Canada: International Franchising: Health, Beauty And Fitness

Last Updated: May 16 2011
Article by Stéphane Teasdale

Stéphane Teasdale, the national lead of Fraser Milner Casgrain LLP's (FMC) Franchise and Distribution Group, co-authored the "Health, Beauty and Fitness" chapter in International Franchising: A Practitioner's Guide.


Despite the obvious distinctions between the sectors discussed in this chapter, franchise systems in the beauty, fitness and health industry have a number of common characteristics. This justifies the following sector-specific overview.

In recent years, consumers have become more and more concerned about their health and fitness. They are often afraid of being overweight or in poor health, or are simply trying to keep fit to cope with everyday life into old age. Similarly, the importance of good physical health, fitness and beauty has become socially more important during the last few decades. It is not surprising, then, that franchises in these industries have become increasingly popular.

Surveys indicate a large growth trend in the number of both franchise units and franchise systems selling units in the health and beauty sector.1 Twelve out of the 55 fastest-growing franchises operate in this sector (eg, the Paul Mitchell Partner School and 123 Fit).2 As a result, the number of people employed in beauty-related businesses increased by 24% from 1999 to 2003.3 Generally, franchisees are not required to have a specific level of education; nor do they need a particular licence. In many cases, they simply need to have general business experience. Some franchisors, especially in the cosmetics retail sector, will work only with candidates who already have a retail background. Others require their potential franchisees to have management experience or marketing skills.

1.1. Beauty

Franchises in the beauty sector are comprised of businesses as varied as hairdressers, barber shops, nail salons, cosmetic products and tanning salons, to name but a few. These businesses often provide the basic services combined with the retail sale of related products. The launch and operation of a business in this sector require specific professional skills and basic professional training in the services offered. The franchise units will usually employ personnel with the same professional qualifications; however, extensive training is not usually required to start a franchise business in this sector.

In the United States, more than one-third of licensed beauty salons and spas are franchised or set up in a franchise-type model.4 The modest start-up fees make this sector very attractive to many people starting their own business. However, capital requirements vary widely. The average cost runs to about $150,000 with royalty fees of around 5% to 6% – similar to other industry sectors in franchising.

One important sector in the booming beauty industry is hairdressing. This sector is estimated to be a $55 billion industry, which is still dominated by family-run shops. However, major franchises such as Great Clips Inc, Fantastic Sams Hair Salons and Regis Corp, with brands such as Supercuts, Cost Cutters and Pro-cuts, are making inroads into this highly fragmented market. They are often situated in malls, Wal-Mart locations or similar sites. Usually, these businesses occupy specific market segments (ie, men or women, children or the elderly), or pursue a low-price strategy.

The spa industry has approximately 15,000 facilities in the United States. According to the International Spa Association, these generate around $10 billion in annual revenue. If one adds other pampering businesses such as massages, the potential revenue is even higher. Only a small number of spa visitors attend for medical reasons. The industry is growing in importance not only in the United States, but throughout the world. Many of the spa facilities are franchised or set up in a franchise-type model, with usual launch costs of $200,000 to $400,000 per unit. Typical examples of franchises in this sector are Elements Therapeutic Massage, Inc, a Hand and Stone Massage and Facial Spa.

Another common type of franchised beauty-related businesses is tanning salons. In the United States, two major franchises – Planet Beach Tanning and Hollywood Tans – control nearly 65% of the market (by number or units). In Europe, the tanning business is flourishing, particularly in France, and seems to be impervious to the negative press associated with excess exposure to ultra-violet rays.

Finally, the retail business of some major cosmetic producers, such as Yves Rocher, Elizabeth Arden, Revlon and Inter Parfums is often organised in the form of franchises although there are variations (eg, licence-type legal structures and even joint ventures). It is impossible to establish the existence of a standard legal structure, but it is safe to say that save for pure licensing, most will revolve around a franchise-type relationship.

1.2. Health

Health franchises comprise businesses ranging from medical outlets to medical spas, senior and home healthcare, weight control and loss systems, as well as life-care and child-care services. The sale of natural products devoted to weight loss can also be included in this sector. As has been well documented in the last few decades, problems with obesity are rising significantly among western populations, who are seeing healthcare costs soar as a result. By way of example, in the United States, where two-thirds of all adults are believed to be overweight, there is a strong incentive for health-related businesses and, by way of consequence, franchises to tap into this hugely potentially profitable market. What is more, governments – albeit reluctantly in some western countries – are welcoming private sector initiatives to reduce the costs of healthcare.

Launching a business in this sector requires specific professional experience and qualifications. Depending on the required infrastructure, set-up costs can be considerable.

Health sector-related franchises are among the fastest growing in the franchise industry. An example of an upcoming franchise is Foot Solutions Inc, which provides products and services for people with foot or related problems. Weight Watchers International and Jenny Craig are also examples of leading weight control programmes that operate with a franchise system at the retail level. General Nutrition Centers, the largest global specialty retailer of nutritional products, also distributes its products using a franchise system in the United States and internationally.

1.3. Fitness

Western societies' struggle with obesity, coupled with health clubs' nimble responses to new opportunities, has fuelled the rapid growth of the fitness industry. The US domestic fitness industry boasted 25 million members in early 1999; it has set a goal of 50 million US members by 2010 and 100 million members globally. The strength of the domestic fitness market is apparent: half the opportunities reside in what is probably the most fitness-conscious country in the world, the United States – ironically, a country also plagued with high levels of obesity.

As recently as the early 1990s, health clubs were typically co-ed gyms such as the YMCA or YWCA. They promoted muscle-building exercise on stacked-weight equipment to the under 50s. Today's fitness centres generally cater to special demographic groups such as teens, women, families and seniors, and offer a comprehensive approach to wellness, fitness, nutrition, weight loss, stress reduction and nutrition.

Two of the biggest changes in recent years have been the enormous popularity of 30-minute 'express' workouts and the widespread use of hydraulic exercise equipment, favoured by women. The International Health, Racquet and Sports Club Association estimates that about one-third of the nearly 30,000 US health clubs are 'express' fitness centres.

In 2005, there were more than 41.3 million health club members in the United States. This compares to 17.3 million members in 1987 and represents a compound annual growth rate of just under 5%.

Some of the major franchised fitness centres in the United States and Canada are Anytime Fitness, Jazzercise, Snap Fitness, Gold's Gym and Curves. Kieser Training has units all over Europe. Brunswick Corporation and Nautilus Inc are both manufacturers of health and fitness products. They mainly (although not exclusively) distribute their products via franchised units.

Launching and operating a business in this sector usually requires some sort of professional qualification (eg, in physiotherapy) or experience in the fitness business. However, the degree of professional experience required varies greatly. As an example, launching a Kieser training unit in Europe requires initial capital of approximately €100,000.


Franchising, licensing and distribution have flourished worldwide in the last few decades and legislation governing these types of business model has grown accordingly. Many countries have enacted legislation dealing with disclosure, relationships, a combination of both or some other forms or derivatives thereof. The United States is without a doubt a leader in the field of franchise legislation. US legislation deals with both disclosure and relationships at federal and state levels, followed closely by some Canadian provinces and certain countries in the Asian hemisphere such as China, Japan, South Korea, Vietnam, Australia, Indonesia and Malaysia. Other countries, such as Brazil, Belgium, France and Taiwan, have enacted legislation relating to disclosure obligations, while Venezuela, Estonia, Lithuania, Belarus, Russia, Ukraine, Kazakhstan, Kyrgystan and Saudi Arabia just have relationship laws.

Companies in the beauty, health and fitness sectors, as in other sectors, would therefore be well advised to ensure compliance with local franchise law in those countries where they are considering carrying on business. In addition, some jurisdictions (eg, North America and Europe) may also have specific legislation regulating, for example, the sale of natural products. Consumer protection, antitrust and other similar legislation most often related to franchising, licensing or distribution should also be reviewed in those countries. These types of law may apply to specific industry sectors. Emerging countries in South America or Africa or areas such as the Middle East are likely to provide a relatively legislation-free environment. However, enlisting the assistance of local counsel to ensure compliance with all relevant legislation is strongly recommended.


Contractual arrangements in the health, beauty and fitness industries will vary widely and depend in large part on the markets and legal environments where companies wish to expand. Some markets, such as Asia or South America, present tremendous opportunities for growth. Others, such as North America and Europe, present significant challenges, if only because these specific industries have been present and growing for decades.

In essence, contractual arrangements will provide for the right to sell products or services under a trademark or banner, sometimes using a marketing formula or concept which must be strictly followed, the whole in consideration of fees that may include an initial fee to obtain the right and an ongoing fee based on sales or a mark-up on products sold for the duration of the contract. Consequently, franchise agreements, licensing, distribution or other similar agreements are normally used depending, generally, on the level of involvement of the franchisor, licensor or distributor in the operations of the franchisee, licensee or distributor. In France in particular, but also in other countries, the franchisor's ability to transfer know-how from one party to the other will largely determine whether a franchise or licensing agreement is used. This kind of transfer involves significant exposure for both sides if these obligations are not met. The franchisor's ability to transfer such know-how and to provide assistance and support will often dictate whether a franchise agreement, rather than a licensing agreement, is used.

In the cosmetics industry, licensing or distribution agreements are often the norm. Aside from allowing a licensee to use a name or trademark and sell products purchased from the licensor or designated suppliers, very limited know-how, if any, is transferred.

In the fitness sector, franchising is often the business model, although certain arrangements do not necessarily qualify as pure franchise agreements. Fitness may include the retail sale of related products such as sports equipment and clothing. Several North American companies use franchise or franchise-type agreements because they can sell their products with a specific concept where the transfer of know-how on the marketing of that concept is key. Health clubs and fitness centres will also often use a concept that goes beyond the sale and distribution of products or services. Recognised systems such as Curves, Nautilus and Kieser provide an all-inclusive concept where specific equipment and services are offered to consumers within a defined space, which is presented in a uniform way and in accordance with well-established norms and standards. As the protection of know-how and knowledge and experience of a technical, business, financial or other nature is difficult legally, franchise agreements in the fitness sector contain specific and detailed control mechanisms, especially in pure service franchises such as health clubs.

In the beauty industry, one also finds varied arrangements including franchise agreements or other forms thereof. Beauty centres that include hair salons, spas, manicure shops and other types of beauty-related establishment offer not only services, but also products marketed in the form of a concept that is usually distinct from their competitors'. Consequently, the transfer of know-how, in addition to trademarks, trade dress and other distinct features, favours the use of a franchise agreement rather than a licensing or distribution agreement.

In addition, franchisors wishing to expand internationally will choose one or other of the following models, depending on the circumstances.

3.1. Unit franchise, licence or distribution

The use of this particular arrangement may depend in large part on the level of significant support that the franchisor, licensor or distributor will wish to provide for the operation and commercialisation of the products or services to be sold. Single unit owners will be granted a limited right to market products and services at a single location for a specific period of time. The single unit model may be used where:

  • market development potential is limited;
  • support of the franchisor is easily available; and
  • cultural or market differences are not significant.

Companies in the fitness, health and beauty sectors use this model only if the criteria set out above are prevalent.

3.2. Multi-unit franchising, licensing or distribution

In certain markets, the multi-unit model will provide an effective means of developing market potential without the drawbacks of a master franchise model. For the same reasons why unit franchising, licensing or distribution may be appropriate, the model will enable the franchisor, licensor or distributor to establish multiple units using one single partner who has the knowledge and resources to develop the market by himself. However, the market-servicing capabilities of the franchisor, licensor or distributor are crucial to the success of this model internationally. Companies in the health and beauty sectors often use this model.

3.3. Master franchise, licence or distribution

In this model, franchisors, licensors or distributors delegate their responsibilities to a master who is charged with developing a market by recruiting a minimum number of franchisees, licensors or distributors within a set period of time. This model is used by US and European companies in the health and beauty sectors expanding abroad, particularly in countries where the law, culture, language and other characteristics are significantly different from their own. They believe that their development is best achieved by having a partner with the knowledge, ability and resources to accomplish their expansion initiative in these countries. In turn, franchisors, licensors or distributors will be compensated by collecting initial fees and an ongoing royalty stream for years to come.

3.4. Joint ventures

Joint ventures are fairly cost-intensive projects that involve both parties sharing the risk and the cost of setting up single or multi-units. They are increasingly being used by North American companies which are expanding internationally. In the fitness industry, companies have often used this model in their international expansion initiatives and have contributed to the investment required to build high-end stores to sell their products. These types of agreement can be characterised as a mix of franchise, licensing and distribution, where the franchisor exercises a significant degree of control over the presentation and marketing of the premises and products without providing much assistance in the operation of the business itself. This model is also used by pure service franchises such as branded health and fitness clubs or spas.

Other forms of joint venture in the cosmetics and personal products industry include arrangements where the franchisor owns the rights to the lease and the fixed assets of a store, but where the franchisee operates the store under a management agreement and owns the inventory. This type of arrangement often requires minimum investment on the part of the franchisee, but allows for some profit from the turnover of inventory.

Other arrangements call for franchisor and franchisee to co-own the franchise via a corporation where each is a shareholder and where the corporation will execute a franchise agreement with the franchisor. The partnership arrangement will often allow the franchisee to gradually acquire the franchise under pre-determined terms.

3.5. Area development

These are less common for international expansion purposes. The area development model does not lend itself well to these particular industries, except perhaps for cosmetics, because franchisors are often looking for single unit operators.


1. "Franchise Time", November–December 2006; see also Darrel Johnson, "Franchising Expansion Fueled by Industry Entrepreneurs", Franchise World, December 2007, p 43.

2. Darrel Johnson, "The Fast 55 – Speed Demons: How 55 Companies Defy the Speed Limit", Franchise Times, March 2008, p 24,

3. Becky Bergman, "The Beauty of It All", Franchise Times, November–December 2007,

4. Ibid.

About Fraser Milner Casgrain LLP (FMC)

FMC is one of Canada's leading business and litigation law firms with more than 500 lawyers in six full-service offices located in the country's key business centres. We focus on providing outstanding service and value to our clients, and we strive to excel as a workplace of choice for our people. Regardless of where you choose to do business in Canada, our strong team of professionals possess knowledge and expertise on regional, national and cross-border matters. FMC's well-earned reputation for consistently delivering the highest quality legal services and counsel to our clients is complemented by an ongoing commitment to diversity and inclusion to broaden our insight and perspective on our clients' needs. Visit:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions