Planet Beach Sees Significant Improvement in Loan Success Rate
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Planet Beach Sees Significant Improvement in Loan Success Rate

NEW ORLEANS - Sept. 17, 2014 /PRNewswire-iReach/ - In the past five years, Planet Beach has improved its Small Business Administration (SBA) loan success rate to 86.67%. Planet Beach attributes this positive change to its move away from UV tanning and the full implementation of its automated spa concept.

For SBA loans closed prior to 2009, the company had a higher than acceptable default rate. However, out of the 15 new SBA loans during the period 2009 to 2013, there were only two failures, per the FRANdata report described below. This is very positive for the brand, considering that two-thirds of all small business startups fail within the first two years. (SOURCE: 2014

Over the past few years, many misleading articles have been written about SBA franchise loan default rates. For example, in a recent Wall Street Journal article, Planet Beach was cited as having high default rates, when in fact the data was 10 percentage points off to the negative from 2004-2013.

Unfortunately, The Wall Street Journal obtained and reported on incorrect SBA data. Prior to this article, Planet Beach had already contacted an independent research firm, FRANdata, for SBA data validation in 2013. FRANdata is the only research company that objectively studies the activities of all companies that franchise in the United States.

According to the FRANdata Enhanced Loan Loss Analysis Report, the data that the SBA reported is inaccurate in three major ways: 1.) Loans that should have been attributed to franchised brands were not included in the SBA report, 2.) Loans were attributed to franchise brands that should not have been and 3.) Loans were attributed to the wrong franchise brand.

Once FRANdata identified these discrepancies, the SBA chose to work with them to assist in rectifying their incorrect data. FRANdata examined the SBA data for Planet Beach for the period from August 2000 to September 2013 and discovered the following: the SBA had wrongly classified 44 loans to Planet Beach businesses as non-franchise loans, which were not included in the default rate calculation.

"It should be noted that our reported default rate was for a time frame where the UV tanning business was in serious decline," said Stephen P. Smith, Founder and CEO of Planet Beach. "Using a Blue Ocean strategy, we created a niche market with our automated spa concept. It should also be noted that Planet Beach was the only franchise that made such a drastic change to our offerings and concept during the reporting timeframe. Obviously, this was done in order to ensure the future success of our franchise system."

Smith went on to say, "While any failure is a tragedy, we work hard to ensure our franchise and franchisees thrive. We have evolved our brand and, as a result, our success rate has greatly improved over the past five years."

"I was approved for an SBA loan in 2011, one of the toughest years to try and get financing," said Carrie Baugh, a Planet Beach Regional Developer and Franchisee in Utah. "In my opinion, Planet Beach has a proven business model that works. We opened our spa with only one UV unit with the goal to get customers into the door to introduce our other new automated spa services. If you follow the business model, you will be successful."

Planet Beach has a mission to change the way the world rejuvenates. According to Troy Wise, Executive Director of Marketing, "Our franchisees and employees are very passionate about what we are doing. Further evidence of this belief in the brand is shown by the fact that five out of our 23 corporate employees own licenses and operate six Planet Beach locations, with one current employee in the process of acquiring a location, which would bring the total to seven."

With the new brand position, innovative technologies and services offered to fulfill customer demand, coupled with the focus on finding the right type of franchisee, Planet Beach expects to continue improving the SBA loan success rate.

About Planet Beach

Planet Beach, based in New Orleans, LA, is the leader in automated spa services and creator of the automated spa concept. The international franchise is dedicated to changing the way the world rejuvenates by providing affordable and high quality skincare and spa treatments. Founded in 1996, Planet Beach has grown to more than 220 locations worldwide. For more information, visit

SOURCE Planet Beach

Media Contact:

Paige Davila
Planet Beach

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