Three franchise brands run a nail salon. Here they are beside the independent version of the same business, with each brand’s fees as it publishes them and worked out in dollars. A brand can bring customers an independent has to earn one by one. The question is whether it brings in more than it costs.
Typical for a nail salon: $190k to $500k in sales, and the owner keeps 12% to 20% after paying for its own marketing. Change either to your own numbers.
Work each brand out at
How the two sides are counted
Sales. A brand’s name brings customers an independent wins one at a time, so each brand is worked out at the sales it reports where we have them, and at yours where we don’t.
Marketing. On your own you pay for all of it, about 3% of sales here (the SBA’s usual range for ongoing marketing). The ad fund does part of that job, so it is counted once, not twice.
Survival. New franchised businesses were about 5 to 6 points more likely to make it through their first two years in Census data, and about half of all new businesses close within five years. It is not in the dollars; each brand’s details give the sources.
Your own nail salon and each brand, side by side
The independent version
Your own nail salon
Built and run under your own name
Cost to open
$47k to $289k
Annual sales
$310ktypical
Franchise fee
None
Royalty + ad fund
Noneall marketing is yours
$49,600
The owner keeps in a year, after about $9k of marketing
Taking new owners
Regal Nails Salon & Spa
Nail salons
Total investment
$173k to $721k
Avg. annual sales
Ask the brand
Franchise fee
$25k
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Taking new owners
Glosslab
Nail studios
Total investment
$315k to $584k
Avg. annual sales
Ask the brand
Franchise fee
$50k
Royalty + ad fund
6% + 2% of sales
$31k
The owner keeps in a year at $310k in sales (your sales), after $25k to the brand
$19k less a year than on your own
Taking new owners
Hammer & Nails
Men's grooming and nail care
Total investment
$694k to $944k
Avg. annual sales
$862k to $929k
Franchise fee
$60k
Royalty + ad fund
6% + 2% of sales
$90k
The owner keeps in a year at $896k in sales (what it reports), after $72k to the brand
$40k more a year than on your own
Before you sign: what to read in the disclosure document
Every franchisor must give you its Franchise Disclosure Document at least 14 days before you sign or pay. These are the parts that answer the questions above.
Items 5 to 7, the fees and the investment. The franchise fee, every other fee (technology, training, transfer, renewal), and the full opening budget, including working capital.
Item 19, what owners earn. Whether the brand states owner sales or earnings at all, and for which units. Put its figures in the boxes above in place of the typical ones.
Item 20, units opened, closed and sold. How many owners left in each of the last three years, and a list of current and former owners you can call.
Item 12, the territory. Whether you get a protected area, and what the brand can open or sell inside it.
Item 21, the franchisor’s own finances. Whether the company behind the brand is in good health.
smbnest is a self-assessment tool, not individualized advice. Fees are as each brand publishes them on its franchising page and in its disclosure document, reviewed in the month shown, and change; the figures in dollars are worked out at the sales you enter and are not a forecast. We never take a cut of your deal or a fee from a franchisor. Before you sign, speak with a franchise attorney and a qualified financial adviser, and call owners from the disclosure document.
Your guidesmbnest
The guide is an automated assistant. Answers come from this business’s model, its sources and your plan; they are general information, not legal, tax or financial advice. Talk to a person