Merle Norman Cosmetics Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$47,566 - $260,437
Min Cash Required
$1,733
Total US Locations
797
Business Summary
Merle Norman Cosmetics, Inc. operates retail stores known as "Studios" that specialize in selling Merle Norman brand skin care, color, and other cosmetic products. These Studios also provide customers with free, individualized instruction on skin care and how to use the cosmetic products.
Corporate History
Merle Norman Cosmetics, Inc. was incorporated in California on June 12, 1974, as a successor to various companies that had been operating under the Merle Norman name since 1931. The original cosmetics business was started in Santa Monica, California, in 1931 by Merle Norman and her nephew, J.B. Nethercutt. The first independently-owned Merle Norman Cosmetic Studio opened in 1934. The manufacturing and distribution of Merle Norman cosmetics through these independent Studios has been continuously managed by the Nethercutt family, with J.B.'s son, Jack Nethercutt, currently leading the company.
Financial Overview
Investment Range
$47,566 - $260,437
Minimum Cash Required
$1,733
Equipment Costs (Low)
$21,871
Equipment Costs (High)
$139,801
Working Capital
$32,629
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Merle Norman Cosmetics, Inc. reported net losses in 2023 and 2024, following net income in 2022. Despite these losses, the company maintains healthy working capital, with over $20 million in 2024, and has shown positive cash flows from operating activities in 2023 and 2024, recovering from a negative in 2022. The independent auditors have issued an unqualified opinion on the financial statements, indicating no going concern qualification. However, a significant future risk involves a 145% tariff on products imported from China, imposed in April 2025. This tariff is expected to substantially increase Merle Norman Cosmetics, Inc.'s packaging costs, impacting the cost of goods sold and gross profit, though the full extent and duration of this impact remain uncertain.
Financing Details
Merle Norman Cosmetics, Inc. offers financing for a portion of the initial package and the MN POS software and hardware. For new Studio Owners, 45% of the initial package cost can be financed over three monthly installments with no interest. Branch Studio Owners can finance 70% of their initial package under the same terms. For all Studio Owners, Merle Norman Cosmetics, Inc. will finance 80% of the purchase price for the MN POS software and certain computer hardware at a 10% APR, repayable in equal monthly installments over 12, 24, or 36 months. This financing requires signing a Promissory Note and a Security Agreement, and Merle Norman Cosmetics, Inc. retains a security interest in the financed collateral. There are no prepayment penalties.
Performance Metrics
Total US Locations
797
Franchised Units
797
Corporate Units
0
Avg Square Footage
717
Franchising Since
1934
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Merle Norman Cosmetics, Inc. has no litigation or legal disputes to report in Item 3 of its FDD.
Bankruptcy History
Merle Norman Cosmetics, Inc. has no bankruptcy information to report in Item 4 of its FDD.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew, Merle Norman Cosmetics, Inc. franchisees must provide timely written notice and not be in default of any agreement with Merle Norman Cosmetics, Inc. They must renovate and update their Studio if requested, ensuring it reflects the current image of the Merle Norman System. The franchisee and their employees must complete any required training. They must also have the right to remain in possession of their Studio location for the renewal term and have consistently operated the Studio in compliance with the Merle Norman System and met financial obligations during the initial term. Finally, the franchisee and all guarantors must sign a general release and covenant not to sue, and execute a new Studio Agreement in the form Merle Norman Cosmetics, Inc. is using at that time, which may have substantially different terms.
Training & Support Program
Franchisor Assistance
Merle Norman Cosmetics, Inc. provides extensive support to its Studio Owners, both before and after opening. Pre-opening assistance includes advising on Studio design plans and approving furnishings, furniture, fixtures, and signs. The franchisor sells an initial package of Merle Norman products and provides initial virtual training, which includes online modules and live classes, along with access to a comprehensive Operations Manual. During operation, Merle Norman Cosmetics, Inc. continues to make products and sales aids available for purchase and provides free lesson materials. Franchisees receive consultation and advice, and Merle Norman Cosmetics, Inc. has the right to inspect Studio operations. The franchisor also advises on and approves local advertising, and offers a co-operative advertising program that reimburses franchisees for a portion of approved local advertising expenses, currently paying 60% of these costs. Merle Norman Cosmetics, Inc. may also modify its system, including operational standards and Studio design, with 30 days' notice.
Initial Training Hours
24
Training Location
Online/virtual
Ongoing Support
Merle Norman Cosmetics, Inc. provides ongoing support by making additional products and sales aids available for purchase, and by supplying free lesson materials. It offers consultation and advice as needed. The franchisor inspects Studios and provides approval for local advertising, and also reimburses a portion (currently 60%) of approved local advertising costs through its Studio's Choice Co-operative Advertising Program. Merle Norman Cosmetics, Inc. may also modify its system, including operational manuals and Studio design, with 30 days' notice. Additionally, Merle Norman Cosmetics, Inc. offers a wide variety of continuing training seminars and videos to support new product introductions and color collections, with attendance strongly encouraged and sometimes required.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Absentee Allowed
Territory Type
Non-Exclusive
Territory Size Requirements
Merle Norman Cosmetics Inc. grants franchisees a nonexclusive right to operate a Studio at a specific, pre-approved location. The FDD explicitly states that franchisees will not receive an exclusive territory. Merle Norman Cosmetics Inc. reserves the right to establish other Studios or retail outlets selling its products, or use any other method or channel of distribution, including the internet, at any location regardless of its proximity to a franchisee's Studio. Franchisees do not receive any right of first refusal or similar option for additional territories.
Staffing Notes
Merle Norman Cosmetics, Inc. requires Studio Owners to employ a sufficient number of employees to operate the Studio at its maximum capacity during normal retail hours in their area. If a Studio is located within another retail business, it must be open whenever the separate business is open and must always have at least one dedicated employee on duty.