Franchise Evaluator™: The TEST


Membership revenue model with a unique offering driven by the increased demand for health and wellness services, has plenty of room to grow new customers.

How to get the most out of this assessment.

Franchise at a Glance



Corporate Address

 

8149 Santa Monica Boulevard, PMB 298
Los Angeles, California 90046

Year Founded: 2015

Year Started Franchising: 2019

Business Description:

Your Franchised Business will have the right to offer and provide the Approved Services and Approved Products (collectively, the “Approved Products and Services”), including (a) table and seated massages, (b) herbal therapy, crystal healing, and other Boutique services we authorize, and (c) merchandise and other health and beauty products that we authorize, only from your Premises of your Boutique. 

Your Franchised Business will have a license to utilize the Proprietary Marks and System we designate from time to time and determine to license under the franchise agreement you enter into with us. We expect and intend that our Franchised Businesses will provide the majority of the Approved Services via an ongoing membership model with its clientele (each, a “client” or “customer”).

MARKET Factors


1
Market Size

AMTA’s 2022 Massage Profession Research Report, 21% of American adult females and 25% of adult males reported receiving a massage from a professional massage therapist in the past year. While the demand for massage services spans all income groups, consumers with household income greater than $100,000 per year are more likely to get a massage than lower income households. Additionally, over half of all massage consumers got their last massage for health and wellness reasons.

References:
AMTA Massage Industry Fact Sheet

8

We categorize the market size as a large market with plenty of opportunity to create customers new to massage.

2
Industry Trend

The industry seems to be solidly a growth industry. In fact from the same AMTA research study, In 2021, 63% of consumers who got a massage for health and wellness reasons stated it was part of a treatment plan from a doctor or medical provider. Consumers are also active in seeking out massage therapists through various mechanisms.

As well, the medical community is active in referring patients to massage therapists.

 

9

We categorize the Industry Trend as active and a high growth trend.

3
Product and Service Drivers

One could argue this is right in between a want and need based service. While it is a choice, unlike food or shelter, people who take their health seriously and are looking for the best quality of life and longevity, see massage as a necessity.  From the AMTA study, citing the top medical reasons patients discussed massage therapy with their Doctors, most had specific health or ailment outcomes they were looking for relief from.

8

We categorize the product and service drivers as mid to high drivers.

4
Competitive Climate

It’s a little challenging to pin this number down as a sole practitioner massage therapist can be considered a competitor and at the same time, a potential partner/employee/resource. What the AMTA survey says is that the number of practitioners grew by 14% over the last decade. Other things to note:

  • 77% of massage therapists describe themselves as sole practitioners
  • On average, massage therapists work in about 2 different settings

Overall, in our opinion, the overall market feels more like a community.

7

We categorize the competitive climate as lowmid competitive pressure.

5
Regulatory Climate

Like many in the practice of healthcare and personal services, massage therapists are required to obtain a professional license. There are several national and potentially state requirements to receive and maintain your license. Aside from general business licenses and and other local requirements, having the massage therapists you employ be licensed and in good standing is critical. Page 4 of the 2022 outlines what some of the regulatory requirements may be. It is up to the Franchisee to understand these regulations and comply with all federal, state and local regulations.

7

We categorize the regulatory climate as mid regulation.

MODEL Factors


1
Revenue Model

The NOW services are predominantly subscription/membership based. This creates a recurring revenue stream and predictable cash flow to help manage and grow a The NOW business. As these are services most clients tend to use consistently over time, this revenue model is in line with client expectations.

There also are earning claims in the FDD based on a significant operating history. You should review this with the franchisor and competent legal and financial resources.

9

We categorize the Operational Model as Simple.

2
Brand Management

Differentiation in the market is vital to getting attention and creating demand. The NOW seems to have occupied a unique position in the market by providing an environment and services aligned not only with those major health and wellness objectives clients are seeking, but also bridging into a true sanctuary for the rejuvenation of body, mind and spirit. While other providers seem to focus on the health and medical aspects on one end of the spectrum, to pure relaxation on the other end of the spectrum, The NOW seems to have found an uncrowded middle ground for a client’s total wellness. Coupled with a strong internal Brand Management and Digital Marketing team to capitalize on how customers seek massage providers, The NOW creates a compelling brand and market strategy.

8

We categorize the Brand Management as High Engagement

3
Operational Systems

The Founders of The NOW are still actively involved in the business. They have created the franchise concept and the franchise operating procedures based on the success they have had starting and operating the initial locations and the vision of what The NOW means to customers and how it is changing the massage landscape. They continue to build a highly franchise experienced executive team to continue to refine and build processes to support a nationwide expansion effort. Side note: A The NOW environment is intentionally minimalist which creates a straightforward buildout.

9

We categorize the Operational Systems as Comprehensive.

4
Franchisee Role

A Franchisee of The NOW system is recommended to establish and operate a business, not perform the actual services. In other words, the Franchisee is not expected to be a massage therapist. There is a recommendation that the Franchisee run the actual business as in managing the core business systems like sales and marketing, operational procedures, finance, recruitment and retention, etc.  But you are not obligated to do so. But somebody has to. The Franchisee can opt to hire a Designated Manager who will be responsible for some or all of these things. Either way, the Franchisee has wide latitude here to set up and operate the business as they see fit to maximize the opportunity within your territory. However you set up the business, a franchisee must look toward meeting their obligations to the business and to the Franchisor set about in the agreements.  Along with adequate financial resources for this type of business and according to The NOW requirements, potential franchisees do not need specialized industry knowledge or skills. As expected, you must have an aptitude and willingness to learn the system and follow the procedures, as with most franchise systems. General management, sales, hiring, retention, marketing, motivation, problem-solving, issue resolution and a financial management acumen, should a franchisee have these skills, will all be helpful in starting and growing your business, but none are required outside of learning The NOW way of executing and managing these aspects.

Note: You may score this differently depending on what role you want to play in the business.

8

We categorize the Franchisee Role as Business Manager.

5
Real Estate Needs

A suitable real estate location in central to The NOW brand positioning, customer experience and services. So where, and what type of location will be of critical importance. According to the current FDD, The NOW offers various types of guidance and support as the franchisee identifies and evaluates a suitable site, however the details are not specific. This should be discussed with the Franchisors about what support is available including possible Approved Supplier resources.

9

We categorize the regulatory climate as essential need.

ORGANIZATION Factors


1
Franchising Experience

The NOW was founded in 2015 and started franchising in 2019. They have grown 34% to 67 locations from 12/31/19 to 12/31/21.

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We categorize the Franchising Experience as Extensive.

2
Franchise Leadership

The founders of The NOW concept are both still integrally part of the brand in critical leadership roles. As well, they have been building a solid team of highly experienced franchise leaders to continue to refine and shape the brand as they seek expansion throughout North America.

From The NOW 2022 Franchise Disclosure Document: Profiles of some key Executives.

Jason Post, Chief Executive Officer Mr. Post is currently our Chief Executive Officer and has held that position since March 2020 in Los Angeles, California. Prior to that time, Mr. Post served as our President from our inception through February 2020. Mr. Post is the originator of the franchised concept and has actively been involved in all aspects of the development of our System since its inception. 

Jeffrey Platt, President Mr. Platt has served as our President since June 2021. From October 2020 to May 2021, Mr. Platt was not employed. From 2006 to October 2020, Mr. Platt was President of Sky Zone Franchise Group, LLC in Los Angeles, California.

Gara Post, Chief Creative Officer Ms. Post has served as our Chief Creative Officer since our inception, and has primarily performed these duties in Los Angeles, California. Ms. Post has actively been involved in all aspects of the development of our System since its inception.

Fred Tennet, Director of Field Operations Mr. Tennet has served as our Director of Field Operations since July 2020 in Los Angeles, California. Prior to that time, Mr. Tennett served as (i) the Director of Franchise Operations of WellBiz Brands (Elements Massage) in Englewood, Colorado from October 2018 through June 2020, (ii) Business Consultant/District Leader of 7‐11 in Irvine, Texas from November 2015 through November 2018, and (iii) Store Leader of Target Corporation in Minneapolis, Minnesota from May 2010 through November 2015.

Michelle Sandonato, Chief Operating Officer Ms. Sandonato has served as our Chief Operating Officer since June 2021. From March 2015 to June 2021, Ms. Sandonato was the Vice President, Guest Experiences & Programming of Sky Zone Franchise Group, LLC in Los Angeles, California.

Leland Raymond, Vice President of Learning and Development Mr. Raymond has served as our Vice President of Learning and Development since January 2020. From January 2017 to January 2020, Mr. Raymond served as our Director of Operations. Mr. Raymond was our General Manager from May 2016 to January 2017.

Christina Dale, Senior Director of Real Estate Ms. Dale has served as our Senior Director of Real Estate since September 2020. From August 2019 to September 2020, Ms. Dale was a Strategy Consultant for CL3 in Carlsbad, California. From May 2018 to August 2019, Ms. Dale served as Executive Vice President of Real Estate of Xponential Fitness in Irvine, California.  Ms. Dale was the Director of Real Estate and Franchise Sales Operations for The UPS Store, Inc. in San Diego, California from September 2016 to April 2018

10

We categorize the Franchising Leaders as Highly Experienced.

3
Franchisee Engagement

In reviewing the 2022 Franchise Disclosure Document, there is an extensive section on the franchisor’s training and assistance. Please review Item 11 – FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING in detail. Suffice to say there is significant assistance and support in starting and operating The NOW business.

8

We categorize the Franchisee Engagement as Highly Engaged.

4
Financial Health

According to the most recent documents outlined in the FDD, The NOW is in sound financial health. You should review this section with competent financial and legal professionals.

10

We categorize the Financial Health as Sound.

The BASICS


Investment Range
$414,850 - $767,600
Initial Franchise Fee
$60,000
Financial Performance Representation
Yes
Locations
45

As of March 31, 2023

3 Year Growth in Units
1025%

12/31/20 – 3/31/23

Royalty Fee
6%
Marketing Fund Fee
Up to 2%

Brand Marketing Fund;
$1500/month Digital Marketing Fee

Agreement Term
10

Initial (Years) & Renewal (2 consecutive)

Territory Designated, but not Exclusive Territory
Financing Neither Direct or Indirect

 

Obligations to Participate in the Actual Operation of the Franchised Business

Franchisee Recommended, no obligated. Designated Manager and option

Total Franchise Evaluator Score


120
0 - 24

Missing fundamental, internal or external factors

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


This is a simple business model, based on a clearly understandable consumer need, with macro industry drivers expanding the customer base of the industry. Along with being a leading brand in the category, healthy growth rate and highly experienced and engaged executive team, this is a system we would invite closer scrutiny.