Episode 127: Scale Fast With This Recurring Revenue Franchise Investment FACE FOUNDRIÉ

Looking for a high-growth franchise with recurring revenue? Learn how FACE FOUNDRIÉ is scaling past 100 locations in the booming wellness industry.
Episode Overview: In this episode of the Franchise QB Podcast, host Mike Halpern sits down with Michele Henry, the visionary founder and CEO of FACE FOUNDRIÉ. Michele shares her inspiring origin story of launching an open-air facial bar concept in 2019 to solve her own skincare challenges—and turning it into a massive franchise network. Discover how this innovative brand utilizes AI skin scanning technology, leverages a highly sticky membership model, and what it takes to open your own location. If you want to capitalize on the multi-billion dollar wellness space, this is a must-watch breakdown of a concept built for scale.

Highlights:
"That recurring revenue is lovely for our franchisees, right? Because it hits the first of every month. And it's also fantastic for our clients because it goes back to making sure that they make this part of a habit and a routine... They're extending the lifetime value and the lifetime of our memberships is getting extended." — Michele Henry, Founder & CEO

 Chapters
00:00 - Meet Michele Henry & FACE FOUNDRIÉ
02:53 - The Hormonal Acne Struggle That Sparked an Empire
04:24 - Why Modern Beauty Consumers Love Open-Air Facial Bars
05:53 - Explosive Growth Trajectory: Scaling to 100+ Stores
07:06 - The Power of Monthly Recurring Membership Models
09:14 - Integrating AI and Skin Scanning Tech into Franchising
11:44 - What Makes an Ideal FACE FOUNDRIÉ Franchise Partner?
15:31 - Crucial Advice for Aspiring Franchisors
16:55 - Cost Breakdown: Initial Investment Range & Item 19

#FranchiseOpportunities #FaceFoundrie #WellnessFranchise #RecurringRevenue

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Mike Halpern, CAFC
mike@franchiseqb.com

Transcript

0:42

Joining us on the huddle today is Michelle Henry, founder and CEO of Face Foundry. Welcome to the show, Michelle. Thanks for having me, Mike. It's great to have you and we have a special guest that's here with us today. My son, Lane Halpern, is my intern for the next two weeks and he'll be a freshman at the University of Tennessee in the fall. So welcome, Lane. Hey, Michelle. Nice to meet you. Thanks for having me. Appreciate it. Absolutely. Tennessee. It's my favorite state. One of them. One of them. that's cool. didn't have you spend some time there. Yes, we have a store in Nashville. So I've spent a lot of time there. I just love Nashville. that's amazing. Yeah. We, we spent some time in Knoxville checking out the campus, but we will be visiting Nashville as well. So I've heard a lot of good things about that town. so Michelle, I'm going to take lane off camera a little bit, uh, just so it's the two of us, but thanks for joining us, buddy. Um, so you founded multiple concepts in the wellness and personal care space, including face foundry, which is the subject brand we're going to discuss today. as well as Savant Aesthetics Institute. Your businesses have generated more than a hundred million in revenue across all of your ventures. And you founded Face Foundry in 2019, which is an interesting time to found a business as we all know. It's grown to 77 open locations in more than 30 states with over 170 additional units in development, incredible growth. Under your leadership, the brand has delivered strong year over year growth. and serve more than 1 million clients nationwide. That's an incredible amount of people that your brand services. During the pandemic, you guided the business through unprecedented disruption while opening a third corporate location and launching a franchise program that secured more than 50 unit commitments within four months. Beyond your entrepreneurial work, you serve on the boards of YPO and Ocean Crest Ventures. You were named a 2022 40 under 40 honoree by the Business Journal. and received the EY entrepreneur of the year award in 2023. Amazing stuff. So Michelle, we'd love to understand a little bit about your background with the audience. Can you share your origin story and what kind of inspired you to launch the face foundry? Yeah, absolutely. So I'm going to take you back to 2017. I had just had my third child and I was struggling with crazy hormonal acne. And the options were really limited to where I could go. you think about influencers or skin influencers today, right? On TikTok and Instagram, they didn't exist. Really the only option was to go to a med spa. The hours were super constrained, so you're locked in between 9 to 4, Monday through Friday. And the price point was just absolutely unattainable. So monthly visits and trying to get that education, it just was not there. And my background was in apparel design and merchandising. So I came from the world of customer service. But what I really found, the aesthetics industry in general, it lacked making sure that the customer was really driving the experience. And it felt very inverse. I thought about this concept because I had my own challenges as a client and as a consumer. And I really sat on it for about a year. I didn't want to leave what I knew, so there was a little bit of trepidation there. But that is really where it started, was my own skincare struggles. Interesting. Yeah, so you have this problem and you're like it needs to be solved So I'm gonna come up with this concept and give it a try which is kind of speaks to your entrepreneurial spirit So in your view, why does the concept resonate so much with today's beauty consumer? I think a big portion of what we were trying to tackle at Face Foundry as we launched was the time constraint. You think about your traditional med spa, you're going in, you're getting undressed. It's this hour, hour and a half long commitment. I just felt like that just was not attainable for busy lifestyles, especially me as a mom of three at the time. I wanted something where I could go in and it was very focused on your face. You didn't have to disrobe. It was an open-air concept. So that kind of folded into a whole bunch of other optionality where we host face parties and it's a great way for bachelorette parties or birthday parties to be hosted as a group. And so you think about, we really kind of broke down the walls physically and figuratively of that approachability. And then the price point. I think what you'd be surprised by is our services are the best in the world. You are not going to go in and get another facial that is better than ours. And our price point is super approachable. That for me was kind of the catalyst to then offer membership so you could come in every month and you can track your skincare journey and see all of the improvements over time. Very cool. So I want to go back to the opener and talk a little bit about your growth because it's incredible how quickly you've grown over the past, you know, six, seven years. How many locations are open and how many are in development? And can you talk a little bit about the growth trajectory of the franchise system? Yeah, definitely. So we have 77, actually our 78th open today. So 78th open. The 78th is in Southlake in Texas. So right outside Dallas. Yes, very excited. We've got a lot going up in Texas this year. Thank you. And we just. I know when you're in your business, you have to identify a site, you need to negotiate a lease, you need to kind of, you know, upfit the unit. you know, sometimes that takes time, but you have a tremendous amount of like units commitments, which is really cool. For sure. We'll end the year right at 100 stores open. So that's really exciting for us. We've got quite a few leases already signed. Q3, Q4, it's going to be very busy, which we're excited for. And then rolling right into Q1 of 2027, like you said, we'll probably execute between 40 and 50 stores next year. Our pipeline is strong. We've got great interest. very excited, just was approved yesterday in California. So very pumped because we've got a lot of interest. Thanks. lot of time talking with Lane about FDDs and registration states and renewals and California is a tough nut to crack. So congrats on that. Thank you. uh We filed very early this year. Yeah, very cool. So Michelle, I want to talk a little bit about the stickiness of the model. You have a membership model. uh Why is that critical to the success of your franchise? That reoccurring revenue is lovely for our franchisees, right? Because it hits the first of every month. And it's also fantastic for our clients because it goes back to... making sure that they make this part of a habit and a routine. And we are seeing such a big uptick in members, which is great because they're extending the lifetime value and the lifetime of our memberships is getting extended. But then also they're referring friends. We're capturing new audience and they're sticking with us because they're seeing the results. And I also think that there's a lot of variety within our menu where they can mix and match our focused facials with your enhancements because let's face it, your skin is your largest organ and it's always changing. It's changing seasonally, it's changing monthly if you're a female with different hormones spikes and so you have to be able to cater to the different needs of your skin and that's really what our monthly membership allows you to do. Yeah, very cool. So does it typically start out where someone, you know, there's a trial basis where they come in and they say, yeah, I'm just going to get a service. And then they just, you know, become a raving fan of the service. And then they end up saying, Hey, I want to do this weekly, monthly. And they become a subscription member. Typically, yes, we convert people after they experience their first facial at Face Foundry. They're wowed and they sign up and they realize that the membership model for us is that you get a focused facial and you also get a complimentary enhancement each month and then. 10 % off additional products and services. So it's a huge value add and they can mix and match and they like that kind of optionality. You can also roll over that monthly membership and let's say you want to put it towards a more expensive service like a hydrofacial or microchanneling, you have that optionality as well. Yeah, I like that. I mean, it just puts the power in the hands of the consumer and they get to kind of pick and choose what they like and then try new things. And I think that just gets them more interested in coming back time and again. So Michelle, let's talk a little bit about AI. It's a big buzzword in franchising. I know it's a big thing in all consumer facing businesses. How have you integrated AI into your business? We have integrated AI in many different facets. uh A few examples that I would call out right now, inventory management is a big one. And I think it's applicable to outside of the wellness industry. Just about every franchise or I'm talking to is looking at that. What is unique to Face Foundry and something we've been working on for the last 18 months is we have a skin scanning device. And what it does is it takes different calibrations of a client's skin. It pulls it into an analysis. It uses the AI tools to then analyze and tell that client what they need based on those skin concerns and what they need based on different hydration levels and other factors. And it would say, OK, Mike, based on what I'm seeing, this is what we recommend for services or products. And what's wonderful is because our app is really robust, you can look and you can track your skin over time after all of these services and actually see how it's changed and how the calibrations and scores have changed. That's really cool. So do you call like the person that's performing the facial, they're an aesthetician or they called something else? Yes, they are estheticians. Okay, so now you get the benefit of the aesthetician making like a judgment call based on their experience, plus the consumers feedback as to what they think they need any of the AI. So between all these different influences, you can make really good decisions about what we need to do today. Exactly. And I think one thing that I felt early on as a consumer, you know, I was navigating my own skin concerns in 2017, 2018, the lack of education for a client and consistent education and access to a database where I can see, hey, what did my skin look like when I started this journey, you know, four or five years ago? that really wasn't there. And so we're really trying to build off of empowering our clients to have that education and to really know what their skin needs. And ultimately we're building a community and a bucket of trust with that client that is so important. Yeah. And you're also providing them with confidence, right? Like if they have an issue that they're embarrassed about, or they don't feel great about how they look and you're able to, you know, improve that and kind of point them in the right direction and, have these like real physical improvements. I know that's going to be a boost to their confidence, their self-esteem, and it's going to be a really good reason for them to continue to come back and be a part of the face foundry. So let's talk a little bit about the future. Like, what do you think the future looks like for facial bars? Like where's the category headed? and how are you positioned to lead it? I have been really astounded by our growth. We actually just hosted our annual franchising convention. It was fantastic. It was down in Austin. We fly in all of our franchisees and some of their key team members. And looking at our year over year growth, it has been fantastic. Seeing membership growth even month over month has really been astounding. We're seeing more and more people are investing in wellness and we see that, you know, well, the wellness industry, there's a lot of buzzwords, a lot of hype around it, but truly I'm seeing it firsthand. And I don't foresee that going away. see if anything between social media, between the use of AI, it's a really noisy climate and it's only getting noisier. And what we've been able to provide is obviously real-time results that boost in confidence, making sure that they see that there's skin is improving over time. But we're also providing this moment of solitude and quiet. When you come in for a 40 minute facial, you truly see that your blood pressure drops and that you're more calm. And who doesn't need that in their life once a month for the foreseeable future? amazing. ah I think in the wellness space, like you mentioned, in the facial business or the massage space, like you're providing someone with, I love how you kind of phrase that, your moment of solitude to just relax and get out of our busy lifestyle with everything going on in our phones and in our lives. It's nice to have a moment to kind of reflect and to just be calm. So that's really neat. For sure. kind of ride the coattails of your big convention you just got off of, which I know is exciting. Everyone's shot out of a cannon. They're super excited to get back to their units and kind of grow their business. um Like who makes an ideal face foundry franchise owner? I know they don't, you know, they don't look exactly the same. They come in different shapes and sizes, but what does the brand look for in a partner? Great question. We talk about this a lot. Actually, we just hosted a discovery day where prospective franchisees come up and meet our team and really get a peek behind the curtain. We talk about this at length because we want to make sure that our franchisees They're not just trying to buy a business. They are aligned with our mission. They want to make people feel good. They want to boost their confidence. And the most ideal franchisee is someone who lives in that community. They are the mayor of their town. They know everybody. They know the businesses they want to partner with. They understand that leading by example is crucial. And truly they invest in their team and they build their team. uh And they're really just the community notable. I think it's very important. You know, we are, we are a hands on operational business. so being in the, you know, within an hour drive from your store is really crucial because you can speak to, Hey, is this a, is this a center I would drive to? Is this a center I would shop at? Would my friends come here? Are my co-tenants here? They really understand the overall real estate kind of outlook. for where they're trying to go. And so I think at the end of the day, it starts with making sure they're aligned with our mission and that they want to help people. Very cool. ah So Michelle, what advice would you give to aspiring franchisers? I mean, you've come a long way ah throughout your career and obviously growing this brand. What do you wish you had known earlier and what advice would you provide to people that want to, you know, get into the franchise space? Definitely. I mean, it's coming off of the last kind of bullet point and conversation that we just had about franchisees. Your first. 10 franchisees are crucial. They are going to be what defines the brand and what defines your business. And so I can't emphasize enough that it is imperative to make sure that you are bringing in people that are collaborative, that understand your mission, your vision, your values. That's so crucial. And I feel so grateful because our veteran franchisees, they are continuously reinvesting in our brand. continuously seen and initiating feedback and communication to make our system better. So we got extremely lucky. Our veteran franchisees are fantastic. And I can't emphasize how important that is to be picky and to make sure that you know who you're bringing into the system because you sign an FDD and that's like a marriage. It's a 10-year commitment. Know who you're going to work with for the next 10 years. I think it's really good advice and it's great that with your brand name face foundry, you've been really paying attention to the foundation of really good pioneering owners that you brought into the system because you know, I've been doing this for 20 years and the ones that make it are the ones that are really intentional and careful about who they select because like you said, they have to be aligned with your culture and y'all have to be rowing in the same direction. So that's, that's really good advice. So let's talk about item seven. If someone is listening and they're interested in becoming a face foundry owner, I know this is a project, you know, there's a range in the project costs because there is construction involved and construction costs, you know, more on the East Coast and West Coast than it does in the middle of the country. But what are we looking at for a range to become a face foundry owner? great question. So all in costs, including those initial fees, three months of operating capital, uh like you had touched on, those real estate costs, construction costs, that ranges anywhere between $350,000 to upwards of $600,000. Okay, got it. And do you guys provide guidance in your item 19 in terms of earnings potential? Item 19, as you know, if you've been in franchising for 20 years, you get it's a little sticky. We like to be as compliant. And my attorneys, if they're listening, they're going to love hearing this. are always, always very like legally sound. We want to make sure that we are not putting anyone at risk. being as honest as we can and honest as possible. uh We show our item 19 numbers with the corporate stores and with our franchise locations. We actually list it out by vintage, which I think is helpful, right? You can kind of start to see the ramp. But really, you know, I touched on this a bit. Our franchise community is very open and honest. And so they have prospect calls where they talk to potential franchisees and they walk them through what they've seen. And I think that's probably the best way to go about an item 19 is having someone who can speak to it in real time. Yeah, that's a really good point. And I think that the item 19 is just a data point or set of data points. And then the owners are the ones that can really validate what it's like in the real world and how their stores are performing. Michelle, this has been awesome. Anything else you want to add to the mix before we wrap up today? No, uh I would just love, know, when you go to Tennessee with Lane, let's get you into Nashville. back in here. Hi. so is the Nashville unit has that is that a newer store? Has it been around a little while as a corporate? Is it a franchise? It's a franchise. She is an absolute lovely human being. Her name is Heidi and she's actually opening her second site in Belle Meade. She's fantastic and you are going to love going in there. She's got a fantastic team. I would love to get your feedback on what you think of facials. If you've never had one before, even better. Let's do it. They're right in the down, they're in the Gulch. Fun Spot. You'll have lots to do afterwards. Sounds like a really fun road trip. Well, thank you for the invitation. And if anyone listening would like to connect with Michelle and her team to learn more about becoming a franchise owner with Face Foundry, contact me at franchiseqb.com and I'll get you connected. Thank you so much, Michelle, for taking the time to get in the huddle today with me and my special guest, Lane. I appreciate you having me. Thank you. Thank you so much.