Hand & Stone: a Highly Profitable Franchise For Only $665K

With 490 locations in the US alone, Hand & Stone has expanded massively over the past few years and now is one the leading spa massage franchise. There’s a good reason for that: it’s a very profitable franchise for anyone who decides to invest.

Indeed, the average Hand & Stone Massage & Facial Spa franchise makes $1,204,000 in revenue per year. In comparison, as the franchisee it would cost you only $665,600 to open a new location. This seems like a great franchise investment!

How much does it really cost to open a new Hand & Stone franchise? How much profits can you really make as a franchisee? Is this a good investment? Let’s dive in!

Key stats

Franchise fee	$42,500
Royalty fee	5.5%
Marketing fee	5.0%
Investment (mid-point)	$665,000
Revenue per unit	$1,204,000
Revenue per sq. ft.	$446
Sales to investment ratio	1.8x
Payback period*	3-4 years
Minimum net worth	$750,000
Minimum liquid capital	$150,000

What is Hand & Stone Massage and Facial Spa?

Hand & Stone Massage and Facial Spa is an American chain of franchised massage spas.

It was founded by John Marco in 2004 in Toms River, New Jersey and is a subsidiary of HS Parent Inc., with headquarters in Trevose, Pennsylvania.

Hand & Stone Massage and Facial Spa offers various massages such as Swedish massage, hot stone massage, couple massage and skincare services such as classic and back facials.

The company began franchising in 2006 and currently has more than 539 units globally of which 489 are in the US.

Hand & Stone Franchise: Pros and Cons

The Pros:

• Real estate and site selection: Hand & Stone Massage and Facial Spa has an in-house real estate team to help its franchisees with site selection and identify the right location in terms of traffic and demographic patterns. Also, it provides them with design layouts and construction help for their salons, as well as lease negotiations.
• Training and education: The brand offers its franchisees 85 hours of online and 56 hours of classroom training. Franchisees are trained about a successful grand opening, recruiting and training their staff and operating and managing their salons successfully.
• Marketing and advertising: The brand has an in-house marketing agency to help its franchisees with their creative development, media placement, website and email management, television, marketing materials and ongoing promotional and sales guidance.
• Financing: The franchisor provides its franchisees with financing assistance to cover franchise fees. In addition, it provides them with third-party financing to fund their startup costs, equipment, inventory and payroll.
• Exclusive territory protection: Hand & Stone Massage and Facial Spa grants its franchisees the right to operate in an exclusive market area. Under the agreement, the franchisor does not grant any other franchises or operate competing channels or brands in the designated area.
• Extensive and ongoing support: The brand provides its franchisees with extensive corporate support to build and grow their salons. Franchisees get professional management advice, resources, networks, webinars, conventions, growth insights and field operations.

The cons:

• Not a home-based business: The franchise cannot be operated from a home or mobile unit. Franchisees need to have an office space, retail facility or warehouse.
• No absentee ownership: The Hand & Stone Massage and Facial Spa is not a passive investment opportunity. Franchisees must actively participate in the day-to-day management and operations of their salons.
• Not a part-time business. The franchise cannot be run part-time or as a side business. Franchisees should follow the franchisor’s official working hours.

How much does a Hand & Stone franchise cost?

You would have to invest $665,600 to open a Hand & Stone Massage and Facial Spa franchise business.

This is an average; indeed, it varies based on many factors, such as the location of your franchised business, its size, and other factors.

In addition to the initial franchise fee of $42,500, which you must pay to the franchisor, you would also pay for the leasehold improvements, furniture and fixtures, signage, equipment, insurance, etc.

Hand & Stone startup costs

Here’s the full breakdown of costs:

Type of Expenditure	Amount
Initial franchise fee	$42,500
Leasehold improvements	$295,596 – $364,971
Furniture, fixtures and equipment	$90,826 – $120,725
Signage	$9,345 – $11,870
Insurance	$1,500 – $2,500
Working capital (3 months)	$70,000 – $90,000
Other	$81,386 – $107,426
Total	$591,153 – $740,062

How much revenue can you make with a Hand & Stone salon?

On average, a Hand & Stone Massage and Facial Spa franchise made $1,204,386 in revenue per year in 2021.

This is the average sales per franchised business for 439 of the 494 franchised businesses that were open for all of 2021. This is a significant increase vs. 2020 (+32.4%, or $909,600 for 423 franchised businesses).

In terms of square feet, a Hand & Stone salon is typically 2,200 – 3,200 sq. ft. in size: that’s $446 revenue per square foot per year, higher than salon franchises ($270).

How profitable is a Hand & Stone franchise?

On average, a Hand & Stone Massage and Facial Spa franchise makes $365,000 in profits per year. This corresponds to a 30% EBITDA margin.

Hand & Stone Massage and Facial Spa is a profitable franchise. Indeed, the 32% EBITDA margin is higher than salon franchises (25% on average).

Note that we estimated EBITDA using the information available in the Franchise Disclosure Document for 2022. Unfortunately, Hand & Stone Massage and Facial Spa has not provided detailed information on the cost of goods sold (COGS) and labor costs in its FDD. Therefore, we used 3% and 40% of sales, respectively, as per our own benchmarks for salon franchises.

Profit and loss	Amount	% revenue	Source
Sales	$1,204,386	100%	as per FDD
COGS	$(60,219)	5%	industry average
Labor	$(481,754)	40%	industry average
Royalties	$(66,241)	6%	as per FDD
Rent	$(86,706)	7%	as per FDD
Marketing fees	$(60,219)	5%	as per FDD
Other operating costs	$(84,307)	7%	industry average
EBITDA	$364,939	30%

Is Hand & Stone a good franchise investment?

So should you buy the franchise and open a new Hand & Stone Massage & Facial Spa? Good news: Hand & Stone is an incredibly profitable business.

In addition to high profit margins (30% EBITDA margin as explained earlier), the initial investment you would have to fund to open a new spa is very affordable when compared to the profits you can make as a franchisee.

Think about it: it costs $665,600 on average to open a new location which generates $365,000 in profits per year..!

That explains why Hand & Stone has such an excellent payback period (3 to 4 years). In other words, you would repay creditors (like a SBA loan for example) and any investor who invested in your project within 3 to 4 years on average. After that, you can just reap the profits of your franchise, impressive!

How does it compare vs. other franchises?

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