The answer: it’s up to you!
Below is a chart from our current Franchise Disclosure Document, Item 19 earnings claims. This data represents performance from 12 existing studios in business for more than one year:
*A = Studios in operation for 7 years or more
*B = Studios in operation for at least 3 years but less than 7 years
*C = Studios in operation for less than 3 years but more than 1 year
Explanatory Notes to Table:
Revenue: Revenue mean gross sales from products and services sold to customers at the studio.
Costs of Goods Sold: The Costs of Goods Sold includes the wholesale cost of retail goods purchased for resale at the studio and the cost of professional supplies required to deliver services at the studio.
- Beauty Artist Payroll: Beauty Artist Payroll consists of the actual amounts paid to the Beauty Artists and the matching share of the employees’ FICA taxes and contributions to the state and federal unemployment insurance programs.
- Brand Ambassador & Champion Payroll: Brand Ambassador and Brand Champion Payroll consists of the actual amounts paid to the Brand Ambassador and Brand Champions and the matching share of the employees’ FICA taxes and contributions to the state and federal unemployment insurance programs.
- Occupancy Cost. Occupancy cost consists of rent, real estate taxes, personal property taxes, insurance on premises and contents, and depreciation and amortization expenses.
- Maintenance Cost: Maintenance Cost consists of the common area maintenance fee payable to landlord and property owners and other costs associated with the maintenance and upkeep of the studio.
Substantiation of the data used in preparing the financial performance representation described above will be made available to you upon reasonable request.
The affiliate-owned studios used in this analysis are substantially similar to the franchised Studios offered in this Franchise Disclosure Document. However, the amount of sales and expenses incurred will vary from studio to studio. In particular, the sales and expenses of your Studio will be directly affected by factors that include the studio’s geographic location; competition in the market; present of other studios, including other affiliate-owned studios and other franchised studios; the quality of both management and service at the Studio; contractual relationships with lessors and vendors; the extent to which you finance the operation of your Studio; your legal, accounting, and other professional fees; federal, state, and local income taxes, gross profits taxes, or other taxes; other discretionary expenditures; accounting methods used; and certain benefits and economies of scale that Sumita may derive as a result of operating studios on a consolidated basis. The affiliate-owned Studios described in this Item 19 do not pay the initial fees, royalty fees or other fees described in Items 5 and 6 of this Disclosure Document (except for the required contributions to the Marketing and Technology Account). You and your professional advisors should consider the impact of these fees on your projected financial performance.
A NEW FRANCHISEE’S INDIVIDUAL FINANCIAL RESULTS ARE LIKELY TO DIFFER FROM THE RESULTS DESCRIBED IN THIS ITEM 19.