If you are looking towards opening a Palm Beach Tan Franchise, it will be nice for you to have a preview of what the company represents before going ahead to make enquirers about the total cost of opening the franchise in your location.

Palm Beach Tan was founded in 1990 and they began franchising in 2001, about 19 years ago. The current CEO of the company is Diane Lucas and they have their corporate head office at 15455 W. 100th Terrace Lenexa, KS 6621, USA. As of the 2019 Franchise Disclosure Document, there are 278 franchised Palm Beach Tan locations in the United States. Palm Beach Tan has franchise locations in 21 states. The largest region is the South with 127 franchise locations.

Palm Beach Tan, Inc. owns and operates a chain of indoor tanning salons in the United States. The company locations offer sunbed, spray, cocktail, and sunless spray tanning services, as well as sales of tanning and skin care products. Memberships are available, with a rewards program.

Palm Beach Tan is pioneering the use of information technology in the tanning industry to streamline operations and control costs. A specialized industry software system is used to provide automated billing, inventory management, equipment control and management tracking capabilities. With routine processes and procedures automated, managers and staff have more time to interact with the customers and market additional products and services.

Unlike the typical tanning store, Palm Beach Tan considers itself to be in the service business and utilizes an enterprising approach toward marketing its services and products. Management teams receive added incentives and bonuses based on the financial performance of their stores.

Here are areas where you are expected to spend money and the cost associated with it;

  1. Initial Investment Range

    $478,619 – $788,589

  2. Franchise Fee

    $30,000

  3. Royalty Fee

    4 to 6 percent of Gross Sales and the Due Date for this fee is Paid by electronic funds transfer every Friday for the preceding Reporting Period. The amount of the Royalty Fee for any renewal term will be that provided in the Franchise Agreement executed for such renewal term.

Please note that “Gross Revenues” include all revenues generated from the provision of any and all services and/or the sale of any and all products and, whether by the franchisee or a third-party provider, that relate to or arise from the Franchised Business. It does not include taxes collected from customers.

  1. Local Advertising Spend, Local Marketing Fund, or Cooperative Advertising Contribution

    At least 1 percent per calendar year and the Due Date: for this is Monthly.

Please note that each local advertising Cooperative may elect to increase the monthly contribution if approved by a two-thirds majority of the members, and the minimum contribution is subject to adjustment by an amount not to exceed the increase in the CPI.

Centers owned by Palm Beach Tan and its affiliates are also members of their respective local Cooperative and each company-owned Center has the same voting rights as the franchised locations within the Cooperative.

If the company-owned Centers comprise the majority of a given Cooperative, the maximum and minimum fees for that Cooperative will be consistent with the range stated in this Item 6.

  1. Liquidated Damages Under Area Development Agreement

    This fee varies but the Due Date is Payable within 30 days of the termination of the Development Agreement.

  2. Audit Costs

    All costs and expenses associated with the audit, reasonable accounting and legal costs.

  3. Indemnity

    This fee will vary under the circumstances and the Due Date is As incurred.

Please note that you must reimburse Palm Beach Tan if it is held liable for claims arising out of your franchise operations.

  1. Insurance

    Reimbursement of costs the franchisor’s out-of-pocket costs.

  2. Equipment, Supply, or Supplier Testing or Inspecting: Fee not to exceed the actual costs of inspecting and testing. (Due Date:  Due on receipt of invoice.)

Please note that This fee covers the cost of testing or inspecting equipment, supplies, or suppliers you propose.

  1. POS Hardware and Software: Depends upon vendor and products purchased. (Due Date:  Depends upon vendor and products purchased.)
  2. Attorneys’ Fees and Costs: Will vary under circumstances. (Due Date:  As incurred.)

Payable to Palm Beach Tan if it is forced to retain independent counsel and seek damages or injunctive relief to enforce the Franchise Agreement (whether or not suit is filed) or if Palm Beach Tan is required to defend your unsuccessful claim against it.

  1. Veteran Incentives: This is open for negotiation with the company.
  2. Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If requirements are met, franchisees can renew for one additional term of 10 years.
  3. Financial Assistance: Palm Beach Tan has relationships with third-party sources which offer financing to cover the following: franchise fee, startup costs, equipment, inventory, accounts receivable, and payroll et al.

In Summary,

  • Initial investments: $478,619 – $788,589
  • Net-worth Requirement: $500,000
  • Liquid Cash Requirement: $250,000
  • Ongoing Initial Franchise Fee: $30,000
  • Ongoing Royalty Fee: 4 – 6%
  • Ad Royalty Fee: 5.5%
How Much Does It Cost to Open Palm Beach Tan Franchise?