FRANCHISE·WATCH·DESK

Verified — real FDD extraction

Not found in the SBA Franchise Directory under this name — though SBA loans to its franchisees exist; verify eligibility with your lender

MERLE NORMAN COSMETICS

Other · independent · est. —

Merle Norman Cosmetics is a cosmetics company whose products are sold through independently owned studio storefronts offering personalized consultations and free product demonstrations. A studio owner operates a retail cosmetics boutique, advising customers on skincare and makeup and earning margin on product sales rather than paying ongoing royalties.

MERLE NORMAN COSMETICS net unit count declined -8.9% from 20232025 per its FDD Item 20.

New to franchising? Start here

A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.

Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:

  • Franchise fee — the one-time cost to buy in.
  • Royalty — the ongoing cut of your sales you pay the franchisor.
  • Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).

The verdict

Showing strain

Distress

0
STABLE

The disclosed record shows weakness — shrinking units, elevated exits, or churn — worth reading closely before going further.

Exit rate · latest year

5.5%

fiscal 2025, per Item 20

Cost to open

$48K–$263K

Item 7 total investment range

SBA loan defaults

19.3%

vs 14.8% avg across rated brands

Behind the verdict

the record, factor by factor · Item 20

hi-1.0.0
Net unit growth35%

3-yr trend · Item 20 Table 1

Weak
Exit quality25%

terminations + ceased-ops vs. all exits · Table 3

Weak
Transfer / churn15%

transfers vs. base · Table 3

Strong
Promise-keeping10%

actual vs. projected openings · Table 5

Weak
Transparency15%

Item 19 disclosure + completeness

Weak

Systemwide units

2023–2025

-8.9%
831202379720247572025

Survival record

FDD Item 20 · outlet status by year

In fiscal 2025, 44 of 797 franchised outlets left the system — a 5.5% annualized exit rate. Not every exit is a failure — but this is the measurable floor.

Show the outlet tables
Status (FTC)202320242025
Outlets at start858831797
Opened1354
Transfers273233
Terminations340
Non-renewals000
Reacquired by franchisor000
Ceased — other reasons373544
Outlets at end831797757
Net change-27-34-40

The lender's view

SBA 7(a)/504 loan performance · FY1991–present

Banks have made 191 SBA-backed loans to MERLE NORMAN COSMETICS franchisees since 1992. Of the 161 that have resolved, 19.3% were charged off (defaulted) rather than paid in full, versus 14.8% across 576 rated brands.

Charge-off rate

19.3%

31 of 161 resolved defaulted

Loss given default

66.0%

avg. charged-off $ ÷ approved $

Expected loss

12.7%

default rate × loss severity

Avg. loan · FY2020+

$98,542

what recent franchisees borrowed

Median time to default

57 mo

approval → charge-off, defaulted loans

Lenders · FY21+ vs FY16–20

2 vs 7

distinct banks — pulling back

Charge-off rate by loan approval year (%)

14'94001440132927'0124152942200'15

SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO MERLE NORMAN COSMETICS BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL

The owner's side of the deal

FDD × federal loan record

Who finances it

Wells Fargo Bank National Association

9.0% of this brand's loans

That lender charges off 15.6% of its loans to other franchise brands, vs 14.8% nationally.

Who buys it

74.4%

first-time franchise owners

The rest already owned at least one other franchise. Across the corpus, brands bought mostly by repeat operators charge off at roughly 10% versus 17% for brands sold mostly to newcomers.

Does experience help here?

Not enough resolved loans to split

Computed from 191 SBA 7(a)/504 loans to MERLE NORMAN COSMETICS franchisees joined to the brand's own FDD. Debt service assumes level amortization at the average disclosed term and rate. A lender's rate excludes its loans to this brand, so it reads the lender, not the brand.

What it costs — and what it drags

FDD Items 5–7 · fees, investment, royalty

Buying in means a $0 franchise fee (Item 5) and a total investment of $48K–$263K (Item 7). The franchisor publishes no earnings claim (Item 19) — ask current and former franchisees for real numbers.

To open (Item 7)

$48K–$263K

all-in investment range

Franchise fee (Item 5)

$0

upfront, one-time

Royalty (Item 6)

0%

of sales, ongoing

If a unit does this in annual sales…$1M/yr

Your figure — this brand discloses no Item 19 earnings; validate with current & former owners.

Royalty you'd pay / yr

$0

0% of sales, before profit

Over a 10-yr term

$0

royalties alone, excl. ad fund

This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.

Build a real pro-forma for MERLE NORMAN COSMETICS with an independent CPA

Modeled risk

FDD Risk Score · modeled from the public record

Moderate

Modeled from the public record, this brand sits mid-pack: riskier than 46% of systems we score.

Risk percentile

46 / 100

Measured

Modeled SBA charge-off

12.0%

Observed SBA charge-off

19.3%

Top drivers: System size (log units) (lowers) · Share financed by high-loss lenders (lowers) · Single-lender dependence (raises) · Investment ceiling (log) (raises). 50+ resolved loans and complete disclosure data — the score is checkable against the brand's observed rate. A linear scorecard built from this brand's own disclosure figures plus the federal loan record behind its franchisees; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.

Distress signals

news-sourced · bankruptcies, closures, lawsuits

No recent closures, bankruptcies, or major lawsuits found in the news for MERLE NORMAN COSMETICS. That's a good sign — but it reflects news coverage, not a guarantee.

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MERLE NORMAN COSMETICS franchise questions, answered from the filings

What percentage of MERLE NORMAN COSMETICS franchises closed last year?

In MERLE NORMAN COSMETICS's latest FDD Item 20 (fiscal 2025), 44 of 797 franchised outlets left the system — an annualized exit rate of 5.5%. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.

How much does a MERLE NORMAN COSMETICS franchise cost?

Per MERLE NORMAN COSMETICS's 2026 FDD, buying in requires an initial franchise fee of $0 (Item 5) and a total initial investment of $48K–$263K (Item 7).

What royalty does MERLE NORMAN COSMETICS charge?

MERLE NORMAN COSMETICS charges an ongoing royalty of 0.0% of gross sales, per Item 6 of its 2026 FDD.

Does MERLE NORMAN COSMETICS disclose earnings (Item 19)?

No — MERLE NORMAN COSMETICS's 2026 FDD makes no financial performance representation in Item 19. That is legal and common, but it means the franchisor publishes no earnings claim; ask current franchisees for real numbers.

How often do SBA loans for MERLE NORMAN COSMETICS franchises default?

Across 191 SBA-backed loans to MERLE NORMAN COSMETICS franchisees since 1992, 31 of the 161 that have resolved were charged off — a 19.3% default rate, versus about 14.8% across all rated franchise brands. This is the lender's-eye view of franchisee failure, drawn from public SBA 7(a)/504 FOIA data and independent of the franchisor's own disclosures.

Is MERLE NORMAN COSMETICS a good franchise to buy? Health score, exit rate & costs (2026) · Franchise Watch Desk