Missing fundamental, internal or external factors
Franchise Evaluator™:
Phenix Salon Suites
Franchise overview of Phenix Salon Suites franchise opportunity based on 14 internal and external factors.
Franchise at a Glance
Year Founded: 2007
Founders:
Jason and Gina Rivera
President and CEO:
Brian Kelly
Corporate Address
Phenix Salon Suites Franchising, LLC
662 Encinitas Blvd., Suite 248
Encinitas, CA 92024
(719) 785-4858
Website: phenixsalonsuites.com
Investment Range
Initial Franchise Fee
$52,500
Royalty
33c / sq ft
Ad Fund
0.6 / sq ft
Locations
490
Franchised: 490 (370 open to date)
Corporate: 9
Financial Performance Representation
Yes
(In 2021, the top 50% of Phenix Salon Suites franchisees saw an EBITDA of $207K while the highest reports was $522K 95.4 occupancy rate 35% average EBITDA.
Refer to the current Phenix Salon Suites, LLC FDD for more information.)
Seven External Factors of the Franchise Evaluator™
Scoring Scale: 1 = Lowest 10 = Highest
1
Market Size
1.3 Million professionals work in “appearance” specialities in the US. The Beauty category is expected to reach $131 billion in global sales by 2026, up from $72 billion in 2020. Experts predict eventually 10% of all appearance professionals will seek salon suites offering self employment locations. The total number of salon suite buildings in the US is currently 2,000 which indicates demand will outstrip supply in the near future. Phenix currently has almost 400 locations and has territories available for another 600+ locations.
9
2
Industry Trend
There has been steady demand and significant growth in personal and appearance services, healthy wellness and beauty who are the target audience for salon suites in the past two decades. The vast majority of these wellness and beauty professionals are independent business owners or desire to become independent. Since Covid and with the younger generation providing services self employment is now more desirable and co-working environments such as salon suites are being adopted rapidly.
9
3
Product and Service Drivers
The Phenix Salon Suites is a relatively simple model. The opportunity for salon professionals to quickly, easily and affordably have a place of business has enjoyed increasing demand. Phenix offers proprietary products and access to supplies, training and support to its tenants. The concept helps these professionals step into their own space to build their business. The Phenix Salons Suites, just provides a safe, clean, modern environment for them to thrive and franchise owners collect monthly rental fees.
8
4
Real Estate Needs
The Phenix Salon Suites model is real estate focused. Locations are between 4k sq ft up to 8,000 sq ft of retail or commercial space.
7
5
Competitive Climate
The industry has two big franchise brands of which Phenix is one. There are smaller franchise and independent operators in the sector. The industry has been around for about a decade and is considered mature but possibly less than a third developed in terms of potential number of locations in the US. The growth of the independent professional in the health and beauty industry is constantly growing and demand trends indicate the need for independent salon suites will outstrip demand.
8
6
Regulatory Climate
The individual salon suite tenants are responsible for their own licensing and regulations depending on their speciality. The franchisee has no regulatory requirements other than complying with state and local safety and normal building requirements.
10
7
Brand Recognition
The Salon Suite sector has enjoyed increasing visibility and success over the past decade with a major impetus post covid. It appeals to Franchisees looking for business models that are absentee and not inventory and employee intensive. Phenix is one of the major franchised brands in this relatively new service category.
8
Seven Internal Factors of the Franchise Evaluator™
Scoring Scale: 1 = Lowest 10 = Highest
1
Revenue Model
This is a simple, truly semi-absentee business model where franchise owners can count on predictable monthly revenue, when suites are leased, and small time commitment required by franchisees. Suite tenants pay a monthly fee. Think landlord, tenant relationship.
10
2
Franchisee Role
Owners report a Phenix suites location can be managed in only a few hours per week when the location is fully leased out. Many seek semi-absentee franchises that are employee and inventory light, and many have found Phenix Salon Suites to be an ideal fit that matches their business ownership goals.
10
3
Franchising Experience
The founders of Phenix have operated the franchise since 2007 and are still involved in training and business development. The executive team is very experienced in franchising, real estate, construction and marketing.
10
4
Leadership
Founders Gina and Jason Rivera are still integrally involved in the Phenix Salon Suites business.. CEO, Brian Kelley is a multi unit franchisee from the restaurant business. Robert Aertker is Director of Real Estate and also a Phenix Salon Suites multi unit owner. David Garrett is Director of Construction and Lesley Hawks is Director of Global Development with 30+ years domestic and international franchise experience.
9
5
Franchisee Engagement
Franchisees are primarily multi-unit and in recent years almost all of the brand's growth has come from existing owners. Franchisee satisfaction is regularly some of the highest in the industry.
9
6
Financial Health
Phenix is 49% owned by 10 Point Capital, a venture capital company with several very large successful franchise systems in its portfolio. They are providing funding for Phenix to grow and expand its portfolio of services. The founders of Phenix, Gina and Jason Rivera, have stated publicly they intend to develop a legacy business with the brand to be passed along to their children and relatives. They continue to invest time and profits to the Global growth of the Phenix brand.
10
7
Operational Systems
Phenix Salon Suites corporate entity provides all necessary systems for business operations via a proprietary mobile app and with project management software for site selection, design and construction. As stated this is a very simple business to operate with few or no employees and light hourly commitments each week to run the locations.
8
Total Franchise Evaluator™ Score
External Total Score
59
+
Internal Total Score
66
=
Total Score
125
0 - 24
25 - 49
More investigation is needed
50 - 74
Worth exploring further with caution
75 - 99
Add to consideration set
100 - 140
Sound opportunity and likely a great fit
Summary
Phenix is a high investment real estate model for the franchisee which offers a stable, predictable and secure revenue stream with semi-absentee ownership being a major attraction. The sector has shown strong growth and unit success for the past several years and several factors – post Covid – are enhancing the model. Relative to other brands in the salon suites category, Phenix benefits from Founders who are committed to staying in charge of the business and their industry background and Gina’s celebrity status makes their new initiatives likely to be a real differentiator over time. The brand has a very stable track record with no closures, high franchisee satisfaction, a strong corporate support team, company locations and international presence.
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