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 570 rated brands.
19.3%
31 of 161 resolved defaulted
66.0%
avg. charged-off $ ÷ approved $
12.7%
default rate × loss severity
$98,543
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
Merle Norman Cosmetics to close Saturday in Midland
news:Midland Daily News · 71mo ago
11 questions to ask a MERLE NORMAN COSMETICS franchisee
Built from this brand's own disclosures · take it to your validation calls
The franchisor will give you a list of owners to call. Most buyers ask whether they like it. These are the questions built from what MERLE NORMAN COSMETICS has actually disclosed — each one carries the number it came from, so you can tell whether the answer squares with the record.
- 01
MERLE NORMAN COSMETICS’ own Item 20 shows 44 of 797 franchised outlets left the system in fiscal 2025 — about 5.5%. Do you know any of those owners, and do you know why they left?
A franchisor will call these “transitions.” An owner three doors down usually knows whether they sold at a profit or handed the keys back.
FDD Item 20 · FY2025
- 02
33 units transferred to new owners in fiscal 2025. When you look at those, were they people cashing out a good business — or getting out of a bad one?
Transfers count as neutral in every ranking. They are the single easiest place to hide distress.
FDD Item 20 · FY2025
- 03
The system went from 831 units to 757 over 3 disclosed years. What's the explanation you've been given, and do you believe it?
A shrinking system means fewer owners funding the ad fund and support staff you're paying for.
FDD Item 20 · FY2023–FY2025
- 04
Of 161 SBA loans to MERLE NORMAN COSMETICS franchisees that have finished, 19.3% were charged off — the borrower didn't repay. Did you finance with an SBA loan, and how close did your first two years come to trouble?
This is the lender's view of failure, from public federal records, and it is independent of anything the franchisor discloses.
SBA 7(a)/504 loan record, FY1991–present
- 05
Item 7 says the low end to open is $48K, but the average recent SBA loan to a MERLE NORMAN COSMETICS franchisee was $99K. What did you actually spend to open, all in?
Lenders size loans to real project costs. A large gap between the disclosed floor and what banks actually fund is the most common way buyers get underfunded.
FDD Item 7 vs SBA approvals FY2020+
- 06
You pay 0.0% royalty on gross sales, plus the ad fund, before any of your own costs. On your actual revenue last year, what did you take home as the owner — not revenue, take-home?
Royalty is charged on sales, not profit. This is the number the brochure never shows and the one your life actually runs on.
FDD Item 6
- 07
MERLE NORMAN COSMETICS’ FDD makes no financial performance representation at all — legally, they've told buyers nothing about earnings. What did your first 24 months actually look like, month by month?
When a franchisor won't publish numbers, existing owners are the only source. Silence in Item 19 is a choice, not a requirement.
FDD Item 19 · 2026
- 08
How many months did it take to cover your own costs, and how much cash did you burn getting there?
Ramp-to-breakeven working capital is the most underestimated line in any franchise purchase, and the most common reason otherwise-good units fail.
Not disclosed in any FDD — ask an owner
- 09
What does the franchisor charge for that you didn't expect — required tech fees, mandatory remodels, approved-supplier pricing?
Required spending appears across Items 6, 8 and 11 rather than in one place, so buyers routinely miss the total.
FDD Items 6, 8, 11
- 10
If your agreement came up for renewal tomorrow at current terms, would you sign again?
The single most predictive question you can ask. A hesitation is the answer.
Ask every owner you speak to
- 11
Who else should I call — including someone who left?
The franchisor's list is curated by definition. Former franchisees are where the unflattering truth lives, and current owners usually know how to reach them.
Ask every owner you speak to
Want this as a checklist you can take to the calls?
I'll email you the printable version, and tell you if MERLE NORMAN COSMETICS’ numbers move — a new filing, a rising exit rate, a distress signal. Unsubscribe in one click.
A broker is paid by the franchisor to place you. I'm paid by you — and the job is pressure-testing MERLE NORMAN COSMETICS's numbers, including talking you out of a bad deal.
This page is what buyers see before they call you for validation. If the record above is wrong — or right in a way the numbers can't show — say so. Corrections are checked against the filings; nothing you write is published with your name unless you agree to it.
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.