CEO Lee Oberg plans to expand Massage Retreat & Spa through franchisees

Lee Oberg, a former Life Time Fitness manager, started his first Massage Retreat & Spa nine years ago at a Plymouth shopping mall.

"We started in 2007-08, the recession, and those were tough times," recalled Oberg, 57. "That site had been developed by a larger player, Massage Envy. They had locations all over the U.S. and [several] in the Twin Cities."

Today, there are seven Massage Retreat spas around the Twin Cities, with four stores open at least 36 months, including the original Plymouth location. They each gross an average $1.14 million annually from membership dues of $59.95 monthly, which includes a one-hour massage, facial, waxing or other services. Members are entitled to additional massages for $39.95.

A few years ago, Oberg and his minority partner, backed by a loan from Venture Bank, looked at adding more corporate spas.

"But we had already invested $2.5 million," he recalled, including bank credit. They experimented by selling one store in Maple Grove. It has proved a success for the new owner.

"That compelled us toward franchising," Oberg said. "We're talking to two individuals [about buying existing corporate sites]. And we're having other conversations with people who would open a brand-new operation. We're looking for both.

"For many people this is their club. Our focus is not national, but right here. The success of our growth [will be] these franchisees. We're going to spend 12 to 24 months to support new locations in the Twin Cities area before we start to think about outside Minnesota."

A franchisee will pay $300,000 or more to open a new Massage Retreat location. That covers the franchise fee, and costs for "build out," marketing and employee recruitment.

"That will cover 'A-to-Z'," Oberg said, a "turnkey" approach. "We've developed the system and proven the operations. We want the revenue numbers [from new spas] to hit the numbers we've hit in our [corporate-owned] spas over four or five years, for you to make 15 or 20 percent on your money. We've hit our revenue goals every year. There's demand for this business."

The company said it has thousands of local members and massage increasingly is an antidote to stress, pain and other maladies.

Massage Retreat employs about 240 full- and part-time employees.

Neel Kashkari, the blunt, new president of the Minneapolis Fed, spoke last week at Bethel University and made headlines as he continues to scrutinize too-big-to-fail banks. He is drawing on his experience as the person selected by then-Treasury Secretary Henry Paulson to oversee the program that bailed out the financial industry in 2008.

Kashkari also gave some career advice to the students, as reported by my colleague Adam Belz. A portion:

"Your first job is not your most important job. It's not the end of the world if you don't get the dream job right out of the gate. It's what you do with it. People have asked me, 'Should I spend time networking?' I've never spent any time networking.

"My biggest advice: crush your job. Be the MVP, so your manager says 'Wow, if there's an important project that comes in I'm going to go to you on it, because I know you can get it done.' It's not about networking, not about who you know. It's do a great job. Take risks. Seek out real responsibility. If you deliver, you will get more. And then you're going to get more. … And that will open up doors.

"People have never given me responsibility to do me a favor. You know when Hank Paulson picked me to run the [Troubled Asset Relief Program], he had no choice. He just didn't have a lot of people around that he could turn to that he trusted, so he wasn't doing me a favor, I was doing him a favor. And I say that jokingly. But it's not that I need someone to look out for me and do me favors.

"No. Do a great job and it's going to be in their interest to invest in you."

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.