr % Monthly Payments
Initial Package 45% 55% 3 None Equal Installments
MN POS Software and Hardware 80% 20% 12-36 10% Equal Installments
Fixtures Financing Generally $7,500 to $40,000 None See FDD See FDD Equal Installments
For Branch Studio Owners
Item Financed Amount Financed Down Payment Term (Months) Apr % Monthly Payments
Initial Package 70% 30% 3 None Equal Installments
MN POS Software and Hardware 80% 20% 12-36 10% Equal Installments
Fixtures Financing Generally $7,500 to $40,000 None See FDD See FDD Equal Installments

Except as described above, Merle Norman Cosmetics (MNC) does not offer direct or indirect financing. MNC does not guarantee the franchisee’s note, lease or obligation.

Training and Assistance: Before the Studio opens for business, the franchisee or a manager, is required to satisfactorily complete Home Office Training. This training also is required of any person who becomes a Studio Owner by purchase from an existing Owner. Home Office Training covers eight days with classes being held from 8:45 a.m. to 5:00 p.m. The Operations Manual and Beauty Know-How Manual are the principal instructional materials used. In addition, other hand-outs, training videos, slides and other audio-visual presentations are used, along with makeup for use during the in-class makeup workshops. Home Office Training does not include on the job training in a Merle Norman Studio. MNC conducts an annual national convention for Studio Owners. Attendance at the convention is voluntary. MNC encourages attendance since it gives franchisees the opportunity to see and sample new products and to prepare staff to introduce and sell these new products. The convention also includes presentations covering many areas of Studio operation and provides an opportunity for franchisees to meet with members of the Home Office Staff and other Studio Owners.

Territory: The franchisee will not receive an exclusive territory. They may face competition from other franchisees, from outlets owned by the franchisor, or from other channels of distribution or competitive brands controlled by the franchisor.

Term of Agreement and Renewal: The franchise term is for 10 years, with an option to renew for a single renewal term of 10 years.

Obligations and Restrictions: Franchisees are not required to participate personally in the direct operation of the Studio, but if the Studio is not under their direct daily supervision, they must hire a manager. The manager must complete Home Office Training. The franchisee must purchase an initial inventory of MN Products and certain required supplies from MNC. While MNC does not prohibit the sale of other merchandise (in addition to MN Products) or the offer of other services (in addition to free makeover lessons using the lesson material provided by MNC), the franchisee must obtain prior written approval of any additional merchandise or services from Merle Norman.

Estimated Number of Units: 1,270

Investment Tables:
Initial Investment for Regional Mall Locations
Name of Fee Low High
Real Estate Variable
Initial Package of Inventory and Supplies $17,000 $26,000
Travel and Other Expenses Incident to Training $1,800 $3,000
Studio Costs
Fixtures and Furnishings:
Millwork Fixtures
Acrylic Organizers
Chairs & Stools
Graphics
Mirrors
Merchandising Pieces
Flooring
Lighting
Exterior Signage
Construction

 

$13,000
$2,200
$700
$200
$145
$328
$2,000
$1,500
$3,500
$15,000

 

$23,000
$3,400
$1,000
$300
$500
$600
$4,000
$2,500
$6,000
$65,000

Computer (hardware/software) $1,800 $4,900
Working Capital, Deposits, Insurance, and Advertising $35,000 $50,000
Estimated Total (does not include retail costs) $94,173 $190,200
Initial Investment for Non-Mall Locations
Name of Fee Low High
Real Estate Variable
Initial Package of Inventory and Supplies $17,000 $26,000
Travel and Other Expenses Incident to Training $1,800 $3,000
Studio Costs
Fixtures and Furnishings:
Millwork Fixtures
Acrylic Organizers
Chairs & Stools
Graphics
Mirrors
Merchandising Pieces
Flooring
Lighting
Exterior Signage
Construction

 

$10,000
$2,200
$700
$200
$145
$328
$2,000
$1,500
$3,500
$5,000

 

$13,000
$3,400
$1,000
$300
$500
$600
$4,000
$2,500
$6,000
$25,000

Computer (hardware/software) $1,800 $4,900
Working Capital, Deposits, Insurance, and Advertising $15,000 $25,000
Estimated Total (does not include retail costs) $61,173 $115,200
Other Fees
Type of Fee Amount
Purchase of Additional MN Products Variable.
Delinquency Fee As required by MNC's then-current payment policies.
Advertising Co-op Variable.
MN POS Software Program Annual Upgrades/Support $300
Initial Training Currently no charge.
MN POS Training Currently no charge.
Indemnification All liability, damages, costs and expenses incurred in connection with any action or claim arising out of or resulting from the franchisee’s operations at the studio.

The above information has been taken from the FDD of Merle Norman Cosmetics. Year of FDD: 2015

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