This client was referred to us by a franchise attorney who thought our client was receiving bad advice from one of her customers.  Our client operates a massage service in major airports and at convention centers.  Her customers pay a reasonable amount for a massage centered in relieving tension on the neck, shoulders and back.  One of her customers tried to convince her to develop the concept into a franchise.  The customer offered to develop the agreements and provide other front-end work for 2 points of the proposed royalty stream.

We were engaged by the client to review her business and to provide material to support the best method for expansion.  Each operating unit was highly profitable on low revenue volumes.  We analyzed the cash available to support a franchise system and advised the client that this would not be in her best interests.  We then developed a company-owned expansion plan.  It showed that the existing units easily threw off enough cash to cover the small capital investment needed to start a new unit.  In addition, after all operating expenses, each unit provided substantial cash to pay for a company-owned support system while delivering higher returns than would be available in a franchise based system.

While our client has met resistance at some airports, for those locations she has she enjoys very solid returns.  

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Last Modified:  April 17, 2006