Lee Oberg, founder and CEO of Massage Retreat & Spa, said, “The success of our growth [will be] these franchisees.
Lee Oberg, a former Life Time Fitness manager, started his first Massage Retreat & Spa nine years ago at a Plymouth shopping mall.
“We started in 2007-08, the recession, and those were tough times,” recalled Oberg, 57. “That site had been developed by a larger player, Massage Envy. They had locations all over the U.S. and [several] in the Twin Cities.”
Today, there are seven Massage Retreat spas around the Twin Cities, with four stores open at least 36 months, including the original Plymouth location. They each gross an average $1.14 million annually from membership dues of $59.95 monthly, which includes a one-hour massage, facial, waxing or other services. Members are entitled to additional massages for $39.95.
A few years ago, Oberg and his minority partner, backed by a loan from Venture Bank, looked at adding more corporate spas.
“But we had already invested $2.5 million,” he recalled, including bank credit. They experimented by selling one store in Maple Grove. It has proved a success for the new owner.
“That compelled us toward franchising,” Oberg said. “We’re talking to two individuals [about buying existing corporate sites]. And we’re having other conversations with people who would open a brand-new operation. We’re looking for both.”
“For many people this is their club. Our focus is not national, but right here. The success of our growth [will be] these franchisees. We’re going to spend 12 to 24 months to support new locations in the Twin Cities area before we start to think about outside Minnesota.”
A franchisee will pay $300,000 or more to open a new Massage Retreat location. That covers the franchise fee, and costs for “build out,” marketing and employee recruitment.
“That will cover ‘A-to-Z’,” Oberg said, a “turnkey” approach. “We’ve developed the system and proven the operations. We want the revenue numbers [from new spas] to hit the numbers we’ve hit in our [corporate-owned] spas over four or five years, for you to make 15 or 20 percent on your money. We’ve hit our revenue goals every year. There’s demand for this business.”
The company said it has thousands of local members and massage increasingly is an antidote to stress, pain and other maladies.