Waxing The City Franchises: $550K Revenue, Low Profits?

Waxing The City is one franchise that leaves us puzzled: the Franchise Disclosure Document only includes some scarce profit information from 7 low profits company-owned salons vs. 113 franchises.

Based on this information, the average Waxing The City has a 12 years payback at best: not the best franchise investment unfortunately. But is this really the case? How much profits can you really make as a franchisee?

In this article we are looking at Waxing The City and its Franchise Disclosure Document to find out how much it really costs, how much profits you can make and whether it’s a good investment. Let’s find out!

Key stats

Franchise fee	$42,500
Royalty fee	6.0%
Marketing fee	2.0%
Investment (mid-point)	$359,000
Revenue per unit	$564,000
Revenue per sq. ft.	$313
Sales to investment ratio	1.6x
Payback period*	5 years
Minimum net worth	$350,000
Minimum liquid capital	$150,000

What is Waxing The City?

Waxing The City is a salon-styled beauty studio offering the best head-to-toe waxing services. 

Founded in 2003 by Summer Hartshorn Vasilas and her friends, the Minnesota-based brand offers body waxing, facial waxing, eyebrow waxing, bikini waxing, Brazilian waxing, salon and hair removal services. 

The exclusive waxing studio has been franchising since 2010. 

Today, Waxing The City operates in 125 locations worldwide, with 118 studios in the US.

Waxing The City franchises pros and cons

Pros

• Repeat customers: back to back waxing services, eyebrow enhancement and hair removal services attract recurring revenue.
• Multiple revenue streams: franchisees earn from waxing services, body and skin car product sales. 
• Growth potential: a popular brand in the booming waxing and self-care industries with huge growth potential. 
• Simple studio operations: streamlined daily operations thanks to the tried and tested waxing methods. Franchisees have predictable working days with straightforward routines. 
• Low-cost investment: the brand is known for its excellent waxing services, setting up a low-cost franchise opportunity for franchisees to capitalize on. 
• Expert assistance: the franchisor helps franchisees make a strong first impression on potential customers. The dedicated support team helps new brand owners handle site selection, lease negotiation, operations, construction guidance and studio design. 
• Strong marketing strategy: the franchisor helps brand owners stand out with effective marketing and advertising strategies. The devoted corporate team helps franchisees attract new clients and retain the existing ones after studio opening. This includes grand opening marketing programs, local advertising assistance, free access to corporate marketing tools and promotional scheduling help. 
• Ongoing support: the franchisor helps with the ins and outs of running a successful business. The support team keeps in touch with franchisees throughout their entrepreneurial journey, from staff guidance to training, conference calls, webinars and regional workshops. 
• Financial assistance: Waxing The City may provide financial assistance via third-party sources to help franchisees cover the startup costs, franchise fees, inventory, equipment and trade fixtures. 
• Exclusive territory protection: a fixed area to run the franchise business without competing with other Waxing The City studios.  

Cons

• No absentee ownership: full involvement in the daily operations from the physical locations. 
• Can’t be run part-time: mandatory, full-time, long-term commitment. 
• Minimum employee requirement: 8 employees to run the franchise. 
• Can’t operate from home/as a mobile unit: franchises must be operated from physical locations. 
• Competition: EWC and Bliss & Bluemercury.

How much does a Waxing The City franchise cost?

On average, you may need to invest around $359,000 to open a Waxing The City franchised salon. This amount is on the lower end compared to the average salon franchise ($450,000 as per our own benchmark).

The investment may vary depending on your location or the size of the salon. For example, the market price of real estate has an impact on the lease deposit which in turn impact the initial investment.

As per the 2023 Franchise Disclosure Document, the required investment ranges from $223,965 to $493,428.

Waxing The City startup costs

Why would you need to pay this much amount at the very beginning of the operation, you may ask? Well, the investment covers all the startup costs you may need to start a salon.

In addition to the initial franchise fee of $42,500, the investment also covers: 

• Formation Costs: training expenses, leasehold improvements, equipment, furniture, interior and exterior signage, technology system, permits, business licenses, etc.
• Initial Marketing: grand opening advertising
• Operating Costs: 3 month’s rent, office supplies, initial retail inventory, initial waxing supply inventory, insurance, working capital for the first 3 months, etc.

Type of cost	Low	High
Initial Franchise Fee	$42,500	$42,500
Formation Costs	$87,855	$339,718
Initial Marketing	$25,000	$25,000
Operating Costs	$68,610	$86,210
Total	$223,965	$493,428

What is the revenue of a Waxing The City salon?

On average, a Waxing The City salon makes $564,000 in revenue per year. That’s the annual median sales of 98 franchised salons operating in 2021 as disclosed in the latest FDD.

Yet, revenue performance varies a lot from one salon to the other. Indeed, the top 1/3rd franchises had a revenue of $737,000 per year whereas the bottom 1/3rd had an average revenue of $329,000 only.

How profitable is a Waxing The City franchise?

Even though Waxing the City does not have any detailed cost information for their franchises, they do provide a detailed profit-and-loss for a handful of their company-owned salons (7 salons to be exact).

Also note that the P&L below is adjusted to account for expenses as if it were franchised-owned salons (by adjusting for royalties for example).

On average the franchisor estimate that a franchise has a EBITDA margin anywhere from -7% (lowest performing salon) to 11%.

As per our own analysis, using the average revenue per unit of $539,000, we estimate the average Waxing The City franchise makes $60,000 in profits per year (11% EBITDA margin).

Unfortunately, this isn’t the best profit margin for a salon. Indeed we found that salon franchises have EBITDA margins of 25% on average instead.

Profit and loss	Amount	% revenue	Source
Revenue	$538,634	100%	as per FDD
COGS	$(86,182)	16%	as per FDD
Staff	$(242,385)	45%	as per FDD
Royalties	$(32,318)	6%	as per FDD
Rent	$(58,000)	8%	as per FDD
Marketing*	$(21,545)	4%	as per FDD
Other operating costs	$(37,704)	7%	as per FDD
EBITDA	$60,500	11%

Is a Waxing The City franchise a good investment?

Because of a low profitability, Waxing The City has a high payback period. We found that Waxing The City has a payback of 12+ years (assuming a 5% net profit margin).

As you would expect, this isn’t the best franchise investment: you would have to wait 12 years at least before you can repay investors, creditors and yourself. Again, this assumes your salon reaches 5% net profit margin. Yet, there is no guarantee your salon will perform as such.

Also, keep in mind that these numbers are based on the analysis of 7 company-owned salons as disclosed by the franchisor in the FDD. As such it is also possible that the 113 franchised-owned salons as of 2022 perform better than the company-owned salons as presented in the FDD.

In any case, and before investing, make sure to speak to a number of franchisees to assess their own financial performance.

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