Acquisitions Anonymous - #1 for business buying, selling and operating - Would You Buy 3 Skincare Franchises with Razor-Thin Margins?

Episode Date: March 17, 2026

In this episode, the hosts analyze a three-location skincare franchise in Alexandria, VA generating $6.4M in revenue—but debate whether razor-thin margins and franchisor red flags make this a falling knife.Business Listing – https://www.bizbuysell.com/business-opportunity/3-open-and-operating-skin-care-franchises-in-dmv-with-6-4m-in-revenue/2472429/Welcome to Acquisitions Anonymous – the #1 podcast for small business M&A. Every week, we break down businesses for sale and talk about buying, operating, and growing them.Looking to build a professional website in minutes? Try Wix: https://wix.pxf.io/c/6898629/3115214/25616?trafcat=templateHubSpot is the backbone for how businesses scale without chaos. Try them out here: https://go.try-hubspot.com/OeG9Vr💰 Sponsored by:Capital Pad – A platform connecting accredited investors with vetted small business acquisition deals. Discover exclusive opportunities at https://capitalpad.comGo High Level – The all-in-one sales and marketing platform built for agencies and entrepreneurs. Automate, manage, and grow your business at https://www.gohighlevel.comThis week, the hosts break down a three-location skincare franchise in Alexandria, Virginia (DMV area) generating $6.4M in revenue with $356K in EBITDA. The concept positions itself as a “modern facial studio,” blending spa-quality services with fitness-style memberships. Revenue is driven by three streams: recurring membership dues, à la carte facial services, and high-margin retail skincare products. On paper, it taps into the $100B U.S. skincare market and operates in a high-income region.Key Highlights:- $6.4M revenue across 3 locations; $356K EBITDA (≈5% margin)- $2M asking price — difficult to finance at current earnings- Membership + services + retail model modeled after fitness studios- Corporate-owned franchise locations being sold as a package- Key risk: churn, labor intensity, lease exposure, and unclear store-level rampSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Welcome back, everybody, to Acquisitions Anonymous, the internet's number one podcast on small business M&A. Mills Snell, one of your co-hosts, joined today by Heather Anderson and Connor Gross. We talk about a Virginia-based business that is in the skincare franchise space, multiple locations, established revenue. We talk about where this business might be in the revenue ramp, because some of the numbers don't always add up when you look at businesses at a point in time. It's a compelling business.

We like it for certain reasons. We talk about its similarities and differences with the massage space, especially on the franchise side. Med spas, which we've covered a lot, and Heather has amazing expertise on. And I think you're really going to like this episode. If you ever looked at anything like this, you know that the devil's in the details,

and this one has some things to like and some things that we have a lot of questions about. Stick around after a quick word from our sponsor. We'll set acquisitions anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100% beers anymore. And thumbs downing on just the plus inventory. Hey, everyone, it's Bill.

And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called CapitalPad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So CapitalPad is a marketplace for acquisition. entrepreneurs, that is people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest in acquisition deals. So if you want to back somebody buying a small business, CapitalPad is a place to do it. And if you want to

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go check out Capitalpad.com and tell them that Acquisitions Anonymous sent you. Welcome back, everybody. Another episode of Acquisitions Anonymous. It's me, Heather, and our good friend, Connor Gross, to talk about another fantastic business for sale. And we're just going to keep running with the hits at this point because we liked the last deal, and I think we're going to like this one too.

We always tried to pick something where we have some experience. I have no experience with this type of business. So you guys are going to have to really carry the conversation about a skin care, three location, skin care franchise in Alexandria, Virginia. This is on Bizby Cell. One day they might be a sponsor, you never know. But it says three open and operating skincare franchises in DMV. What is DMV?

Maryland, D.C., Maryland, Virginia. Okay, okay. With 6.4 million in revenue. in Alexandria, Virginia, asking price $2 million. They do not disclose any cash flow SDE. The EBITDA is $356,000 on $6.4 million in revenue. It's been established since 2021. And it says this is a franchisor owned, which we just did one of these and we're on a role with them.

Franchisor owned and offering to one new franchise owner for first time. I think I understand what they're trying to say there. It says this is an opportunity to acquire three fully staffed, open and operating franchisor-owned locations in the DMV area. We established our first of these three locations in 2021. We are the modern, quote, facial shop that marries spa quality results with the repeat visit economics of a fitness studio. Clients book 30 to 50 minute personalized facials. add targeted enhancements and shop curated skin care, then keep coming back through an optional membership that bills monthly and unlocks perks.

That triple engine of recurring dues, al-a-cart services, and high-margin retail gives each shop predictable, diversified cash flow while meeting surging demand in the $100 billion U.S. skincare market. I have to commend franchisors on their sales, pros because these are these are great descriptions i i'm i'm so interested it says a proprietary crm drives rebooking and product suggestions and that national brand campaigns feed your local pipeline so owners focus on high level growth rather than day-to-day marketing i can't wait to unpack that part more employees these three corporate owned locations are fully staffed open and

operational we don't get an employee count competition they say the triple stream revenue of dues services and retail delivers predictable cash flow and 35% blended margins, unlike single service spas, membership driven loyalty engine, 30-day facial cadence, proprietary CRM rebooking, and product auto refills, pushes repeat visits, semi-absentee scalability. That doesn't say anything about their competition, but that's okay. There are opportunities to open additional franchise locations throughout D.C., Maryland, and Virginia. Support and Training, our franchise training unfolds in three tightly sequenced phases that blend e-learning, classroom work, and hands-on field coaching. Training team is available to provide the buyer and any new staff, three corporate iron.

They say their lease expiration. This has got to be a typo is January 1st of 1970. And it looks like... Before my time. Yeah. Yeah. It looks like there's, and I haven't seen this before, but there's like there's like, like biz by sell edge, which I'm sure is a, is a behind a paywall, but you can get,

uh, demographic information for the area and you can get, uh, financial benchmarks for Virginia spas and, and some additional info, but I don't have that. So I'm not that cool. What do you guys think about this, uh, $2 million asking price on 6.4 million in revenue and 356,000 in EBITDA? Well, it feels like a med spa without, Botox is what I'm what I'm kind of sensing from their description. And as you guys know, I've done a lot of med spa deals. And what we generally value the most in a med spa is recurring revenue, which has traditionally been seen at Botox, right? Once you start Botox, you've got to come back every three months. You can't stop. And people never stop. And so it's very reliable recurring revenue. This one,

it sounds like it's facials, maybe like things that you're, you don't need license for. They talk about their training programs, so it's probably a lot of different, you know, microabrasion, microndeling, all kinds of other little treatments that you can do that are effective, but not like Botox, not medical,

you know, you don't need licenses for. That is generally not as recurring as Botox, but it sounds like they use their CRM to try to make it as recurring as possible, like really going back out to their clients and reminding them and recommending products and telling them to keep going with it. So I would say the valuation is a little rich, given that they don't probably do injections and it's just facials.

But, you know, nice business. I think it has some merit, you know, and I like some of the things that I heard there. I just think the valuation sounds a little high. Yeah, it's interesting. I was trying to think about it more so as a massage concept, but it's more niche than that because they only do facials because I know like massage indie and hand in stone. I know they do your standard massages, whatever you call it, but they also do facials.

This sounds like it's exclusively facials. So I don't know if there's a component like of that that brings it closer to a med spot, but that was kind of the adjacent business that I was trying to piece it together with. In this wellness space, if you will, there are all kinds of little niche. models popping up. Believe it or not, there are places you can go for a scalp treatment, scalp massage. Like, they don't do facials, they don't do massages, they just work on your scalp. And they don't even do hairstyling. It's literally just that. So this is like kind of in that category. But facials are a little more mainstream. A lot of women and men. Some men will go get facials, just people are more aware of

skin care. And again, there's so many new products. And I think this could be appealing to people who want someone else to figure it out for them. Like, you know, analyze what's going on with my skin and tell me what are the right products for me. That would be effective. And I think that's kind of an interesting niche because the space is flooded with products and new technology and everything all the time. So I think it could be appealing in that regard. I like that there's like a consultative nature to this. And I think that probably, I don't know, it seems like this, there's a lot going on here that doesn't really add up to me, but it seems like they would have a stronger path to

higher margin than like Alta or Sephora, where there's salespeople, right? But they're not actually like really performing services. They're just, you know, letting you test stuff and saying that looks nice on you. they say they have 35% gross margins, right? It wasn't gross? But I mean, this is 5% net margins. This is really, really low. I guarantee you they have one location is bleeding money, at least.

I'm also wondering, like, is there some one-time opening? Like, the oldest store is four years old, maybe going on five years old. the so are there one-time expenses related to or just the ramp up of revenue right on some of these locations that they're like look we just don't have the patience for them to pan out just seems like a terrible time to sell if you've already done all the work yeah and they would be better presenting their revenue and ebidab by store and showing you this is our most mature store middle store the newest store that would answer a lot of those questions because here's what's possible you can't get, you know, high teens, you know, net margins.

It's not, you're not locked in at five. Yeah. Yeah. That would make more. Where you read the header where they phrased it as a franchise offering to one new franchisee. That is what they were telling you is that we will give you the two that you're going to want. And you also have to take the one that you don't want, but one franchisee. Yeah.

That's a good point. Yeah. And it's funny. They even compared it to the economics of a fitness studio, which I'd never seen. a boutique fitness studio with 5% margin. So I've seen them with either 25% or negative 25%, but never 5%. So that's awesome. I don't know that I follow the parallel there.

So what has always scared me about the massage space in general is just how unscailable the labor model is. I mean, you have one person that is there is only serving one person at a time. and you cannot outrun that at any point. So I've seen more specialty things where they're just able to command such a premium price where it does change the economics of the business. But I'm just curious what you guys think about whether or not that might come into play here. It reminds me of like the limitations around like a law firm model where, you know, that lawyer may bill out for $450 an hour, but they're basically only getting paid $150 an hour, right? like it's kind of a three to one ratio,

whether it's a law firm or a dental practice or some one to one like this, where it's one person providing service to one person. And if the dentist hands are not in somebody's mouth, like there's no revenue, you know. But I think it, I think it could work. Um, I just,

I just wonder, to me this seems like it's too good to be true. And they're doing a great job describing this like triple threat, you know, uh, thing, but this just seems like such a discretionary expense that I get it. I think that the person goes in, they have a great customer experience, everything goes great, they feel like really benefited by the like value ad, not just of the service, but also the upsell of these products

that should be a higher margin. But I think when my wife comes back from this place, I'm like, why the hell are we still paying, you know, on subscription for you, like, and not to be mean about it, but like, I just think this gets cut really quickly. Yes, it does. From the budget, especially under a membership model. Yeah. I'm sure there's a lot of churn in their members, and I think that's one of the things. If you're a buyer, you want to get right at that. What is the churn? You know, because for a while, people might pay this, but long term, you're right, eventually they're going to go this. I could just buy these products. I don't need to, I don't need to go in and have them sell it to me every time. What I do like about this model is when you're doing Botox, there's a special training and medical training and whatnot. And there's somewhat of a shortage of injectors that can be very difficult. This model says, we've got the whole training program. You know, we can basically hire people without skills and turn them into skilled providers. And so that might keep your labor costs down a little bit and also give you kind of a steady

stream of replacement or growth employees, if that's the direction you're going in. So I do like that. But on the other hand, I do agree with you, this is a tough one to really have low churn. You're going to have high churn. And that means you're going to have high marketing costs. You have to always go out and find your new clients. And then you've got physical locations, you know, to set up with, you know, furniture and fixtures and equipment. Leases, multi-year leases that you're taking on. that didn't end in 1970. Correct.

Right. So it's an expensive business model from a lot of different angles, including marketing and customer acquisition. Big thanks to High Level for sponsoring this video and helping us pay for our editors. High Level is the all-in-one CRM that handles your emails, text, funnels, and more all in one place.

Think of it like the Swiss Army Night for small businesses, and you can try it for free for 30 days at gohighlevel.com slash Michael Gurdley. at least with the gym too like there's a community aspect and like they're going to do like culture building events and like you're going to have camaraderie and then like even if you don't want to keep paying for the gym you don't want to leave your friends you know here like this is a solo experience it's not something that i mean maybe they do like you know girls nights or something like that you know and and but i just think that it's not going to have the same communal kind of pull and stickiness that jims at least try to have No. And that's been, I think that's been seen in a lot of med spas is you need to go, you need to be located in an area that has very high income, average income levels, which this does. Alexandria, which is a very nice area. But, you know, even with the high income levels, you're still going to have, you know, that churn is still going to be there no matter what. And you're right, this is easy to cut. You don't even feel guilty. You just don't go. Yeah. I'm curious because I always think about gems is like the way. to spot a winner in fitness franchising is where the customers wear the gear like it's a sports

team like you've seen that with every single person, Heather in a in a med spa concept, I would guess people don't do that because there's kind of a like you wouldn't be advertising like, you know, this is where I get my Botox, right? It'd probably be. Yeah, there tends to actually be the other way around to act like you're just naturally looking this good all the time. Right, exactly. I'm going to tell you to be a secret. It's a thousand dollars on your face, you know. So, yeah, you do the opposite. Mills and I are not wearing the t-shirts of where we get our Botox done. So we just don't.

Although a scalp massage sounds really nice. I might have to look that up. Yeah, we need to check it out. I had one of those done in India for about a dollar and 50 cents. My guess is they'd be a little bit more expensive here. I think what literally makes or breaks this deal is the breakdown by store, both like the economics by store and also the opening timeline, because the thing that would change it for me

is if they had one or two locations that were still ramping. And it can't be ramping after, if they were all opened in 2021, they can't still be ramping, right? With a brick and mortar business, you do not want to do that if it's not something that can be fully ramped, quote unquote, within the first 12 to 24 months.

But if they had one that had opened up within the last 12 months that showed, you know, a more promising pro rata, you know, a monthly number, that would get me more intrigued. Which is interesting. To Mills' point, they did a great job describing the benefits, like what a customer would feel, you know, about this business, but they did not do a great job in this teaser of the financial benefits to a buyer. Yes.

You know why, Heather, and this is my biggest critique of this deal. is this right here, 356,000 in Evida and a $2 million asking price, it does not pencil. No. There is no, there's no way the math works, right? And this is not a, you know, put 10 or 20 percent down and finance the rest scenario. There's just not enough free cash flow to service the debt associated with the purchase price, which makes me really skeptical. Yeah. I think it could work if it was one of those trajectories where you have.

had one or more locations that was ramping because you'd want to do part of it as a seller note with an earn out feature in there. But depending on the trajectory and the deal structure, obviously, I could see them getting that number if it was really strong. And if you're going to get a loan

and you've got that ramping problem, right? You've got multiple locations. We've got to look at the maturity of each one. That, even with the best of data, even with a really great chart that shows each store and when it open, that's really hard for lenders to swallow because they're going to come back to, but you only have 356,000 of EBITDA.

You know, so they don't want to lend on the pro forma of these other stores and the fact that they're going to get there. They need to be there. So this really limits your borrowing ability to buy a business that's got stores that are ramping and sort of dragging on earnings, you know, in the recent history. So I think, you know, that's the main problem here. You know, you're not going to pay $2 million. And whatever you are going to pay, you're not going to be able to borrow very much.

you didn't have to pay a lot of that place. Yeah. So we talked about another franchisor carve-out. And part of what I brought up was just like, why aren't they selling it to a franchisee? And, you know, we talked about that happened to be a business where it was much more owner-operator, smaller, you know, community-oriented. I think about something like this is the inverse of that. Like, this is the business for someone who wants to scale, who has more capital than they do time. And so my question, they're more amplified, like, why are they not to a franchise?

Because if they aren't going to, to me, that's a red flag of franchisor. Like, why would they not be supportive of franchisees adding? And if they asked, and franchisees didn't want to, obviously, like, that's a red flag too. So that's my big question here. And, like, we're assuming best case scenario that they're ramping. if they're not ramping, like, the people who know this business the best and started it and know what every, know what every best practice is for every other franchisee can't make it work. Here, I'm a newcomer. I think I can make it work. Like, there's just some cognitive dissonance there that, you know, I think that there's a big pull for franchisors, right, to think, like, this is going to be great. I'm going to get, you know, I'm going to get this concept off the ground.

I'm going to go through the FDD certification process. I'm going to sink all this cost in. And this is my path to, you know, royalties, you know, in perpetuity. And then, like, yeah, if the franchisor is going great, you kind of want to be out of the franchisee game. You don't want to own corporate locations so that you can allocate resources like the last one to supporting franchisees. There's not really any mention of that in this. I think it just might be like a falling knife. they don't want to hold it anymore.

What are we? Thumbs up or thumbs down? I'm thumbs down for a bunch of different reasons on this one. It just scares me. I am thumbs down as well. I think where I generally like med spas, I'd much rather see them with Botox and other medical services here. And it's just the earnings are pretty thin for that reason.

I'm thumbs down with the caveat, like I mentioned, that if I was to take a look at the unit level performance and the timeline, there's a scenario where it could get me interested again, but the fact that they didn't break that down tells you kind of what you need to know about how that would reflect in the deal. If this was like $1.2 to $1.5 million in EBITDA and the asking price obviously was higher, I would go, okay, there's proof of concept.

It is sticky customer relationships. They do extract margin because of the service retail membership mix. I mean, and I guess, I don't know, if, let's just say this is average, right, two-ish million dollars in revenue per location, for a retail store, like, I think that's pretty good. It just doesn't seem like the margin has proved out, which is at the end of the day, like, you're doing a lot of work and taking a lot of risk. It's got to, you got to be compensated for it. Completely. And I also, Mills would think about it differently if you removed the franchisor, mitigating factor. Like if the franchisor wasn't the seller here,

I could get my head wrapped around more easily. Okay, this is somebody that is selling for maybe personal reasons, lifestyle reasons, and they're just looking for an off-ramp. But, yeah, it just to me does not reflect positively

on the franchisor to be selling it directly on the back end of incurring all of the downside and then selling right before the OAPS side, you know, theoretically should be coming, which is the fact that they're unloading at that point

It leads me to believe that they are skeptical as to whether or not that upside's going to come. we joked about the lease thing too. It really concerns me because not only am I, you know, taking on an obligation to acquire the business, I'm assuming the liabilities with the leases, which you have those like point in time, okay, I have X amount of years left on the lease and that's a liability. But also you have like the future reinvestment risk, so to speak, of I have to re-up those leases. And the landlord has me at that point because I've built out a really nice space. and whether there are five-year leases that are about to come up or seven-year leases that are coming around the corner, you know, you've just got, these have to be in nice areas in order to work and attract the right clientele. I would just be really worried about getting a new lease.

What are those lease rates going to be now five to seven years later? How much more is that going to eat into my razor-thin margin? It just could get, it could go from bad to worse. Agreed. Location dependent. Anytime you're location dependent, it's a little scary because it's a whole other layer of risk. Yeah. Okay, so we're all thumbs down, but Connor has a caveat. There could be a good story, you know, behind it that might turn this around. And I agree. I'm curious about that. Like, and I think if they don't come right out of the gate and give you the metrics by store, then this is, you know, runaway at all cost. Yeah. Yeah. All right. Well, that was a fun one. Thank you, Heather and Connor for bringing your expertise. And thanks everybody for listening. If you enjoyed this episode, there's hundreds more like it at ACQUAnon.com. And Heather and Connor are both incredible experts in their fields. Heather's at Vizzo Capital, Connor Gross. They can find you at Connergross. They can find you at Connergross.com, LinkedIn, and Twitter. All right, everybody. We'll see you next time.

Thanks.