Merle Norman Cosmetics
Date of Incorporation: 1931
Franchising Since: 1934
Address: Los Angeles, California
Country: U.S.
Description: 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:
i.) Merle Norman Studio - The franchisee will operate a retail store which sells Merle Norman cosmetic products.
ii.) 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.
Financial Assistance: The franchisor offers the following financing programs:
For New Studio Owners
| Item Financed | Amount Financed | Down Payment | Term (Months) |
Apr % | Monthly Payment |
|---|---|---|---|---|---|
| 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 Payment |
|---|---|---|---|---|---|
| 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 8 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. The franchisee must pay for travel expenses to Los Angeles, California, hotel expenses and all other expenses, excluding the complimentary Continental Breakfast and lunch each business day provided by Merle Norman.
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: The franchisee is 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.
Total Number of Units: Approximately 2,000 units.
Investment Tables:
Initial Investment:
Based on a Regional Mall location
| Name of Fee | Low | High |
|---|---|---|
| Real Estate | Variable | Variable |
| Initial Package of Inventory and Supplies | $13,000 | $24,000 |
| Travel and Other Expenses Incident to Training | $3,000 | $5,000 |
| Studio Costs: Fixtures and Furnishings: Millwork Fixtures Acrylic Organizers Chairs & Stools Graphics Mirrors Merchandising Pieces Flooring Lighting Exterior Signage Construction |
$13,000 |
$23,000 |
| Computer (hardware/software) | $1,800 | $4,900 |
| Working Capital, Deposits, Insurance, and Advertising | $35,000 | $50,000 |
| Total (does not include retail costs) | $91,891 | $190,778 |
Based on a Non-Mall Location (New Design Features)
| Name of Fee | Low | High |
|---|---|---|
| Real Estate | Variable | Variable |
| Initial Package of Inventory and Supplies | $13,000 | $24,000 |
| Travel and Other Expenses Incident to Training | $3,000 | $5,000 |
| Studio Costs: Fixtures and Furnishings: Millwork Fixtures Acrylic Organizers Chairs & Stools Graphics Mirrors Merchandising Pieces Flooring Lighting Exterior Signage Construction |
$13,000 |
$23,000 |
| Computer (hardware/software) | $1,800 | $4,900 |
| Working Capital, Deposits, Insurance, and Advertising | $15,000 | $25,000 |
| Total (does not include retail costs) | $61,891 | $125,778 |
Based on a Non-Mall Location (E-Design Features)
| Name of Fee | Low | High |
|---|---|---|
| Real Estate | Variable | Variable |
| Initial Package of Inventory and Supplies | $13,000 | $24,000 |
| Travel and Other Expenses Incident to Training | $3,000 | $5,000 |
| Studio Costs: Fixtures and Furnishings: Millwork Fixtures Acrylic Organizers Chairs & Stools Graphics Mirrors Merchandising Pieces Flooring Lighting Exterior Signage Construction |
$7,000 |
$9,000 |
| Computer (hardware/software) | $1,800 | $4,900 |
| Working Capital, Deposits, Insurance, and Advertising | $15,000 | $25,000 |
| Total (does not include retail costs) | $51,936 | $95,649 |
Ongoing Fees:
| Name 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 |
| Home Office 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. |
Date of FDD: 2011
The above information has been compiled from the FDD of Merle Norman along with online sources.
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