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Beauty Franchise Industry Report 2015

Beauty Franchise Industry Report 2015-1

“Beauty is whatever gives joy.” – Edna St. Vincent Millay

Dating back to ancient times, people like to look and feel their best. The numbers tell the tale. Sales for the global beauty and anti-aging market are estimated at $1.025 TRILLION annually.

If you’re seeking a franchise to help others enhance their natural beauty, read this report on the ever-popular beauty franchise industry!

United States Beauty Franchise Industry Overview

The beauty industry, like many others, is highly competitive. Competitors include franchises, non-franchised chains, independent service providers, and large corporations. Sometimes also referred to as the personal care industry, beauty businesses cover a wide swath of products and services. Four of the larger segments of the industry are as follows, per the North American Industry Classification System (NAICS):

  • Barbers, cosmetologists, hairdressers
  • Manicurists and pedicurists
  • Massage therapists
  • Skincare specialists

Note that there are additional segments, and a number of franchises cross over between segments, or provide services in multiple segments. There is also crossover between the fitness and health and beauty industries. Popular beauty franchises include: Fantastic Sams, Great Clips, Sport Clips, Camille Albane, Supercuts, Massage Envy, Seva Beauty, Massage Green, Merle Norman, BodyBrite, Planet Beach, The Lash Lounge, Palm Beach Tan, Yves Rocher and more.

Billions of dollars in revenue are generated annually by the American beauty industry. Hair care providers lead the pack, generating more than $42 billion in revenue annually. Compiled from IBISWorld, a provider of market research reports, here are the annual revenue numbers of other major beauty industry segments in the United States:

  • Beauty, Cosmetics & Fragrance Stores—$20 billion
  • Health & Wellness Spas—$16 billion
  • Personal Waxing & Nail Salons—$11 billion
  • Massage Services—$12 billion
  • Tanning Salons—$3 billion

Franchises that excel in the field “provide exceptional value, a memorable experience and execute at a very high level demonstrating care for the client,” says Pete Lindsey, president of franchising for Sport Clips.

Beauty Franchise Industry Report 2015

Projections for the Future

Market researcher Euromonitor International is bullish on the future of the industry saying, “the forecast for beauty and personal care is positive for the coming years. Average disposable incomes are expected to grow as the U.S. economy continues to grow and unemployment rates decline. The higher incomes will allow more consumers to buy more premium products.”

In addition, “an aging population will also become more prominent, driving growth in areas that cater to older generations, such as anti-aging skin care.”

Their findings are backed up by IBISWorld, which estimated the annual revenue growth of beauty industry segments to be the following:

  • Personal Waxing & Nail Salons—7.6 percent
  • Beauty, Cosmetics & Fragrance Stores—5.8 percent
  • Massage Services—4.9 percent
  • Health & Wellness Spas—2.7 percent
  • Tanning Salons—2.2 percent
  • Hair Salons—1.3 percent

Furthermore, according to the Occupational Outlook Handbook, 2014-15 Edition, average job growth expected among all industries is 13%. Data from the handbook shows that all of the beauty industry segments given are forecasted for growth through 2022 at levels at or above the general average.

  • Skincare specialists—40 percent
  • Massage therapists—23 percent
  • Manicurists and pedicurists—16 percent
  • Barbers, cosmetologists, hairdressers—13 percent

One issue to keep an eye on for the future is wages, as many workers in this field are hourly. Many cities and states are enacting legislation to raise the minimum wage. While currently concentrated in the fast food industry, the fight for increased wages could move into certain beauty services fields in the not-too-distant future.


Beauty Franchise Market on the Rise: Massage Services

“Millions of Americans are now experiencing massage and spa who might otherwise not have done so because of the lower price points offered by franchises.”

~ Allan Share, President of the Day Spa Association (USA)


Above you read that the revenue for the general massage services industry has been growing at a rate of 4.9% annually. But, the estimated annual revenue growth for massage franchises has been even better at 12.4%.

The rise in massage has been meteoric. In the past year, over 20% of Americans have received a massage compared to about 8% in 2007. Massages are now viewed as an affordable luxury, with many consumers working a trip to a masseuse into their regular wellness routine. However, the reasons for the uptick go beyond personal pampering as more doctors are prescribing massage therapy as a treatment.

Beauty Franchise Industry Report 2015

And with good reason. According to the Mayo Clinic, massage has been found to be helpful in dealing with a number of ailments, including anxiety and certain types of pain.

But it’s not just traditional medical care. The rise in alternative health methods has also been a factor. “The rising cost of health care is outpacing inflation and salaries, and there’s a good possibility that that is linked to increasing [complementary and alternative medicine] use,” remarks researcher Dejun Su, PhD, a sociologist at the University of Texas—Pan American.

Also, employers looking to provide incentives that keep their workforce healthy and happy have turned to the treatment. An estimated 14% of Fortune 500 companies currently offer massage as an employee incentive or benefit.

But should there be concern that the industry is possibly growing too fast?

In the October 2014 edition of Spa Business magazine, several industry experts remarked on the potential of “acute” talent needs surfacing with the opening of more and more massage spa locations, both franchise and non-franchised. However, at the same time, they expressed optimism that franchising could be exactly what the massage industry needs to thrive in expansion because of the training component.

As Peggy Wynne Borgman, the president of Wynne Business, said:

“One benefit of the franchise model is that the companies can serve as a staffing ‘farm system’ for more upmarket spas. We frequently advise under-qualified candidates to spend a year in a franchise spa position, where they will get comfortable with the tempo of a busy schedule and develop some fundamental skills. In fact, franchises themselves may hold the key to easing the talent shortage. As these companies mature and their need for talent becomes acute, they’ll build educational programs of their own, providing a valuable resource for the entire spa industry.”


Beauty Franchise Market on the Rise: Child and Teen-Focused Services

Mother-daughter manicures have been common for a while, but now the spa industry is realizing catering to kids (mostly girls, but yes, some boys as well) is a good way of augmenting their bottom line.

Per the International Spa Association, 25% of the total number of spas in the United States offer services specifically for those under 13—up 15% from four years ago. In addition, 50% of American spas offer services for teens, which is up over 33% from four years ago. Franchises that specifically cater to a “minor” audience are hair salons Snip-its and Pigtails & Crewcuts, as well as the more traditional spa Sweet & Sassy.

It should be noted, the focus for many of these service providers shifts from health and beauty to entertainment when dealing with their young customers. In fact, a New York Times article indicated most child-oriented spas make their money on birthday party packages.

Nail salons stand to benefit the most from offering services to this market, but things would have to change. According to Mintel, a market intelligence agency, 97% of girls in the United States use nail products, and 14% do so on a daily basis. However, girls under 16 only make up 2% of nail salon clientele. So how can nail salon franchises cultivate this obviously fertile ground? Here are four suggestions from Nails Magazine, which can be adapted for most beauty franchises:

  1. Piggyback on Motherly Influence: “Mothers are the ones who are in the salon the most, so it’s as simple as having fliers out advertising teen specials for graduation, prom, parties, and other occasions,” says Doreen Bloch, founder of Poshly Inc.
  2. Get Social: Particularly for tweens and teens, the ability to document experiences is about as important as the experience itself. “Preview new and exciting products on YouTube, Vine, and Instagram,” says Arthur Ebeling of PR/marketing firm Koi Creative. “And it doesn’t have to be all tutorial based. You can give behind-the-scenes looks at your salon and salon culture.”
  3. Guard Your Online Reputation: Make sure your reviews are as positive as possible. “Yelp is a touch point for teens,” says Bloch. “They really do research on Yelp. They are all about informing themselves, and it absolutely does influence their buying decisions.”
  4. Don’t Be Afraid of Going Mobile: Sometimes you have to go your clients, instead of clients coming to you. “We just finished first communion season and are moving into dance recital season. I go to dance schools, specialty shops, and churches and leave special fliers that I had created at the printer advertising our special packages,” says Sarah Boban, an owner of a Chicago-based tween/teen salon. By doing some field work, you can potentially expand your customer base by getting front of people who otherwise may not have been aware of your business or franchise.


Investing in a Beauty Franchise

There are as many reasons to invest in a franchise as there are franchisees. But a common thread runs between all of them: they wanted more control of their working life. Take, for example, Brandon Latham, a BodyBrite owner from Austin, Texas. He says of his franchise start:

“What originally attracted me to the franchise concept was that I was at a crossroads in my life and wanted a change from a ‘real’ job to something that had more flexibility and ownership. What made BodyBrite so alluring was the low start-up costs relative to other franchises as well as the fact it was part of the wellness industry which is a passion of mine.”

Below is an overview of a limited number of topics to consider when buying a beauty franchise, including a summary of costs.

Please note: the provisions and fees illustrated in this report are some of the most common and not a complete listing. All figures come from the Franchise Disclosure Document (FDD) of each respective franchise dated 2015, except for The Barbershop, which is dated 2014. Please review the FDD of a franchise for all of the provisions and fees related to investing in that particular franchise.

Picking a Franchise System

To stand out, franchisees will need to partner with a franchise that has a distinctive brand. Perception is reality. According to behavioral psychologist Dan Ariely, our brain tricks us into enjoying things more if we believe they are better. Many franchises within the industry provide similar services to one another. The thing that will help franchisees stand out from their competitors is the franchise system’s uniqueness and commitment to customer service.

Special Considerations

If dealing with a franchise that operates within the medical realm, franchisees will also have to be aware of additional regulations such as Stark laws, laws prohibiting the corporate practice of medicine, HIPAA regulations, and certain Medicare statutes. The benefit of franchising in this area is most professional medical care franchises have already navigated these areas, and can pass along their knowledge to their franchisees.

The Financial Question

When it comes to investing in a franchise finding the right concept is dependent on not only the style of the brand, but also the money needed. Below we’ve compiled the initial investment and royalty payments listed in each franchise’s Franchise Disclosure Document (FDD). While these figures only give a small glimpse into what the costs are for owning a franchise, they are a good starting point in narrowing down your many beauty franchise options.

One of the first financial question many prospective franchisees ask themselves is “do I have enough money to start a franchise?” The amount necessary to open a franchise varies depending on the unique business system and execution requirements. The following charts demonstrate, by comparison, estimated initial investment ranges associated with opening one of the 10 sample franchises presented.

Initial Investment Range Chart for Selected Beauty Franchises

*Sport Clips initial investment range estimate doesn't include real estate costs.

Initial costs associated with opening a franchise include the franchise fee, land and building costs, training expenses (such as travel and living expenses, not the actual training courses), grand opening advertising and marketing costs, and more.

A fee specific to franchises is the franchise fee. The paying of this fee by an incoming franchisee typically includes permissions for the franchisee to use the franchisor’s patents and trademarks. It can also cover a portion of the costs for initial support functions such as training and possible site selection assistance. 

In some instances, the franchise fee can vary with a franchise system depending upon the size of the territory the franchisee desires, whether the franchise is a qualifying military veteran, and other factors. The franchise fee for the sample franchises are noted below.


Franchise Fee



Fantastic Sams


Massage Green Spa




Merle Norman


Planet Beach


Seva Beauty



$15,000 - $25,000

Sport Clips

$25,000 - $59,500

The Barbershop a Hair Salon For Men


But in doing your franchise financial planning, don’t forget about the ongoing fees. Throughout the length of the agreement there are costs for being a part of the franchisor’s business system. The most common ongoing fee is a royalty. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes. Examples of how royalties are collected are provided below for each sample franchise.




6% of gross sales

Fantastic Sams

$345.76 per week

Massage Green Spa

6% of gross sales


5% of gross revenue

Merle Norman


Planet Beach

6% of gross revenue for compliant franchisees and 9% of gross revenue for non-compliant franchisees.

Seva Beauty

6% of gross sales or $250 per week, whichever is greater with a gross sales in a 12-month period minimum.


5% of Gross Sales for the first year, and 6% of Gross Sales for the balance of the term

Sport Clips

6% of net sales

The Barbershop a Hair Salon For Men

3% of gross sales

Another significant one of these ongoing fees is for advertising (they also can be referred to as marketing or brand development costs). While the brand name of a franchise can be helpful in gaining customers, franchisees must constantly “beat the street” to keep new business coming in.


Advertising Fees


$300/month plus the cost of internet advertising

Fantastic Sams

$137.44 per week plus a regional advertising fund fee, which currently ranges from $15.00 to $199.46.

Massage Green Spa

The greater of 5% of monthly gross sales or $3,000 for local advertising or cooperative advertising fees.


A regional ad fee 2.5% of gross revenue and a national ad fee of 1% of gross revenue

Merle Norman


Planet Beach

2% of gross revenue

Seva Beauty

2% to 5% of gross sales


1.5% of gross sales for the first year, and 2% of gross sales for the balance of the term

Sport Clips

$300 per week, or 5% of net sales, whichever is more, plus a local advertising co-op fee of up to $300 per week

The Barbershop a Hair Salon For Men

No set amount required

Other regular ongoing fees include software and technology costs. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.

Prior to investing, prospective franchisees should do their research and carefully review a franchisor’s FDD for more detailed information on all systems, procedures and costs.

For more information on a number of beauty franchises, please see our beauty franchise industry page.

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