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Sun Tan City Franchise ProfileHealth & Beauty Franchises > Spas |
What Are the Initial Investment Requirements for a Sun Tan City Franchise?
To open a Sun Tan City franchise, you will need to prepare for an initial investment ranging from $527,289 to $852,529. This includes a franchise fee of $30,000. Additionally, you should have liquid cash available between $50,000 and $100,000 and a net worth of $500,000 to $1,500,000 to meet the financial criteria set by the franchisor.
What Are the Ongoing Fees Associated with a Sun Tan City Franchise?
As a franchisee, you will be responsible for ongoing fees that include an 8% royalty fee on gross sales and a marketing fee of 3.5%. These fees are essential for maintaining brand standards and supporting marketing efforts, which can help drive customer traffic to your location.
What Is the Average Revenue Potential for a Sun Tan City Franchise?
The average annual revenue for a Sun Tan City franchise unit is approximately $400,000, with a median annual revenue of $1,300,000. The revenue can vary significantly, with the lowest reported annual revenue at $200,000 and the highest reaching $1,300,000. Understanding these figures can help you assess the financial viability of your investment.
How Quickly Can You Expect to Break Even with a Sun Tan City Franchise?
Franchisees can expect to reach breakeven within approximately 12 months of operation, with an investment payback period of around 24 months. This timeline can vary based on factors such as location, marketing effectiveness, and operational efficiency, making it crucial to plan your business strategy accordingly.
Sun Tan City Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Sun Tan City Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2018 | 2019 | 2020 |
|---|---|---|---|
| Total Units | 252 | 257 | 260 |
| Net Change YoY | 5 | 3 | |
| Franchised Units | 161 | 166 | 167 |
| Net Change YoY | 5 | 1 | |
| Corporate Units | 91 | 91 | 93 |
| Net Change YoY | 0 | 2 |
Initial Investment
The initial investment required to open a Sun Tan City franchise ranges from $527,289 to $852,529. This includes a franchise fee of $30,000, which is part of the overall startup costs. Franchisees should also be prepared to have between $50,000 and $100,000 in cash available to cover initial operational expenses.
Revenue Potential
Sun Tan City franchises have demonstrated strong revenue potential, with average annual revenue per unit reported at $400,000. The revenue range varies significantly, with the lowest annual revenue at $200,000 and the highest reaching $1,300,000. This variability highlights the importance of location and management in driving sales.
Royalty and Marketing Fees
Franchisees are required to pay an 8% royalty fee based on gross sales, along with a marketing fee of 3.5%. These fees contribute to the overall operational costs but also support brand marketing efforts that can help drive customer traffic to each location.
Financial Performance
The financial performance of Sun Tan City franchises is strong, with an EBITDA margin of 30% and a gross profit margin of 75%. This indicates that franchisees can expect a healthy return on their investment, provided they manage their operating expenses effectively.
Breakeven and Payback Period
Franchisees can expect to reach breakeven within approximately 12 months of operation. The investment payback period is estimated at 24 months, making it a relatively attractive option for those looking to recoup their initial investment quickly.
Growth and Expansion
Sun Tan City has shown consistent growth, with 260 total units as of 2020, comprising 167 franchised units and 93 corporate units. This growth trajectory suggests a strong brand presence and ongoing demand for tanning services, creating opportunities for new franchisees to enter the market.
Frequently Asked Questions
The initial investment for a Sun Tan City franchise ranges from $527,289 to $852,529. This includes the franchise fee of $30,000 and other startup costs.