Salons by JC Franchise: $1.3M Cost Too High vs. Profits?

One of the fastest growing salon franchises, Salons by JC has expanded aggressively since it started franchising in 2011. Over the past 5 years, Salons by JC added 50 locations and now has 134 salons across the US, of which 121 are franchised-owned.

Although it’s always good to be part of a high-growth franchise, that shouldn’t motivate you to buy the franchise either. Instead, you must look at its pros and cons, and more especially its financials.

That’s where it gets a bit complicated for Salons by JC: the investment cost of $1,322,000 (on average) is far more than the average turnover ($489,000 per salon per year).

Is this a profitable franchise? Should you invest and open a new Salons by JC? In this article we’re looking at Salons by JC and its Franchise Disclosure Document to answer these questions and more. Let’s dive in!

Key stats

Franchise fee	$50,000
Royalty fee	5.5%
Marketing fee	1.0%
Investment (mid-point)	$1,322,000
Revenue per unit	$488,600
Revenue per sq. ft.	$65
Sales to investment ratio	0.4x
Payback period*	25+ years
Minimum net worth	$1,000,000
Minimum liquid capital	$500,000

What is Salons by JC?

Salons by JC is a leading salon suite franchise in San Antonio, Texas. 

It was established in 1997 by Jack Griffey and Cecil Miller to empower beauty and wellness specialists with the best salon suite rental opportunities.

The brand gives beauty and fitness practitioners complete freedom to invest in a salon franchise, expand their businesses and reap the benefits. 

Salons by JC has been franchising since 2011, leasing private suites to self-employed beauty practitioners who, in turn, operate their businesses independently. 

Today, the salon suite operates in over 130 locations across 26 US states and Canada. 

Salons by JC: pros and cons

Pros

• Semi-absentee ownership: franchisees can pursue other business interests because Salons by JC allows semi-absentee ownership. 
• Multi-unit rental income: franchisees can own multiple units with state-of-the-art equipment, beds, blankets, hairdryers, roller carts, shampoo pots and mirrors. 
• Support: the franchisor provides all the tools, resources and freedom to satisfy the client’s needs. There are no pricing, working hours, or terms of service restrictions, which enables brand owners to establish personal relationships with their clients. 
• No mandatory experience in the beauty industry: no mandatory salon experience is required to own a Salons by JC franchise. 
• Detailed salon-based training program: the franchisor offers a comprehensive on-the-job and classroom training program focused on the crucial aspects of starting and operating a modern salon.
• Financial assistance: the franchisor liaises with third-party financing partners to help franchisees cover the cost of equipment, franchise fee, startup costs, inventory and accounts receivable. 
• Exclusive territory protection: the Franchise Agreement protects franchisees from competition against other Salons by JC studios. 

Cons

• Not a part-time business: Salons by JC franchise is not a part-time investment opportunity. 
• Not operated from home or as a mobile unit: franchisees must commit to the daily operations from the physical locations. 
• Competition from other premium female beauty and hair salon chains like Phenix Salon Suites, My Salon Suite and Sola Salon Studios to name a few

How much does a Salons by JC franchise cost?

You would have to invest around $1,322,000 to open a Salons by JC 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 $50,000 which you must pay to the franchisor, you would also pay for the leasehold improvements, furniture and fixtures, signage, insurance, etc.

Startup costs

Here’s the full breakdown of costs:

Type of Expenditure	Amount
Initial franchise fee	$50,000
Leasehold improvements	$780,000 – $1,170,000
Furniture, fixtures and equipment	$85,000 – $175,000
Business licenses, permits etc.	$100 – $300
Signage	$8,000 – $25,000
Insurance	$900 – $1,500
Working capital (3 months)	$10,000 – $20,000
Other	$73,875 – $194,400
Total	$1,007,875 – $1,636,200

How much revenue does a Salons by JC franchise make?

A Salons by JC franchise made $488,600 in revenue per year in 2021, as per the 2022 Franchise Disclosure Document.

This is the average revenue per franchise salon for 104 of the 107 franchised businesses that were open for all of 2021.

How profitable is a Salons by JC franchise?

On average, a Salons by JC franchise makes $61,000 in profits per year. This corresponds to a 12% EBITDA margin.

Although a 12% EBITDA margin isn’t necessarily bad, it’s not the best profit margin across the industry. Indeed, we found that salon franchises have a 25% EBITDA margin on average.

Note that we estimated EBITDA using the information available in the Franchise Disclosure Document for 2022. Unfortunately, Salons by JC has not provided detailed information for all costs, namely cost of goods sold (COGS) and labor costs. Instead, we used industry average percentage (3% and 40% of sales, respectively) as per our own benchmarks for salon franchises. 

Profit and loss	Amount	% revenue	Source
Revenue	$488,603	100%	as per FDD
COGS	($14,658)	3%	industry average
Labor	($195,441)	40%	industry average
Royalties	($26,873)	6%	as per FDD
Rent	($130,000)	13%	as per FDD
Marketing fees	($24,430)	5%	as per FDD
Other operating costs	($36,157)	7%	industry average
EBITDA	$61,044	12%

Is Salons by JC a good franchise investment?

This is where it gets complex for Salons by JC: we don’t think it’s such a good investment considering the high cost you would have to fund as the franchise.

Think about it: the estimated investment is $1,322,000 on average yet one salon makes on average $61,000 in profits per year (and that’s EBITDA, not even net profits).

All in all, the payback period for Salons by JC is one of the longest we found for salons franchises in the US: 25+ years. Yes, you heard us right, it would take on average more than 25 years for you as a franchisee to reimburse the initial investment (to a bank, investors and/or yourself).

How does it compare vs. other franchises?

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