SweatHouz Franchise: A Hit in 2024?
SweatHouz is a sauna franchise. Franchisees can own and operate a business that offers wellness experiences and services focused on private infrared sauna, red light, hydromassage, and cold plunge therapies, provided by the Sweathouz franchise.
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How Much Is a SweatHouz Franchise?
The initial SweatHouz Franchise Fee is $35,000. You have to pay this upfront fee when opening a SweatHouz franchise.
SweatHouz Franchise Cost
The estimated total investment necessary to begin the operation of a SweatHouz Franchise ranges from $482,273 – $896,860. The following costs are part of the upfront costs included in the initial investment for a SweatHouz. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a SweatHouz franchise in 2022.
Estimated Initial Investment
| Type of expediture | Amount | To Whom Payment Is to Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee | $35,000 | $35,000 | Us |
| Construction Management Service Fees | $5,000 | $10,000 | Us |
| Initial Equipment Package | $50,000 | $70,000 | Designated Suppliers |
| Training Program Expenses | $0 | $5,000 | Unaffiliated Suppliers |
| 3 Months’ Rent & Deposits | $20,000 | $48,000 | Landlord |
| Leasehold Improvements | $296,273 | $588,860 | Unaffiliated Suppliers |
| Professional Fees / Permits | $10,000 | $17,000 | Unaffiliated Suppliers |
| Furniture, Fixtures & Equipment | $15,000 | $20,000 | Unaffiliated Suppliers |
| Computer System, POS, and Technology Setup | $1,000 | $1,500 | Designated Suppliers and Unaffiliated Suppliers |
| Opening Inventory & Supplies | $7,500 | $15,000 | Our Affiliates / Unaffiliated Suppliers |
| Grand Opening Advertising | $10,000 | $20,000 | Unaffiliated Suppliers |
| Insurance | $3,500 | $6,000 | Unaffiliated Suppliers |
| Signage | $8,000 | $17,000 | Unaffiliated Suppliers |
| Deposits | $1,000 | $3,500 | Unaffiliated Suppliers |
| Additional Funds (3 Months) | $20,000 | $40,000 | Unaffiliated Suppliers |
| TOTAL | $482,273 | $896,860 | |
Requirements
SweatHouz requires at least $200,000 liquidity with a $750,000 net worth to start a franchise.
Ongoing Fees
Royalty: 6% of Gross Sales.
Brand Fund: Currently, 2% of Gross Sales.
Local Marketing: Currently, the greater of (a) $1,500 or (b) 2% of the prior month’s Gross Sales.
How Much Do SweatHouz Franchise Owners Make?
While the information for SweatHouz franchises is not available due to there being no open franchises when our course was published, here we will use financials from their affiliate-owned stores.
2021 SweatHouz Sales: $570,000
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $689,565 | 25% | $142,500 | 6 years |
| 30% | $171,000 | 5.5 years | |
| 35% | $199,500 | 5 years |
Based on the median sales provided by SweatHouz’s franchise locations, at an average of a 30% profit margin it will take around 5.5 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 30% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised store, such as the Franchised store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other Saunas; and the extent of market penetration and brand awareness that SweatHouz stores have attained in your market. Also, the quality of management and service at your Franchised store are major factors.
Is the SweatHouz Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for SweatHouz franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.58
When you go to sell a SweatHouz franchise based on the median multiple of .58 and net sales of $570,000, it would sell for $330,600. This is significantly lower than the midpoint investment of $689,565.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Why Is SweatHouz Franchise Worth the Investment?
Although SweatHouz may not currently have as strong of a return on investment as some of the other brands on the market, it has something that none of the others have – Jamie Weeks, the top OrangeTheory franchisee in the world, who is helping all of his franchisees achieve the same level of success as he did!
How Many SweatHouz Units Have Opened and Closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Company-Owned | 2019 | 0 | 1 | +1 |
| 2020 | 1 | 4 | +3 | |
| 2021 | 4 | 8 | +4 | |
| Total | 2019 | 0 | 1 | +1 |
| 2020 | 1 | 4 | +3 | |
| 2021 | 4 | 8 | +4 |
Because the company is so new, there are no franchises yet. It is operating 8 affiliate-owned stores as of the end of 2021.
Conclusion
SweatHouz is a new offering on the market and it remains to be seen how popular it will become.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Health and Beauty industry.
