Financials

Spa Revenue by Category

piechart

Start-Up Costs

Overall initial investment per unit: $319,475 – $480,655

Type of Expenditure	Amount	Method of Payment	When Due	To Whom Payment Is To Be Made
Initial Franchise Fee	$45,000	Lump sum	When Franchise Agreement is signed	Us
Spa Opening Package	$16,500 – $20,100	Lump sum	At least 120 days before opening	Us, Third Parties
Spa Operational Package	$35,000 – $60,000	Lump sum	At least 120 days before opening	Third parties
Grand Opening Advertising Promotion	$12,500	Lump sum	When Franchise Agreement is signed	Us
Lease Payments	$6,625 – $8,900	As arranged	As agreed in lease or sublease	Landlord
Utility and Lease Security Deposit	$5,750 – $8,600	As arranged	Before opening	Landlord; Utility providers
Leasehold Improvements	$156,500 – $215,455	Lump sum	As required	Contractors and third party suppliers
Employee Recruiting	$1,500 – $8,600	As incurred	As incurred	Third Parties
Training Travel Expenses	$500 – $3,500	As incurred	As incurred	Third Parties
Computer System	$6,800 – $10,000	Lump sum	Before opening	Suppliers
Government Permits and Licenses	$1,000 – $6,500	As arranged	As arranged	Government agencies
Insurance Deposits and Premiums (including statutory workers’ compensation)	$200 – $500	As agent requires	Before opening	Insurance carriers
Professional Fees	$2,000 – $5,000	As required	Before opening	Your accountant, attorney, and other professionals
Additional Funds (10 months)	$27,500 – $75,000	As incurred	As incurred	Varies
Grand Total	$319,475 – $480,655

Please see 2016 FDD #7 for detail notes

Revenue Model

MASSAGE RETREAT & SPA™ Centers
Open at least 36 months as of December 31, 2015
(Plymouth, Edina, Shoreview, Savage)

Average Gross Revenues
Number of Centers	2014	2015	% Change
4	$1,142,168	$1,197,044	4.80%

MASSAGE RETREAT & SPA™ Centers
Open 24 to 36 months as of December 31, 2015
(Eden Prairie, Woodbury, Maple Grove franchise)

Average Gross Revenues
Number of Centers	2014	2015	% Change
3	$795,295	$973,316	22.40%

Average % of Gross Revenues
	Centers open 36+ Mo.	Centers open 24 to 36 Mo.
Membership Dues	66.0%	59.6%
Massage (non-member massage, upgrades)	20.0%	26.4%
Skin	5.8%	6.4%
Retail Products	8.2%	7.7%
Total	100.0%	100.0%

Labor (therapists, service desk, payroll taxes, training, bonuses, excluding gratuities)	50.1%	53.0%

Please see 2016 FDD #19 for detail notes

Royalty Fee and Sample of On-going Expenses

Type of Fee	Amount	Due Date	Remarks
Royalty Fee	5% of Gross Sales	Weekly	Payable by electronic funds transfer (“EFT”). Based on Gross Sales during the previous week.
Local Advertising	$4,950	Monthly	See Item 11 for more information regarding local advertising requirements. Payable by EFT.
Operations Software License and Maintenance Fee	Currently, $799	Monthly	See Item 11 for more information regarding our Operations Software. This fee begins after your first two months of use of the MRS software, although your first month of use may be a partial one. Payable by EFT.

Please see 2016 FDD #6 for detail notes