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Relax The Back Franchise Cost & Fees

Date of Incorporation: 1984
Franchising Since: 1989
Headquarters: La Palma, California

Business Description: Relax the Back franchises sell back-related products from an approved location. Stores are usually located within shopping centers and inline locations in retail space averaging 2,000 to 3,000 square feet.

Franchise Offer: The franchisee will operate a retail store featuring back-related equipment, furniture and products the franchisor approves under the trade name “Relax the Back.”

Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee the franchisee’s notes, loans, leases, or other obligations. The franchisee must obtain necessary financing through third parties.

Training and Assistance: The franchisee (and the initial manager, if applicable) must complete the initial training program to the franchisor’s satisfaction before beginning operation of the Relax the Back store. The program includes up to 5.5 days of classroom training at Relax the Back University, at a time and location chosen by the franchisor. The program also includes an additional 10-12 days of “on the job” training at a Relax the Back store designated by the franchisor. Currently, the initial training program is held at locations in Los Angeles and Orange County, California. The franchisee and manager must attend additional and/or refresher training programs conducted at locations specified by the franchisor, including national and regional conferences, conventions and meetings. The franchisee’s other employees may be required to attend mandatory training programs presented by the franchisor at the franchisee’s store.

Territory: The franchise is awarded for a single location only. The Territory is established after considering geographic, market, population, and other relevant factors, as well as the franchisor’s overall development strategy. The size of a Territory is determined by the franchisor and varies from franchise to franchise, but frequently is comprised of an area that forms a one to three mile radius around the approved site. Some territories may be political divisions (e.g., city, town, state) or established by map references. Franchisees will not receive an exclusive territory.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years. The franchisee may be eligible for a successor franchise (which may differ materially from the current Franchise Agreement) for one additional 10 year term.

Obligations and Restrictions: The store must be personally managed on a full-time basis by a person who has successfully completed all training required and who meets all of the other then-current standards. The franchisor strongly recommends, but does not require, that the franchisee personally manage the store on an “on-premises” basis. The franchisee must maintain an ongoing training program at the Relax the Back store meeting the franchisor’s standards. The franchisee must operate the Relax the Back store to meet System standards (including required products and services).

Estimated Number of Units: 95

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $49,500 $49,500
Real Property, Lease Payments and Improvements $21,000 $68,000
Equipment, Fixtures, & Supplies $26,800 $37,800
Inventory $70,000 $100,000
Training Related Expenses $2,000 $7,500
Grand Opening Expenses $7,000 $12,000
Insurance $3,000 $5,000
Signs $5,000 $18,600
Computer Hardware & Software $6,700 $8,800
Visual Merchandising Fee $0 $4,000
6 Months' Additional Funds $30,000 $60,000
Estimated Total $201,000 $371,200
Other Fees
Type of Fee Amount
Continuing Royalty For new franchisees, the Continuing Royalty will vary between 2% and 5% during years 1 and 2, and will be 5% during year 3 and beyond. For existing franchisees, the Continuing Royalty for stores beyond the first will vary between 3% and 4% of Adjusted Gross Sales during the first year of operations at the additional location, and will be 4% during year 2 and beyond.
Marketing Fund Fee 2% of Adjusted Gross Sales.
Local Advertising 4% of preceding month's Adjusted Gross Sales.
Training Costs As incurred.
Transfer Fee $7,500
Audit Costs Costs of audit, in addition to understated amounts.
Interest on Late Payments and/or Reports Maximum legal interest (18% cap).
Successor Franchise Fee 40% of then current Initial Franchise Fee for first franchise.
Management Fees Reasonable amount currently, these costs range from $125 to $200 per day plus costs.
Convention Costs As Incurred.
Grant of Security Interest Franchisee grant franchisor a security interest in assets/proceeds.
Franchisee Association $400 for the first year and $600 in subsequent years plus $50 monthly dues.
Software Support Fee $75 per month.

The above information has been taken from the FDD of Relax The Back. Year of FDD: 2016

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