PAINT NAIL BAR Franchise Disclosure Document (FDD) 2024 – Discussion Invited
The PAINT Nail Bar franchise is promoted as the “opportunity of a lifetime” by franchisors Mark Schlossberg, Michele Schlossberg & Ashley Koshinski. However, we haven’t found a single franchisee who will endorse the franchise opportunity, or who would encourage a close friend or family member to invest in the salon franchise. We’ve posted the 2024 PAINT NAIL BAR Franchise Disclosure Document (FDD) and invite further discussion & scrutiny of this controversial nail bar franchise. by Sean Kelly
(UnhappyFranchisee.Com) Last week, we asked PAINT NAIL BAR Franchise: Do Franchisees Recommend the PAINT Nail Bar Franchise?
We got an earful – more than 20 comments and rising – none of them positive.
We sent out request for comments to the home office and to the franchisees featured in franchise sales promotions but haven’t received a single positive endorsement.
One common theme to the comments is the description of the franchisor-franchisee relationship in terms of an abusive domestic relationship… with terms like “gaslighting,” “verbally abusive,” “berating,” “belittling,” “shaming,” “a cult,” and “deflection.”
The pattern of behavior they describe is flattery, love-bombing, & charm prior to signing the Franchise Agreement, then bullying, belittling and gaslighting once it’s signed.
That aside, the actual terms of the franchise deal and the formal “factual” presentation of the concept’s performance is supposed to be presented accurately and completely in the FTC-mandated Franchise Disclosure Document.
> ARE YOU IN FAVOR OF FRANCHISE TRUTH? IN GIVING FRANCHISEES A VOICE & A SAFE SPACE TO USE IT? Free Speech isn’t Free. Please contribute what you can.
The 2024 PAINT Franchise Disclosure Document (FDD): Let’s Discuss!
The 2024 PAINT Nail Bar Franchise Disclosure Document (FDD) dated September 13, 2024 was filed by Evan M. Goldman of The Franchise Firm with the Maryland Office of the Attorney General (OAG) as part of the company’s Maryland franchise registration (End date: Dec. 26, 2025.)
I have uploaded it here for free viewing and/or download: PAINT Nail Bar 2024 Franchise Disclosure Document
It is also publicly viewable on the official registration website at NASAAEFD.org: https://www.nasaaefd.org/Franchise/ViewDocument?DocId=200506&EFDID=536148&RegistrationId=50920&isRegistered=true
Franchise sellers are required to provide a franchise disclosure document to a prospective buyer at least ten business days before having them sign a franchise agreement or receiving any payment.
Only 13 states (including Maryland) require franchise sellers to register their FDDs and only a handful of those scrutinize them.
No government agency verifies the accuracy or truthfulness of the claims disclosed, so it it up to the prospect to verify the accuracy… especially by asking questions and speaking with franchisees.
The Federal Trade Commission (FTC) Emphasizes the Importance of Hearing the Experiences & Opinions of Current & Former Franchisees
The cover page of every franchise disclosure document (FDD) contains this language:
More information on franchising, such as “A Consumer’s Guide to Buying a Franchise,” which can help you understand how to use this disclosure document, is available from the Federal Trade Commission…
The FTC’s “A Consumer’s Guide to Buying a Franchise” states that a critical source of information needed for making an informed decision is current and recent franchisees. For this reason, contact information for current & recent franchisees (including those who left the system via ownership transfer) is a required FDD disclosure (Exhibit O in the PAINT Nail Bar FDD).
Missing Disclosures: Required Franchisee Contact Information
According to the FTC Franchise Rule Compliance Guide, franchisors must include “the name of the [current] franchisee and the address, and
telephone number of his or her outlet.”
It appears that PAINT Nail Bar stopped providing required franchisee contact information beginning with the 2024 FDD.*
The 2022 PAINT Nail Bar FDD submitted for Maryland & Virginia state registrations by attorney David Beyer of Quarles & Brady included this required contact information.
That FDD also included, as required, the names and contact information for recent franchisees who left the system via ownership transfers.
Exhibit “O” of the 2024 PAINT Nail Bar FDD submitted for Maryland registration by Evan M. Goldman of The Franchise Firm does not include addresses or phone numbers for current franchisees, just company-issued and controlled email addresses.
Exhibit “O” of the 2024 PAINT Nail Bar FDD fails to list the names and contact information for the nine (9) ownership transfers referenced in Item 20, which includes transfers in 5 states (FL, MD, MI, OH, TX) within the 2023.
We hope that these omissions were inadvertent and not an attempt by PAINT Nail Bar to subvert the due diligence protections intended by The FTC Franchise Rule.
* We invite corrections, explanations & rebuttals from PAINT Nail Bar management & their attorneys on this and our other layman’s interpretation and understanding of franchise law.
“The Franchisor’s Financial Condition… Calls into Question the Franchisor’s Financial Ability to Provide Services and Support…”
The 2024 PAINT Nail Bar FDD includes a required warning based on the Financial Statements submitted with the state registration:
Special Risks to Consider About This Franchise
Certain states require the following risk(s) be highlighted:
… Financial Condition. The franchisor’s financial condition, as reflected in its financial statement
(see Item 21), calls into question the franchisor’s financial ability to provide services and support to you.
”…A high percentage of [PAINT Nail Bar] franchised outlets were terminated, transferred, re-acquired, or ceased operations for other reasons.”
The 2024 FDD also includes a warning about the high franchisee turnover (or, in this case, Churnover) rate indicated in Item 20.
…Turnover Rate. In the last year, a high percentage of franchised outlets were terminated,
transferred, re-acquired, or ceased operations for other reasons. The franchise could be a higher risk
investment than a franchise in a system with a lower turnover rate.
Note that this language may be left out of FDD versions used in and/or submitted to other states.
ITEM 2 BUSINESS EXPERIENCE
Includes business experience of the following personnel:
- Chief Executive Officer and Co-Founder: Mark Schlossberg
- Chief Innovation Officer and Co-Founder: Michele Schlossberg
- Director Of Franchise Operations: Ashley Koshinski
- PbP, Director of Product Development: Marcie Kremppel
- Director of Franchise Development: Sarah McArthur
- Director of Store Operations: Brittany Mcintosh
- Director of Store Operations: Amanda Jones
- National Lead Educator: Mahogany Poinsetta
ITEM 3 PAINT NAIL BAR LITIGATION
Item 3 discloses details of two legal disputes with PAINT Nail Bar franchisees:
On November 11, 2023, Elyse Quast (“Quast”), a former franchisee, filed an Arbitration Demand (Case Number 01-24-0004-2919 against Paint Nail Bar Franchise Company, LLC (“PNB”) and Mark Schlossberg, individually, alleging violations of California’s Corporations code, breach of the implied covenant of good faith and fair dealing, violations of the business and professions code, fraudulent misrepresentation, negligent misrepresentation, fraudulent inducement, and fraudulent nondisclosure….
On May 29, 2024 Paint Nail Bar Franchise Company, LLC (“PNB”) filed suit against Boss Beauty Brands, LLC and Sara Brown (collectively, “BBB”), a former Franchisee, in the United States District Court for the Middle District of Florida, under the caption Paint Nail Bar Franchise Company, LLC v. Boss Beauty Brands LLC, et al., Case No.: 8:24-cv-01309 (the “Florida Action”), alleging violations of the Lanham Act and violations of the non-competition and confidentiality covenants contained in BBB’s Franchise Agreement as a result of BBB’s operation of a competing nail salon…
See the PAINT Nail Bar FDD Item 3 for the full disclosures.
Feedback on PAINT Nail Bar litigation invited.
ITEMS 5, 6, 7: INITIAL FEES, OTHER FEES, ESTIMATED INITIAL INVESTMENT
According to the 2024 FDD,
The total investment necessary to begin operation of a PAINT Nail Bar® Salon business is $217,850 to $755,700. This includes between $62,500 and $77,500 that must be paid to the franchisor or its affiliate(s).
Our initial post generated some concern regarding the initial and ongoing costs and fees.
Items 5, 6, & 7 contain PAINT Nail Bar Franchise Company, LLC’s representations regarding these important items.
We welcome your input on how accurate these estimates are and whether the fees are reasonable for services received.
ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Our initial post prompted several complaints regarding the forced purchase of private label products and jewelry from the franchisor’s affiliates.
In Item 1, states:
We have 2 affiliates that market and sell products to our franchisees and affiliates: Primers By Paint, LLC (“PbP”) and PAINT Purpose LLC (“PP”)…
Item 8 states:
…Our affiliate, PbP has developed, and will continue developing, private label brand nail care products to be sold via the Salons.
You are required to purchase them and market and sell them to Salon customers.
PbP sells them to you at its then-current wholesale price at a markup from its costs.
During the fiscal year ending ‘December 31, 2023, PbP received $40,632.25 from sales to our franchisees.
Fiscal Year Ending: PbP Product Revenue: 12/31/21* $129,285.35 12/31/22* $229,889 12/31/23 $40,632.25 3-year Total $399,806.60
Required Jewelry Purchase of $4500/yr. Regardless of Sales or Inventory
While the requirement of private-labeled products is unsurprising, the required purchase of $750 or jewelry 6X per year for a service (not primarily retail) business has prompted sharp criticism from franchisees. Aggravating the situation is that the jewelry products are not nail-related, and the required purchase amount does not take into account low sales or excess inventory.
Item 8 states:
…Our affiliate, PP, provides a jewelry line to PAINT Nail Bar Salons. You are required to purchase the jewelry line from PP and sell the jewelry line to Salon customers.
PP currently sells the jewelry line to you at its costs, plus $10 for each piece of jewelry.
Every location is required to purchase a minimum of $750 per order of jewelry from PP at least 6 times a year.
During the fiscal year ending December 31, 2023, PP received $238,568 from sales to our franchisees…
Fiscal Year Ending: PP Jewelry Revenue: 12/31/21* $58,520.99 12/31/22* $229,889 12/31/23 $238,568 3-year Total $526,977.99 * 2021 & 2022 numbers are from the 2022 & 2023 FDDs respectively
ITEM 19 FINANCIAL PERFORMANCE REPRESENTATIONS ARE INCOMPLETE
The ITEM 19 disclosures include sales and expense information for 2 of the 3 operating company-owned salons.
Average Monthly Revenue and Expenses Disclosed for Corporate Salons in 2023:
- Company Salon 1: Monthly Revenue: $104,965
- Company Salon 1: Monthly Adjusted Net Operating Income: $24,301
- Company Salon 2: Monthly Revenue: $67,203
- Company Salon 2: Monthly Adjusted Net Operating Income: $11,220
Franchisee Gross Revenue:
The 2024 PAINT FDD Item 19 claims to disclose monthly gross revenue for 23 of 27 franchised salons as follows:
As of December 31, 2023, we had 27 franchised Salons open and operating in the United States. Below, we have complied in Table 2 the historical monthly Gross Revenues of the 2022 Calendar Year (which are unaudited figures) from 23 of the 27 PAINT Nail Bar® Salons operated by our franchisees that were open a full 12 months as of December 31, 2022 (the “Included Salons”). We have excluded 4 Salons as they were not open for the entire 2022 calendar year. Additionally, we have included the Gross Revenues of 22 of the 23 Included Salons for the period January 1, 2023 through December 31, 2023 in Table 3. We have excluded 1 salon that was not opened for the entire 2023 calendar year.
However, that information is cut off in the copy we received.
We’ve requested a full copy from Maryland OAG.
It is not clear whether the excluded salons did not have full-year sales because they were new, or because they had closed.
ITEM 20 OUTLETS AND FRANCHISEE INFORMATION
The PAINT Nail Bar 2024 Item 20 states that for the preceding 3-year period, 3 franchises were terminated, 1 was reacquired, 1 ceased operation and 8 9* were transferred to new owners.
Which 8 9* owners transferred their franchises are not explicitly disclosed, just the states in which they occurred:
- Florida – 2 (2022, 2023
- Maryland – 1 (2023)
- Michigan – 1 (2023)
- Missouri – 1 (2022)
- Ohio – 1 (2023)
- Tennessee – 1 (2022)
- Texas – 2 (2022, 2023)
* Item 20 Table No. 2 lists 9 transfers by state but incorrectly includes only 8 in the Total.
Franchise law firms, including Evan Goldman’s The Franchise Firm, would customarily include contact information for those who transferred their outlets under the Exhibit “O” of this FDD. PAINT does not appear to have done this.
Exhibit “O” Contact Information for Current & Former Franchisees
Exhibit “O” discloses the following franchisees and former franchisees, though without the required contact information. Typos and format inconsistencies are as they appear; only email addresses have been withheld.
EXHIBIT O TO THE DISCLOSURE DOCUMENT CURRENT AND FORMER FRANCHISEES AS OF December 31, 2023
Amarillo, TX Angi Seidenberger and Helen Sage
Ann Arbor, MI Shelley Wolff and Allen Wolff
Annapolis, MD Antonia and Alfred Boakye
Arlington, VA Kevin and Amber Sutton
Aventura, FL Osnat Geri
Bethesda, MD Cassidy and Nate Shollenberger
Birmingham, MI Angie Nobile and Tina Badallo
Broadview Heights, OH Sharece Curry-Miller and Mike Miller
Cleveland (Solon) Naeemah and Daven Holly
Colorado Springs, CO Raleigh and Seth Vincent
Dallas, TX Dave and Shelley Simpson
Fredericksburg, TX Tommi and Brent Seidenberger
Ft Myers, FL Alyssa & Taylor Gay and Hallie & Porter Harris Houston, TX (Garden Oaks) Andrea Eddleman and Eric Eddleman
Kansas City, MO Ron and Britten MoyersLake Norman, NC (Charlotte) Stuart and Nicole Rehfuss
Lakeland, FL Chelsea Dyer and Charles Garneau
Loudoun County, VA Karen Willis
Louisville, KY Miranda And Jeremy Goodin
Naples, FL Pearl and David Baker
Northern Kentucky Marquise and Chris Griffin
Oklahoma City Jeremy & Allison Baskett, Mindy & Josh Baskett
Pittsburgh Jason Kasper & Maria Kasper
Rochestor, MI Angie Nobile
South Sarasota, FL Taylor Karp
St Louis, MO Sara Brown s
St Petersburg , FL Jennifer Lee
Venice, FL Jessica Haworth
Franchisees that have signed a Franchise Agreement but have not opened as of the issuance date:PAINT Nail Bar Winter Park, LLC Casey and Marc Kish Orlando Park, Florida
Red Chair group. LLC Jessica and Joe Grenat Plantation, Florida
PAINT Tampa LLC Brooklyn and Joe Duffey Tampa, Florida
A.D.A.G, LLC Dee Gruijin and Sasha Grujin Richmond, Virginia
Shelly Lewis 12623 W. Colonial Dr., Suite A Orlando, Florida
Adrian And Charlene Balota College Station, Texas
Alena and Robert Gregory Washington D.C.
The name, city and state, and the current business telephone number (or, if unknown, the last known home telephone number) of any franchise who, is our most recent full fiscal year: (a) had an outlet terminated, cancelled, or not renewed; (b) otherwise voluntarily or involuntarily ceased to do business under the Franchise Agreement, as application or (c) who has not communicated with us within 10 weeks of the issue date of this disclosure document is listed below:
Paint Nail Bar Napa, LLC Elyse Quast Napa, California Closed Salon June 2023 – Terminated
Dangela Enterprises, LLC Dan and Angela Murphy Wayzata, Minnesota Closed Salon in October 2023 – Termination
BirdieLu, LLC Jill Martin Nashville, Tennessee Closed Salon in August 2023 – Termination
Alissa and Byron Hoover Perryton, Texas Closed Salon in July 2023- Termination due to tornado destroying building
RL Rositani LLC Roz Sledz and Jeff Cook Encinitas, California Closed the salon April 2023- Termination
Other PAINT FDD Items Worthy of Review & Discussion:
- ITEM 9 FRANCHISEE’S OBLIGATIONS
- ITEM 10 FINANCING
- ITEM 11 FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS,
AND TRAINING - ITEM 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE
BUSINESS - ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
- ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION
ITEM 19 FINANCIAL PERFORMANCE REPRESENTATIONS - ITEM 20 OUTLETS AND FRANCHISEE INFORMATION
- ITEM 21 FINANCIAL STATEMENTS
- ITEM 22 CONTRACTSInvitation: All individuals and companies discussed on our site have an open invitation to provide corrections, explanations, comments, rebuttals or other statements of their point-of-view which will be fairly and respectfully represented. Comment below or send an email to the author at UnhappyFranchisee[at]Gmail.Com.
Opinions shared here or in the comments are that of the individual commenters and not necessarily shared nor endorsed by this writer or publication. We are all responsible for our own statements.
FRANCHISEES: WHAT DO YOU THINK OF THE PAINT NAIL BAR FDD?
IS THE FRANCHISOR PRESENTING THE FRANCHISE OPPORTUNITY ACCURATELY?
TAGS: PAINT Nail Bar FDD, PAINT Nail Bar Franchise Disclosure Document, PAINT Nail Bar PAINT Nail Bar, PAINT Nail Bar franchise, nail salon franchise, Mark Schlossberg, Michele Schlossberg, Ashley Koshinski, Evan Goldman, The Franchise Firm, franchise churning, franchise failures, Franchise Disclosure Document, FDD,
