This is a long blog post because it combines recent posts
about the structure of various massage therapy business options from sole proprietor
to large franchise chain employment.
These posts broadly cover the topic using real work experience,
professional organization statistics and business trends. I am combining the
content because there needs to be one link to the information.
My personal stance is that massage therapy is an important
and viable career and as a community we are in a point of delivery shift.
Massage therapy has three distinct sectors which all over lap- wellness and health
maintenance, performance and recovery and medical care and rehabilitation. The
following outcomes can be addressed in all sectors: wellbeing and relaxation, stress
management, pain management and mobility. Massage therapy approaches to care
include comfort (palliative) condition management and active therapeutic
change.
Until a few years ago
massage therapy was primarily practiced as a self-employed sole practitioner in
a variety of environments such as private office, home office and onsite in
other's location. This type practice remains viable IF the individual is capable
and willing to put forth the energy and time to work both as a massage
therapist and business owner. Nothing in
the blogs I have written indicates otherwise. However in order for those
entering the massage field to make informed decisions about career pathways, somehow
accurate practice and income information must be available. It is not. The self-employed
income reports are typically based on gross income and do not reflect realistically
the cost of doing business and the time spent performing tasks that are non-massage
related but essential to business operations. The wellness sector now has many
employee based positions available but new graduates and those struggling as
sole practitioners are discouraged by some who believe that franchises are the corporate
enemy and only out to make money on the backs of massage therapists. This just is not true. Also positions available in the medical
sector for massage therapist are most like going to evolve as employee
positions. Based on current educational
standards for massage therapy as a community we are going to have to face some
hard facts.
Another point of contention is how much a massage session
should cost. You can charge whatever you
want. However, huge populations of
people who make less than $50,000 a year are not receiving massage therapy
because of the cost. Maybe in some
situations prevention based health insurance will someday pay for massage
therapy related to health maintenance.
Health insurance pays for medical based massage now especially if the
massage therapist is an employee of a medical professional that can bill
insurance. Still more people pay out- of
–pocket for massage therapy in the non-medical sector.
There are issues with education as well. For profit
corporate based schools using financial aid are being increasingly scrutinized. The small massage only school is struggling
and community college education, where there is a viable option to the corporate
based schools, are not providing as many massage education programs as I thought
might occur. I really thought 10 years ago the community
college would be the primary delivery for massage education but this has not
materialized and it seems that the small private massage school is making a
comeback. I do not know why but doesn’t
matter –it is what it is.
So read, do your own research, be logical and know change is
inevitable.
This blog begins with a call to action to the massage
therapy organization and then I call out employers as well.
CALL TO ACTION DIRECTED TO THE MASSAGE THERAPY LEADERSHIP
GROUP DURING THIS TIME OF TRANSITION IN THE MASSAGE COMMUNITY.
- The AMTA can accurately report income. The way it has been done is very misleading. I have spoken with them for years about this.
- Massage therapists need to be able to provide more sessions without hurting themselves. We desperately need a independent ergonomics and biomechanics analysis funded.
- The organizations can live stream conferences and conventions at a much lower fee and place content into an archive for future viewing.
- The organizations can collectively market massage therapy as a career using realistic income and work data. There is no excuse for all this controversy over fees, employment vs self-employed. We need a demographics analysis of what various income levels can afford for retention massage services. Currently AMTA reports that income above $75.000 is the tipping point for paying for massage. Those making less are not receiving massage especially those making less than$40,000 per years.
- Fund a consumer market survey to determine what the market can bare for massage fees based on need, demographics and disposable income.
- Describe clearly the practice differences between massage business in the wellness sector and pay for services and how massage is being implemented in the medical setting such as hospitals and medical clinics including wage classification and employment structure.
- Collect and distribute accurate industry standards which would go a long way toward supporting realistic education for those entering the field.
- Emphasis in entry level education about being.an employee and how to maximize income in that sector would be valuable.
- Support independent massage schools which as a sector provide the most reliable education yet are struggling to survive.
- Support community college program development as an alternative to expensive corporate financial aid based schools.
- Provide grants to those schools and programs wishing to participate in COMTA curriculum endorsement or programmatic accreditation. I specifically call out the Federation of State Massage Boards for this funding.
- Promote affordable tuition fees. Federal financial aid appears to max out at about $8000. To me this means that a foundational education that meets educational standards for entry into the profession is worth about $8000 total cost---maybe $10,000 total cost on the outside---not $12,000- $15,000 or more.
- Create and fund a tuition loan program administered by the massage therapy leadership organizations where schools that do not participate in financial aid can direct potential students. This loan program would actually make money for the leadership coalition through reasonable interest and application fees.
- Combined dialog with all the organizations, educators and employers i.e. the various franchises as well as other employer groups to educate both the massage therapists and the business owners about successful practices would improve income as well as understanding of work environments.
- Surveying the medical sector including chiropractic to determine realistic compensation for massage therapistsand types of business models used.
- Teaching massage therapist about different business models for self-employment such as co-ops is needed.
- Aggressive education regarding misclassification of IC and the development of a resource where both employees and employers can have access to reliable information.
- Access to labor attorneys and business professionals actually trained in business development.
- I could go on and on. The professional organizations primarily AMTA need to step it up big time. Also the Federation of massage therapy boards is sitting on lots of money and could help fund many of these projects
NOW I AM CALLING OUT EMPLOYERS.
- Stop the misclassification of employees by treating them as Independent contractors. If you are afraid of the employment taxes and reporting hire a firm to do this for you.
- Stop listing income paid per massage. It is misleading and unethical. Yes you can pay $30 per massage hour BUT—if only one or two sessions are provided in a 7 hour pay period you are only really paying minimum wage. That massage therapist needs to perform 4 sessions during those 7 hours to make about $15 per hour. Pay base wage for every hour scheduled and commission or per session fee additional. Disclose what the actual hourly rate is.
- Stop including gratuities in the estimated income—yes in the service sectors tips are common but not mandated.
- Do not make employees sign non-compete agreements. They won't stand up in court anyway and it makes employees feel trapped. Instead explain the importance of loyalty and that you want them to disclose where else they are working so everything is transparent.
- Business owners: You need to be present and accountable for activities at your business. This includes those who own multiple locations. You cannot rely on managers to be the face of your business. You need to interact with your employees, walk in their shoes, and observe what it is like to be in a small dark room for hours at a time.
- Employers you are responsible for a quality work environment. Get rid of those who whine, gossip and are not team players. If you have turn over you need to see what is causing it and fix it.
- Employers you are responsible for listening to your employees-and implementing valuable suggestions and explaining why other suggestions are not workable.
- Employers: Stop being aloof and snobs. Remember we are all in this together.
- Employers: Do not over staff so you have lots of sitting around. Massage therapist only make money when they are performing services so staff accordingly.
- Employers: There is nothing wrong with being financially successful –but when your standard of living is many time above your employees then if begins to taste and smell rotten. If you are making a big profit then figure out some sort of profit sharing system.
- Employers: If you cannot find quality massage therapy employees then find quality people who will be loyal, are interested in massage therapy as a career and then help them go to school in return for them working for you for a designated period of time.
- Employers: If you are barely covering overhead and your profit is less than what your employee make something is wrong as well. You should be making a profit.
Of course there is more but this is enough to get ya
thinking
OK HERE COME THE BLOGS
SELF-EMPLOYED SOLO MASSAGE THERAPISTS HAVE MULTIPLE ROLES:
WHEN SELF EMPLOYED YOU ARE BOTH EMPLOYER AND YOU EMPLOY YOURSELF
The questions to ask yourself are:
· How effective
are you as an employer of yourself?
· What type of
an employee I?
A concise description of the two roles is:
Employer: takes care of everything related to the business
operations that is not specifically massage therapy related
Employee: provides massage therapy services, attends to
lifelong learning to improve skills, maintains excellent client services and
attends to client files.
Let’s begin with common complaints from employees about
employers.
· Bossy
· Inattentive
· Micromanage
everything
· Do not listen
to employees
· Do not talked
to me directly
·
Criticizes
· Yells and are mean
· Lack of
appreciation for all I do
· Have
favorites and do not teat everybody the same
· Take all the
money
· Pay low wages
· Expected to
be at work even if no clients
· Expected to
clean and do laundry
· Expected to
participate in finding and maintaining clients
· Lack
understanding about personal problems and need for time off
· Lack of job
security
· Do not
control other employee’s behavior
· Makes
promises and does not follow through
Next is the list of common complaints employers have about
employees.
· Late to work
· Asking for
favors and special consideration
· Lazy
· Complains
about everything
· Gossip and
bring drama to work
· Poor attitude
and looks and acts miserable.
· Poor hygiene
and appearance
· Talk all the
time or won’t talk
· Refuse to be
part of the team and help others
· Use the
excuse “not in my job description” to avoid work
· Unreliable
and won’t complete tasks.
· Hiding and
fooling with devises: texting, playing games etc.
·
Unprofessional
· Not
trustworthy
· Passive
aggressive behavior
· Refuses to
learn new things
· Fights and
undermines necessary changes
· Defensive and
won’t respond to feedback
· Complains
about wages
Using the bullet lists above how do you rate in both the
employer and employee role.
I have been self-employed my entire career and honest
evaluation of myself reveals that I am actually a better employee of myself
than an employer with a few exceptions. My employee self gets paid and my
employer self often does not. So since I generate all the income by providing
massage therapy services I forget about all the time needed to maintain the
business. I may work 15 hours a week
providing massage therapy but I also work 15 hours a week doing all the
non-massage tasks.
I just posted a blog about PAY STRUCTURES FOR MASSAGE
THERAPY EMPLOYEES which got me thinking about the structure of being
self-employed.
If you are the business owner-employer you are taking the
risk. Bottom line is that if you do not make a profit you will not stay in business
and you deserve to be paid at least as much as the employees working spas,
clinics, chains and other employment situations. In order to figure out how much to pay
yourself as your own employee you have to know what your gross income is, cost
of ALL overhead- what you need to keep in reserve for the emergencies and
unexpected costs AND you are self-employed so you have to pay all your own
taxes including self-employment taxes.
Unless you are willing to work 50 or more hours a week, you
cannot be a massage therapist full time because you have to be an
employer/business owner some of the time. If you are really effective
employer/business owner you may be able to work ¾ time as the massage therapist
and ¼ as the employer but that is cutting it tight.
Most massage therapists are only working part time as
employees so let’s use a common ¾ time schedule or 25 hours doing 15-18 massage
sessions. For math purposes this mean
that during your employee role you generated $750 of gross income for yourself
as a business owner/employer of yourself in a work period (25 hours 15 massage
sessions over 7 days). I expect that
during employee time cleaning, laundry and client files are taken care of.
Now put on your employer hat. As the business owner you have
to pay all the overhead, respond to unexpected expenses and time demand,
perform all business marketing, book keeping. Overhead should not exceed 30% of
gross with taxes adding another 15% for
a 45% expense rate and 5% profit margin.
Based on this $750 of gross income let’s look at the
breakdown. Wages expenses for a service business such as massage therapy should
NOT EXCEED 50% OF GROSS. We are going
to use 50% of gross to cover all employee expenses including wages, payroll
taxes and cost of maintaining payroll. Since you in the employee role generated
$750 of gross income you should not take more than $325 for that pay period.
You will not see $325 because of the 15% needed to cover payroll taxes and
costs and also the withheld income taxes.
Your employee self costs $55-$60 for the pay period. $325-$55 (cost)=
$270. This $270 is what you can pay
yourself for your time employee for the pay period. This works out to about $11
per hour for all 25 hours at work being an employee.
What about the other $325? Well now, as the employer, you
have to pay all the other expenses and if everything is smooth that should be
no more that 40- 45 % of gross or $300 per week. This works out to about $1200 a month for
overhead to include rent, utilities, supplies and so forth since taxes were
included in the employee expenses. You should be able to cover overhead with
this amount.
What about the profit? As the business owner you should make
at least 5% of the gross income as profit.
Get ready--- that is just under $40 of profit for the week. If you only
spent 10 hours a week being the business owner you made $4 an hour. Truth is a business owner should make a
minimum of a 15% of the gross or why bother?
That would be more like $112 or about $11 per hour.
To be able to have that level of profit, gross income must
increase or expenses must decrease. You
will need to ask yourself if you can generate more income during your employee
role by increasing the number of massage sessions or increasing the price and
not lose any volume. If volume increased to 18 sessions that would help. If fee increased to $55 per session that
would help. Overhead cost might be able
to be reduced to $1000 per month if very frugal.
Taking these actions could increase profit by $150 a week or
about $200 total—if no one cancels and no unexpected expenses happen. Now you are making $20 per hour for being
the business owner if you are only spending 10 hours a week but you have to
self-employment taxes on this reducing the -in your pocket money- to $170.
Weekly income then for being self-employed:
$270 as the employee + $170 as the employer or about $440
after taxes. Based on a 40 hr. work week
that is $11 per hour.
You can do better than this as an employee in a well-managed
business.
So what is the point of being self-employed? It is a preference and I have done it for 38
years. I am also an employer and as the massage therapy profession moves into the future we need to come to some
sort of reality about what income expectations are for being self-employed as
well as what employees are paid.
You have to be able to provide at least 20-25 massage sessions
to make a sustainable income regardless if employee or self-employed. If
massage therapy is going to be primarily a part time occupation then figures
need to be adjusted accordingly. If the
AMTA figures are accurate, then for ¾ time massage therapist are making about
$24,000 a year and adjusted to full time that is about $32,000 a year. We cannot expect the employer to make
nothing, right? An employer should make
a 15% profit- not 5%. We can complain all day that massage therapists are not
paid enough but there is a cap on what people will pay for massage services and
volume will decrease if fees exceed $60-$70 as session with $50-$60 being the
sweet spot.
I am getting tired of writing this over and over actually,
but so much confusion is out there and new graduates are getting inaccurate
information. We need ,as a community, to
come to grips about this income issue. This level of income does not justify an
educational cost of $12000 or more. $7000-$8000 total cost (books and fees
included) is more appropriate. The
professional organizations need to come to grips with this as well. A massage therapist cannot afford $1000 or
more to go a convention. They cannot afford $400 a day for continuing
education. We have to get real.
Independent massage school owners are small business owners
and we cannot afford to work for nothing either. If tuition costs top at $8000
per student then we need a minimum of 24 students a year to make $30,000 a
year. The professional organizations need to help us out during this time of
low enrollment and paradoxically increased demand for massage therapy
EMPLOYEES. If the demand is for
EMPLOYEES then we better be teaching student how to be excellent employees and
helping employers create win- win environments.
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MOST MASSAGE THERAPISTS ONLY WORK PART TIME—WHY?
According to the AMTA the average, massage therapist worked
25.3 hours per week in 2015 and was paid for 19.7 of the 25.3 average
hours. Also indicated in the report
massage therapists provided massage for an average of 45 clients a month or
between 11 and 12 clients a week. Only about 50% of those surveyed by AMTA
indicated that they wanted to work more hours. (AMTA-- The 2016 Massage
Profession Research Report).
Well, that is interesting.
Also according to the AMTA 2016 Massage Profession Research
Report, gross income ( I assume that means prior to income taxes and after
overhead is deducted if self-employed)
was$24,132 in 2014 and $24,519 in 2015. That sounds
terrible until you realize that is PART TIME and about 62% of the typical forty
hour work week. 38% of the reported income of $24,519 is about $9500. Therefore , factored out to full time, this means that full time earning for a
massage therapist (prior to income tax) is about $ 34,500 per year.
This is a good income for a diploma based education of
625-750 hours and in the vocational sector of health professions.
So why are massage therapists working part time? About 50% are happy with part time. So what
about the other half? Why are massage
therapist only providing 45 sessions a month—part time instead of 90 massage sessions? This is between 20 and
25 client sessions a week or 5 sessions a day.
Two reasons come to mind. Ergonomics/bodymechanics and lack
of client volume. I have been pleading
for an independent ergonomics and biomechanical analysis for massage therapy
for YEARS. The massage therapy
leadership organizations NEED to fund a “for real” independent analysis by
objective experts outside the massage profession to get an unbiased perspective
and useable recommendations. I do not
care who you are or how long you have been doing massage or teaching (including
me), all of us are guessing. We do not
know for sure and it is time to know!
Client volume is an issue as well. So what are the obstacles preventing more
people from receiving massage? Again,
according to the AMTA 2016 Massage Profession Research Report, Females without
children in the home with incomes over $50,000 are the main massage consumer
and 1/3 of all massage consumers had a household income of $100,000 or more in
2015. Only ¼ of those with a household income between
$75,000 and $100,000 received a massage in 2015. Seventeen percent of those
with incomes between $35,000 and $50,000 got a massage in 2015, down from 22
percent in 2014. And only 7% of those
with an income of less than $35,000 got a massage in 2015, down from 8 percent
in 2014.
There is a huge potential to increase clients since only a
small percentage of people actually receive massage. The largest group of people are those making
less than $50,000 a year. Price point of
a typical 60 minute massage session will need to be between $40 and $50 for
these individuals
How often clients receive a massage is also an issue. Many who get massage only schedule once a
month. Research has shown multiple times that that frequency is not enough to
generate and sustain benefit. Weekly
massage sessions are idea but realistic scheduling for clients is a massage
every other week. Increasing the
frequency of massage for current clients would double the session hours worked.
What are the obstacles for receiving more massage sessions in a month? Cost and time with cost being the biggest
deterrent. If the average fee for
massage is $ 65 the monthly cost for a
client receiving a massage every other week is
$1625 a year or $135 per month.
For those with incomes less than $40,000 a year that is a real chunk of
money. For those with yearly incomes of
$ 75,000 or more that is 2% of income but for those making $35,000 a year it is
5% of income. Those earning $35,000
-$40,000 only have $700 (2% of income)
to potentially spend on massage. The
most they could spend is $30 a massage session if they received 2 massage
sessions a month.
I just had this conversation with my students as we were
discussing how to provide massage therapy to first responders such as EMT, fire
fighters and police.
This is the reality we face right now. People know massage has value and many more
people would become clients if they could.
If more people could receive massage then more massage therapist could
work full time if they want. This is a
tricky economic line to walk. As massage
therapists we need to make an income sufficient to meet our needs and at full
time, like so many, that is $30,000-$35,000 a year and this is the income of
the group of people that can be helped so much by massage therapy on a regular
basis.
I certainly do not have all the answers but I sure am
thinking about it
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PAY STRUCTURES FOR MASSAGE THERAPY EMPLOYEES
I am getting a lot of questions about pay structures for
employees. The first person you should
consult is an accountant or business attorney.
I also suggest that if you have more than a couple employees you use a
human resource outsourcing service to set up your accounts and handle payroll
and taxes. I am not endorsing this
company but if you look at their website you will better understand human
resource outsourcing. America’s Back
Office –americasbackoffice.com. I am sure there are similar companies in your
area. Just search for human resource
outsourcing service. These companies
take care of all payroll, taxes and labor law compliance issue for you for a
fee which is less expensive that doing it yourself or hiring someone. You can also get a lot of information from
the US Department of Labor website.
CUTTING TO THE CHASE----------
So here is my recommendation. Pay minimum wage or a bit more—like
$9 per hour for all hours worked and then pay a bonus/commission of $5-$10 per
session based on massage therapist experience and volume. The potential raises would be in commission
amount not the base. Tips in the service industry belong totally to the
employee and are not factored into wages costs.
And since employees now realize they are paid for ALL time
at work it is expected that the employee work productively all hours including
massage, cleaning, stocking, follow-up calls, charting, review of client files
and laundry.
NOW FOR THE JUSTIFICATION.
It is clear that the massage therapy delivery in the US is
shifting to employees and away from self-employed. This blog IS NOT about if one is better than
the other. The focus is for those who
are considering hiring employees and or shifting from some sort of group
practice model using the very confusing independent contractor model. If you want to create an environment for
other massage therapists to work and you want to control how they provide
services such as scheduling, pricing etc. then learn about employer/employee
set up. Otherwise rent space and let the
renters run their own business.
If you are the business owner-employer you are taking the
risk. Bottom line is that if you do not make a profit you will not stay in
business and you deserve to be paid at least as much as your employees. As the
business owner you WILL work more hours than the employees and you WILL have to
handle all the non-massage aspects of business and the inevitable unexpected
events that will occur such as the plugged toilet or the no show employees.
Even if you hire a manager-they are still and employee and ultimately THE
OWNER(S) ARE RESPONSIBLE.
Ok--- in order to figure out how much to pay an employee you
have to know what your gross income is, cost of ALL overhead-wages being the
largest chunk in a service based business- what you need to keep in reserve for
the emergencies and unexpected costs AND you are self-employed so you have to
pay all your own taxes including self-employment taxes. By the way the various
massage franchise business owners are individual small business owners—NOT a
big corporation. Those that own a franchise/chain pay for the use of the brand
name and support services.
I am going to attempt to make this simple and basic.
Sometimes when I do this some information is left out. This blog is only a
guide based on a bunch of questions I have been getting. Return to the first
paragraph please. What this blog can do
is help formulate intelligent questions to ask the experts. Now for some simple
math.
For example purposes lets figure out a break even analysis
on one employee for one week based on the current typical work schedule for
massage therapists. Also I am going to use $50 per 60 minute massage session.
If you want to figure this out on a higher massage rate than you can use this
example to do the math.
A full time work week for a typical massage therapist is
30-35 hours doing 20-25 massage sessions. Most massage therapist do not work
full time- they work part time. I have another blog on that. So let’s use a
common ¾ time schedule or 25 hours doing 15-18 massage sessions. For math purposes the common massage employee
is going to work 25 hours per week and perform 15 massage sessions at $50 a
session. This mean this employee
generated $750 of gross income for the business in a work period (25 hours 15
massage sessions over 7 days).
Based on this $750 of gross income let’s look at the
breakdown. Wages expenses for a service business such as massage therapy should
NOT EXCEED 50% OF GROSS. We are going
to use 50% of gross to cover all employee expenses including wages, payroll
taxes and cost of maintaining payroll and human resources services. We are not
providing any benefits such as paid vacation or contribution to retirement or
health care costs. The employer must
match a percentage of employee taxes and withhold for income taxes sending $ to
the IRS. The matching tax percentage is
7.5 and typical service cost for maintaining payroll is another 7-10 % so using
15% as a base every $100 paid to an employee cost the employer $115.
The employee generated $750 of gross income so payroll costs
for that employee should not exceed $325 for that pay period. The employee will
not see $325 because of the 15% needed to cover payroll taxes and costs and
also the withheld income taxes. The
employee cost $55-$60 for the pay period and you will need to withhold about
$25 for income taxes.
$325-$55 (cost)= $270.
This $270 is what you can pay the employee for the pay period. Their
check will be about $220 after income tax is withheld. This works out to about
$11 per hour for all 25 hours at work.
This seems like an awful hourly wage but if the person was self-employed
they would end up making about the same per hour (but most do not want to admit
it). And if that same employee did just
2 more massage sessions during that time frame they would increase hourly by $4
per hour or $15.
Most employers attempt to keep wages costs in check by
paying minimum wage (and a bit more) base for all hours worked and a bonus (commission/
per session fee) for each massage session (60 min, –yes more for a 90 minute).
So the math for this looks as follows:
$9.00 per hour base x
25 hours worked = $225 base wages. The employee grossed for
the business $750 and $325 is available to cover wages and employee costs. The
$225 in base pay will cost the employer about $30 bringing employer wages cost
to $255. $325 (available)-$255=$70
available to pay in bonus/commission. The employee provided 15 sessions. $70 /
15 massage session= about $5 bonus for each massage session. This still sounds
terrible so let’s figure it the way most are attempting- paid per massage hour
and as long as the employee makes at least minimum wage for the 25 hours at
work the employer is legal. Let’s
continue to use the $9hr. as the minimum wage. If the massage therapist is paid
per massage hour then you could say you are paying them $18 per massage hour
which now sounds better but this is really kind of sneaky since that $18 x 15
sessions still ends up being $270.
Sneaky is not very ethical however during this transition
period it is essential that employees are thoroughly informed about how the pay
structure works.
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WHAT IS A MASSAGE FRANCHISE?
Recently I have begun to wonder how many individuals
understand the franchise business model.
Let’s explore this topic like a massage session: General
–Specific-General.
GENERAL
A franchise is a way to do business. Franchising is a
business opportunity that's somewhere between buying an existing business and
developing a business from scratch.
The franchisor is the person or persons who did all the work
from scratch to develop a successful business operations model.
The model is the franchise when the originator then sells
the model to others who want to do business the same way.
The person(s) who buy the business model is call the
franchisee. In exchange for an initial
set-up fee and a monthly payment, the franchisor provides the franchisee a
business model, marketing supplies, staff-training assistance, managerial
consulting and brand awareness .
A short way to restate this information is:
A franchisee buys a license from a franchisor to be a dealer
of that business model (franchise). The owner of the franchise sells a product
or service through its franchisees.
There are many advantages to the franchise business model.
Franchising is a strategic alliance between groups of people who have specific
relationships and responsibilities with a common goal. A network of
interdependent business relationships is formed that allows a number of people
to share:
· A brand
identification
· A successful
method of doing business
· A proven
marketing and distribution system
There are downsides to franchising as well. It costs money to buy and set up the
franchise business. There is a onetime
fee paid by the franchisee to the franchisor to "buy into" the
franchise. The initial fees typically range from $35,000- $45,000. That is a
lot of money. Generally, the fee reimburses the franchisor for the costs of
initial training and support for new franchisees. Next the location must be
rented or purchased and then remodeled, equipped and supplied to fit the
franchise facility design. For example: we all recognize how a McDonalds
building is designed. This part of the upfront money is really a lot ranging
from $100,000 to over a million dollars.
Then about a year of operating costs must be available. That is
expensive too. The point is that the
franchisee has to invest A LOT of money to get the business up and running.
In addition to all the overhead costs to operate the
business there are additional ongoing fees related just to being a franchise
business.
Staff are employees: This means that the business owner must
pay at least minimum wage for every hour worked and all matching taxes as well
as other federal and state mandated withholding.
Social Security and Medicare Taxes
Federal Unemployment Taxes
State Unemployment Taxes
Workers Compensation Average (varies by industry)
A conservative rule of thumb is to add 30% to an employee's
wages to calculate the total cost to the employer. So if someone is paid $10.00
an hour the cost to the employer is $13-$14 per hour . If self-employed YOU
have to pay those taxes. That means for every $ 10 you make you are only really
getting about $7 in your pocket.
If there are 5 employees working each shift and the business
has two shifts that means that the weekly payroll is about $6,000.00. If the
cost of a service is $50.00 then 120 services a week must be sold just to pay
payroll.
SPECIFIC
Massage Franchises.
This is great link to explore.
As an employee in a massage franchise business you have to
have the whole picture to understand why things are done the way they are done
and why the pay rate is the way it is. Each of the franchise models is more or
less the same. Really does not matter which one. Some have higher services fees for the
massage or maybe a facial and some a bit lower.
A middle range initial investment of the franchise owner is about
$350,000 plus a year of operating costs. $500,000 as a commitment is
reasonable. Before that franchise owner
makes any money, the business must earn back $500,000. Let’s also use an average of $50 as the
amount paid for each unit of service—a massage or facial. The business must sell 10,000 massage or
facial sessions. –That is a lot. Full time
massage practice ranges from between 1000-1200 massage sessions a year or 20-25 session weekly (based on 50 weeks). At the same time and for ever after, the
business must generate enough gross income to pay all expenses BEFORE the
franchise owners get any profits. This amount can range from $ 250,000 a year
to $350,000 a year—about 6500 service units ($50 massage sessions).
It is time consuming and expensive to train new employees
and turnover in the franchises is huge. Turnover occurs for many reasons but a
couple biggies are ergonomics and unrealistic income expectations and those
flawed foundations are often laid in the entry level education. Also the employers do not just have massage
therapists to pay, but also receptionists and housekeeping, management, repairs
and maintenance staff. In the massage franchises the product is quality massage
therapy. It is hard to find dedicated
massage therapists that really understand the difference between being self-employed
and an employee
What should a massage therapist be paid?
Based on educational and responsibility similarities when
compared EMT(emergency medical technicians), medical assistants,
cosmetologists, all of who have more training than massage therapists at the
current 500-625 hour standard, $25,000 a year at entry level for a 40 hour work
week(25-30 massage hours in the 40 hours)to $38,000 a year for an experienced
massage therapist working a 40 hour work week.
A 40 hour work week is 2040 hours of work per year. You would need to provide 25 -30 actual
hours of massage during the 40 hours or at least 1400 hours of massage per
year. Now remember, the low end pay of $
25,000 earned per year costs the employer an addition $7500 in taxes you would
have to pay yourself if self-employed.
So actual yearly wage is really $32,500.
If the cost of each massage is $50 you have to provide a
minimum of 650 massage sessions per year just to pay your wages. In addition,
all the other overhead operating expenses must be paid. I typically teach 30-50
percent of gross must be allocated to pay these bills so- $12,000- $14,000 in
the mid-range (I used about 40% of $32,500). You have to earn this just to have
a place to work- whether self-employed or employee. And as an employee, the
operating expense amount is lower because others are sharing costs. This is another 250 massage sessions at $50
each. So when working at a franchise you have to do 900 massage sessions before
the owner makes ANY money off of you IF you want to earn $25,000 a year.
REALITY CHECK--- And this is based off of $50 per massage.
Most unit sales will be less than the $50 because of member discounts, coupons,
specials, etc.
Also, the franchise environment is typically a place where
massage therapists receive gratuities/tips which can add $7000-$10,000 to the
income per year.
If massage therapists were paid a flat $15 per hour for a 40
hour work week, the yearly income is $30,600 which costs the employer $40,600
in payroll and another $12,000 in operating costs. So the franchise owner has
to cover about $53,000 of expenses if they pay $15.00 an hour. That is 1375 hours of massage per year
working 40 hour work weeks and based on figures of actual massage hours of 1400
per year (even though you are getting paid for 2040 hours a year).
Soooo-the profit to the owner on this model of employment is
based on 25 units of service at $50 or $1250 a year. If that owner has 10 massage therapists
working full time, yearly profit margin is about $20.000 and that is less than
what each massage therapist makes. Quite
a different picture isn’t it. These figures are within a realistic range and
based on maximum schedule. What happens
when there are no shows or a bad weather day? This is a tough cookie to
eat. A lot of people have their fascia
in a twist. The franchise model is
misunderstood in the massage community. This is unfortunate.
What are the solutions? Paying employees less for sitting
around when not doing a massage and charging more for the services hoping there
is enough volume. The massage franchise membership model was originally based
on affordable massage for the masses. The average yearly income is around
$35,000 per year. The most a massage can cost to serve this majority of the
population is $-40- $50 with the tip.
That means the price point cannot be much more than $45 per massage and
that only buys one massage a month which in really not enough to gain the
health benefits massage can provide.
Volume will likely decrease as the cost of a massage exceeds $50-$75
unless you are specifically focused on a demographic that earns more than
$100,000 per year. $40 -$50 per massage is a better price point for client
retention, multiple massage session and volume. So much for raising the price of
services.
Owners may do better than the $20,000 profit mentioned
earlier. They work off of volume and often own multiple businesses. There are product sales and add on
services. Paying the low rate for
sitting helps the profit margin. Still being a franchise owner is not the huge
money maker many would think and the intent is not to work massage therapists
to the bone and treat them badly.
GENERAL
You will make the most money as self-employed massage
therapist going to client’s homes or places of work. BUT THIS IS A LOT OF
WORK- You will have to charge a minimum
of $75-$100 for each massage session provided.
This fee is out of range for the majority of people but there are some
who can pay. You will have to gross at
least $80,000 to net $50,000 and you have to pay your taxes on the
$50,000. It takes at least 3 hours of
time to provide a 60 minute massage on site. With all the driving around and
set up and take down time 3- 4 sessions a day or 15 -16 sessions is the max you
can do within the 40 hour work week. You
can gross $75,000-$80,000 a year—but you will only make $35,000-$40,000 a year
after paying all taxes and operating expenses and with a mobile business there
is no facility rental. You still have to
do all the laundry and everything else. You will make-if no one cancels and you
are booked full 51 weeks out of the year (I week vacation)- maybe $18 an
hour. This is how I have structured my
massage business for over 30 years so I have lived this model. AND I was really
busy often seeing 6 clients a day. I
have been my own employer and employee and up until a couple years ago
maintained a full time practice.
In 2015, the average annual income for a massage therapist
(including tips) was estimated to be just under $25,000 per year. BUT most massage therapists are only working
1/2 to 3/4 time and only providing 40-50 sessions a month ( 10-12 sessions a
week--1/2 of full time at 25 sessions --60 minute sessions used as base)..You
can do much better than that at a well-managed franchise if the number of
massage hours is similar.
AMTA DATA
PART TIME MASSAGE THERAPISTS.
According to the AMTA the average, massage therapist worked
25.3 hours per week in 2015 and was paid for 19.7 of the 25.3 average
hours. Also indicated in the report
massage therapists provided massage for an average of 45 clients a month or
between 11 and 12 clients a week. Only about 50% of those surveyed by AMTA
indicated that they wanted to work more hours. (AMTA-- The 2016 Massage
Profession Research Report). Also
according to the AMTA 2016 Massage Profession Research Report, gross income ( I
assume that means prior to income taxes and after overhead is deducted if
self-employed) was$24,132 in
2014 and $24,519 in 2015. That sounds terrible until you realize that is
PART TIME and about 62% of the typical forty hour work week. 38% of the
reported income of $24,519 is about $9500.
Therefore, factored out to full time,
this means that full time earning for a massage therapist (prior to
income tax) is about $ 34,500 per year.
So why are massage therapists working part time? About 50% are happy with part time. So what
about the other half? Why are massage
therapist only providing 45 sessions a month—part time instead of 90 massage sessions? Two reasons come to
mind.
Ergonomics/bodymechanics and lack of client volume. I have been pleading for an independent
ergonomics and biomechanical analysis for massage therapy for YEARS. The massage therapy leadership organizations
NEED to fund a “for real” independent analysis by objective experts outside the
massage profession to get an unbiased perspective and usable
recommendations. I do not care who you
are or how long you have been doing massage or teaching (including me), all of
us are guessing. We do not know for sure
and it is time to know!
Client volume is an issue as well. So what are the obstacles preventing more
people from receiving massage? Again,
according to the AMTA 2016 Massage Profession Research Report, Females without
children in the home with incomes over $50,000 are the main massage consumer
and 1/3 of all massage consumers had a household income of $100,000 or more in
2015. Only ¼ of those with a household income between
$75,000 and $100,000 received a massage in 2015. Seventeen percent of those
with incomes between $35,000 and $50,000 got a massage in 2015, down from 22
percent in 2014. And only 7% of those
with an income of less than $35,000 got a massage in 2015, down from 8 percent
in 2014.
There is a huge potential to increase clients since only a
small percentage of people actually receive massage. The largest group of people is those making
less than $50,000 a year. Price point of
a typical 60 minute massage session will need to be between $40 and $50 for
these individuals
How often clients receive a massage is also an issue. Many who get massage only schedule once a
month. Research has shown multiple times that that frequency is not enough to
generate and sustain benefit. Weekly
massage sessions are idea but realistic scheduling for clients is a massage
every other week. Increasing the
frequency of massage for current clients would double the session hours worked.
What are the obstacles for receiving more massage sessions in a month? Cost and time with cost being the biggest
deterrent. If the average fee for
massage is $ 65 the monthly cost for a
client receiving a massage every other week is
$1625 a year or $135 per month.
For those with incomes less than $40,000 a year that is a real chunk of
money. For those with yearly incomes of
$ 75,000 or more that is 2% of income but for those making $35,000 a year it is
5% of income. Those earning $35,000
-$40,000 only have $700 a year (2% of income) of disposable income to potentially spend on
massage. The most they could spend is
$30 a massage session if they received 1
massage session a month.
Here is who is getting a massage----
From AMTA :
Average massage consumer is female, has a household income
over $50,000 and does not have children under 18 in the household. Household
Income – Thirty-one percent of all massage consumers had a household income of
$100,000 or more in 2015, and 38 percent of consumers in households with an
income of $100,000 or more had a massage in 2015.
Twenty-four percent of Americans that have a household
income between $75,000 and $100,000 received a massage in 2015, up from 16
percent in 2014.
Twenty-one percent of Americans that have a household
income between $50,000 and $75,000 received a massage in 2015, up from 17
percent in 2014.
Seventeen percent of Americans that have a household
income between $35,000 and $50,000 got a massage in 2015, down from 22 percent
in 2014.
Seven percent of Americans that have a household income of
less than $35,000 got a massage in 2015, down from 8 percent in 2014.
The 2016 Massage Profession Research Report
Most massage
franchises are well managed, but not all. If you are working in the franchise
system and the managers and owners are not doing a good job keeping up their
side of the business----and if you are a good employee-- meaning appropriate
business behavior, good retention rate for clients, tending to cleaning and facility
management duties and want to be part of the solution---then diligently
identify the problems as you see them, write them down with potential solutions
and respectfully present to the franchise manager. If that does not work go to the owners and if
there is still no improvement go to the Franchise corporate offices. IF STILL NO SUCCESS THEN QUIT. THERE IS A
SHORTAGE OF MASSAGE THERAPISTS RIGHT NOW.
YOU CAN FIND ANOTHER POSITION.
If you are motivated to complain, gossip and generally
contribute the problem then quit, go into business for yourself. If you do not like all the standardization,
rules and pay then go to work for yourself.
If you are a quality massage therapist dedicated to service you will
have a full schedule and won’t be sitting around making a minimum wage base an
hour. If you are sitting around and not
getting retention and client rebooking then take a good look at your
professional behavior and skill set.
Employers: If you are good employers you realize that you
are in a team relationship with your employees. Do not be aloof and distant. Be
part of the team by sharing and communicating and you are not too good to clean
the bathroom either! Support your excellent employees and get rid of the
employees that are a strain and drain. One bad apple spoils the whole barrel.
Finally: Educators
stop instilling unrealistic income expectations. Present the employee model of
career development with the same objectivity as you present self-employed. Do not downgrade either career path- present
the facts-the real facts.
Disclosure: My family owns a franchise massage clinic. We are excellent employers and ours employees
are part of the success team.
