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Massage Envy
How much does Massage Envy cost?
Initial Investment Range
$719,350 to $1,081,000
Franchise Fee
$45,000
ME SPE Franchising, LLC offers franchises to operate a personal health business under the name “Massage Envy” that offer professional therapeutic massage services, Massage Envy’s proprietary Total Body Stretch service, hot stone massage therapy, customized facial and/or skin care services (including services such as microdermabrasion and chemical peel), all utilizing a unique process and high-end product line, as well as related products and services through a membership-based program in a distinctive, clean and friendly environment.
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Massage Envy April 25, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: July 16, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
Medium Risk
Explanation
The financial statements for ME SPE Franchising, LLC (the franchisor) show consistent profitability. However, it operates as a securitization entity, meaning a significant portion of its cash flow is distributed to its parent company and used to service debt. While currently stable, this structure prioritizes payments to investors and lenders. Your accountant should evaluate the cash flow and retained earnings to assess the franchisor's ability to reinvest in the brand and support franchisees long-term.
Potential Mitigations
- Engage a franchise accountant to analyze the audited financial statements in Item 21, paying close attention to cash flow, debt covenants, and related-party transactions.
- Discuss the implications of the securitization business model on brand support and investment with your financial advisor.
- Your attorney should review any parent guarantees or support agreements mentioned in the FDD to understand their strength and enforceability.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a significant negative trend, with a net loss of 44 franchised outlets in 2024, following losses of 30 in 2023 and 26 in 2022. In 2024 alone, there were 16 terminations, 2 non-renewals, and 27 units that 'Ceased Operations - Other Reasons' against only 1 new opening. This high rate of turnover is a critical warning sign that may indicate systemic issues, franchisee dissatisfaction, or challenges with profitability within the system.
Potential Mitigations
- A thorough analysis of the Item 20 tables with your accountant is essential to quantify the churn rate and identify trends.
- It is critical to contact a significant number of former franchisees listed in Item 20 to understand why they left the system.
- Your attorney should help you formulate specific questions for the franchisor regarding the high number of terminations and ceased operations.
Rapid System Growth
Low Risk
Explanation
This risk was not identified. The system is shrinking, not growing rapidly. A shrinking system presents its own risks, such as declining brand recognition and reduced funds for marketing and support, which could impact your location's performance. The franchisor's ability to attract new franchisees may be diminished, which can affect the overall health and innovation of the brand. This is a mature system experiencing contraction, as shown in Item 20.
Potential Mitigations
- With your business advisor, discuss the potential long-term impacts of being part of a contracting franchise system.
- Question the franchisor about their strategies to address the net loss of units and to stabilize the system.
- An accountant can help you model the financial effects of potentially lower brand growth and marketing fund contributions.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified. Massage Envy is a large, mature franchise system that has been operating for many years, as disclosed in Item 1 and Item 20. However, even mature systems face challenges, as evidenced by the high franchisee turnover discussed in Item 20. Your due diligence should focus on the system's current health and future direction rather than its initial viability.
Potential Mitigations
- Your business advisor should help you evaluate the current competitive landscape for this mature brand.
- Discuss with existing franchisees how the franchisor has adapted its model over time to stay relevant.
- An attorney can review the FDD for any recent changes in ownership or strategy that might affect the mature system.
Possible Fad Business
Medium Risk
Explanation
The core business of therapeutic massage has sustained demand. However, the specific membership-based business model and its competitive positioning are critical to evaluate. The high rate of franchisee turnover detailed in Item 20 could raise questions about the long-term viability or profitability of this specific business model for franchisees, even if the underlying industry is not a fad. You should assess if the model can adapt to changing consumer preferences and competition.
Potential Mitigations
- A business advisor can help you research the long-term trends in the wellness and membership-based service industries.
- Discuss the sustainability and profitability of the specific business model with a range of current and former franchisees.
- Your accountant can help you model the financial resilience of the business under different market conditions.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD. Item 2 discloses that the key members of the management team generally have significant experience within the company or the franchise industry. An experienced management team is important as it can lead to better strategic decisions, more effective franchisee support, and more stable system operations. You should still verify their reputation within the industry.
Potential Mitigations
- Review the specific backgrounds of the key executives listed in Item 2 with your business advisor.
- When speaking with franchisees, ask about their direct experiences and the perceived competence of the leadership team.
- Research the executives' public track records and past company affiliations to supplement the FDD information.
Private Equity Ownership
High Risk
Explanation
The franchisor is part of a portfolio of brands controlled by Roark Capital Group, a private equity firm, and the franchise assets are held in a securitization structure. This ownership model may prioritize extracting cash and maximizing returns for investors over the long-term health of individual franchisees. The Franchise Agreement gives the franchisor broad rights to sell the system, which is a common exit strategy for private equity, creating uncertainty about future ownership and strategic direction.
Potential Mitigations
- Your attorney should explain the implications of the securitization structure and the franchisor's broad right to assign the franchise agreement.
- Research Roark Capital's track record with its other franchise brands to understand their typical management style and exit strategies.
- Discuss with your financial advisor how this ownership structure could influence decisions regarding fees, support, and mandatory expenditures.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. The FDD discloses the parent companies and the audited financial statements of the franchisor, ME SPE Franchising, LLC, are provided. It is a subsidiary within a larger structure controlled by Roark Capital. The financials provided are for the specific legal entity granting you the franchise, which is compliant with disclosure rules. It is important to understand this specific entity's role and financial standing.
Potential Mitigations
- Your accountant should review the provided financial statements, including all footnotes, to understand the financial health of the specific franchising entity.
- An attorney can help you map the corporate structure described in Item 1 to understand the relationships between the parent, franchisor, and manager entities.
- Clarify with the franchisor if any parent guarantees exist for the franchisor's obligations.
Predecessor History Issues
Medium Risk
Explanation
The FDD in Item 1 identifies Massage Envy Franchising, LLC (“MEF”) as the immediate predecessor and Massage Envy Limited, LLC as a prior predecessor. Item 3 discloses a history of significant litigation involving these predecessors, including class actions and franchisee disputes. This history is relevant because it may indicate unresolved systemic issues or a culture of conflict that has been carried over to the current franchisor entity, impacting how the system is managed today.
Potential Mitigations
- A careful review of the predecessor history in Items 1, 3, and 4 with your attorney is crucial.
- Question long-tenured franchisees about their experiences under the predecessor entities and whether historical problems have been resolved.
- Your business advisor can help assess if the current management has meaningfully changed the practices that led to prior disputes.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a significant and concerning pattern of litigation. This includes numerous lawsuits from customers alleging sexual misconduct by therapists, multiple consumer class actions regarding membership and billing practices, and a large-scale arbitration involving over 100 franchisees alleging breach of contract and issues with mandatory purchases. This history suggests major systemic risks related to brand reputation, operational procedures, and franchisee relations that could directly impact your business and potential liability.
Potential Mitigations
- Your attorney must conduct a thorough review of every piece of litigation disclosed in Item 3 to understand the allegations and outcomes.
- Considering the nature of the claims, discuss with your insurance broker the cost and availability of robust liability insurance.
- This extensive litigation history warrants in-depth conversations with current and former franchisees about these systemic issues.
Disclosure & Representation Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Financial & Fee Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Legal & Contract Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Territory & Competition Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Regulatory & Compliance Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Franchisor Support Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Operational Control Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Term & Exit Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Miscellaneous Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
