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 2023–2025 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
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
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2023–2025
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 ↓Hide the evidence ↑
| Status (FTC) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Outlets at start | 858 | 831 | 797 |
| Opened | 13 | 5 | 4 |
| Transfers | 27 | 32 | 33 |
| Terminations | 3 | 4 | 0 |
| Non-renewals | 0 | 0 | 0 |
| Reacquired by franchisor | 0 | 0 | 0 |
| Ceased — other reasons | 37 | 35 | 44 |
| Outlets at end | 831 | 797 | 757 |
| 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.
19.3%
31 of 161 resolved defaulted
66.0%
avg. charged-off $ ÷ approved $
12.7%
default rate × loss severity
$98,542
what recent franchisees borrowed
57 mo
approval → charge-off, defaulted loans
2 vs 7
distinct banks — pulling back
Charge-off rate by loan approval year (%)
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
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 CPAModeled risk
FDD Risk Score · modeled from the public record
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.
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing MERLE NORMAN COSMETICS's numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →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.