The Lash Lounge Franchises: $372K Cost vs. Low Profits

Founded in 2006 and having started franchising in 2010, The Lash Lounge is one of the fastest-growing salon franchises today. Over the past 5 years to 2022, The Lash Lounge went from 11 franchises to 113..!

Should you buy and open a new The Lash Lounge franchise? The answer isn’t that obvious here.

Even though The Lash Lounge has been expanding rapidly recently, it’s unfortunately not the best franchise investment we found. Indeed, we found that The Lash Lounge has rather low profit margins for a salon franchise (11% EBITDA margin) which leads to a high payback.

How much does it really cost to open a The Lash Lounge franchise? Are the profits worth the estimated investment? In this article we’re looking at the Franchise Disclosure Document to find out all you should know before investing. Let’s dive in!

Key stats

Franchise fee$60,000
Royalty fee6.0%
Marketing fee2.0%
Investment (mid-point)$540,000
Revenue per unit$571,000
Revenue per sq. ft.[franchise_value_revenue_per_sq_ft]
Sales to investment ratio0.4x
Payback period*[franchise_value_investment_payback]
Minimum net worth$500,000
Minimum liquid capital$150,000
* using 5-10% net profit margin

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What is The Lash Lounge?

The Lash Lounge is a premier salon franchise that offers in-demand eyelash extension services using cutting-edge technology and a dedicated team of beauty specialists.

Founded in 2006 by Anna Philips, the beauty brand operates on an all-inclusive, membership-based model, offering additional services such as eyebrow threading, eyelash tinting and lash lifts. 

The Lash Lounge is headquartered in Texas and started franchising in 2010.

Today, the company operates over 116 studios in the US. 

The Lash Lounge franchises pros and cons

Pros

  • Explosive growth potential: the franchisor excels in one of the fastest-growing niches in the beauty industry. 
  • Recurring revenue model: repeat clients attract recurring revenue. 
  • Low cost business: low cost franchise opportunity, meaning only $150,000 in operating capital plus a net worth of $500,000 can get you on your way.  
  • Multiple income streams: franchisees earn from semi-permanent eyelash extension services, eyebrow threading, brow and lash tinting, lash lifts, lash fills and product sales. 
  • Simple business model: a simple business model relying on the brand’s popularity, strength and stability to grow. 
  • No beauty background required: franchisees don’t need a background in the beauty industry to own a studio. The franchisor puts such responsibilities on their highly trained and qualified professionals.
  • Marketing assistance: extensive marketing support to help franchisees attract and retain clients. Besides leveraging the brand’s popularity, franchisees work with a corporate team to make a lasting impression on their clients. 
  • Initial training: comprehensive training to help with site selection, lease negotiation, field operations, meetings and conventions and security and safety procedures. In-person consultation and a free coaching program help franchisees understand how to run a Lash Lounge franchise. 
  • Ongoing support: franchisor support goes beyond the daily operations, with a dedicated team to provide consistent feedback, communication and business analysis to ensure stability.  
  • Third-party financial assistance: The Lash Lounge has relations with third-party financial sources to help franchisees cater to the franchise fee, startup costs, equipment and inventory. 

Cons

  • No absentee ownership: franchisees must be involved in everyday operations. 
  • Not a part-time investment opportunity: The Lash Lounge franchise can’t be run part-time or as a side business. 
  • Not a home-based opportunity/mobile unit: franchisees must operate from fixed locations within the designated working hours. 
  • No exclusive territories: no fixed areas to operate the franchise. Franchisees may face competition from other Lash Lounge franchises. 
  • Minimum employee requirement: 6-12 employees to run a Lash Lounge franchise. 
  • Competition: Amazing Lash Studio and JJ Eyelashes.

How much does a The Lash Lounge franchise cost?

On average, you would need to invest around $372,500 to open a The Lash Lounge salon. This amount is on the lower end compared to other salon franchises ($450,000 as per our own benchmark).

The investment depends on your location, the salon’s size, and other similar factors. Generally, the investment amount ranges between $242,619 and $502,345 (Franchise Disclosure Document 2022).

Startup costs

The investment amount includes an initial franchise fee of $49,500, which must be paid to the franchisor.

In addition to the initial franchise fee, the investment covers all the essential startup costs you may need to start a beauty salon. Namely: 

  • Formation Costs: pre-opening training expenses, construction, lease improvements, equipment, furniture, decor, signage, POS system, security deposits, permits, business licenses, and first year’s professional fees, etc.
  • Initial Marketing: grand opening event
  • Operating Costs: initial supplies, initial cosmetic inventory, telephone and utility expenses, insurance deposits and premium, first 3 month’s lease payment, 3 months working capital, etc.
Type of costLowHigh
Initial Franchise Fee$49,500$49,500
Formation Costs$143,441$370,138
Initial Marketing$1,000$1,500
Operating Costs$48,678$81,207
Total$242,619$502,345
Source: 2022 Franchise Disclosure Document

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What is the revenue of a The Lash Lounge salon?

A The Lash Lounge franchised salon makes $278,000 in revenue per year on average.

This is the annual median sales of 74 franchised salons operating in 2020. Although there were a total of 109 franchises at the end of 2020, we excluded from that average the franchises that were not opened for all of 2020 due to the pandemic.

See below the breakdown of the revenue per unit of 74 franchised salons as disclosed in the FDD, from the highest ($653,000) to the lowest ($39,000).

How profitable is a The Lash Lounge franchise?

Even though The Last Lounge does not provide detailed cost information in its Franchise Disclosure Document, we estimate that one salon makes $31,000 in profits per year.

This corresponds a 11% EBITDA margin of which we are providing a simplified profit and loss below. Unfortunately, 11% is much lower than the average profit margin for salon franchises as per our own benchmarks. Indeed, we found that the average salon franchise reaches 25% EBITDA margin in comparison.

This is mostly due to the fact that rent costs are very high compared to revenue: as per the FDD the average salon spends $72,000 in rent per year, whilst the average revenue per salon is $278,000 (~25% vs. 10% on average for salon franchises).

Again, note that these numbers are estimations: we had to make assumptions when the data is not available in the FDD as outlined in the “Source” column. For example we estimate COGS and staff to be 5% and 40% of revenue respectively.

Profit and lossAmount% revenueSource
Revenue$278,124100%as per FDD
COGS$(13,906)5%industry average
Staff$(111,249)40%industry average
Royalties$(16,687)6%as per FDD
Rent$(72,000)26%as per FDD
Marketing*$(13,906)5%as per FDD
Other operating costs$(19,469)7%industry average
EBITDA$30,906~11%
* including marketing fee
Source: 2022 Franchise Disclosure Document

Is The Lash Lounge a good investment?

This is where it gets a bit tricky with The Lash Lounge: because it has low profit margins (again, these are our own estimates), The Lash Lounge is not the best franchise investment you can make in the beauty space. Let us explain:

Assuming a net profit margin of 5% to 10% of revenue (after deducting all expenses not included in EBITDA), we found the payback for a The Lash Lounge franchise is 15 to 25 years. That’s a very mediocre payback: you would need to wait that long to repay all creditors and investors (including yourself) before you can reap the profits from your salon.

To calculate payback, we simply compare the estimated investment of $372,000 against the net profits (5% to 10% in this case).

Even though we try our best to use industry benchmarks to estimate profits, you should realise that the investment cost itself (the $372,000) is high vs. the expected revenue per unit ($278,000). A good rule of thumb is to have the sales-to-investment ratio higher than 1x (here 0.7x instead).

Yet, note that this does not guarantee your salon will perform as such. Your salon may be more (or less) profitable than our estimates and the average of The Lash Lounge salons in general. When choosing a franchise, make sure to do your own research and speak to a number of franchisees to get their own advice and representations.

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Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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