Franchising Sparkles in the Health and Beauty Industry

Originally published in Franchising USA
First Serial Rights March 1, 2015

Do you think French fries and fitness, or pedicures and pancakes, have nothing in common?

Think again. All can benefit from franchising’s proven business model, which combines marketing, business, and operational best practices with the name recognition and economies of scale associated with a branded channel of distribution.

Just like a franchised restaurant, a franchised spa, salon, or a dental or chiropractor office can duplicate its success in other locations based on an established system of operation, and by leveraging the capital and skills of independent franchise owners.

Franchising in health and beauty provides the same advantages that it does in other industries:

1. The customer benefits from an established brand that provides a standard of care they’ve come to expect.

2. The franchisee benefits from tested and streamlined office operations, advanced appointment scheduling systems, preferred vendors, and operational protocols. For medical or beauty professionals who want to concentrate on patient and client care and own their own business, franchising offers an attractive solution.

3. And the franchisor benefits, as in other industries, by allowing growth using someone else’s financial and sweat equity.

 

Statistics tell a tale of growth in the health and beauty sectors

It’s no secret the market for healthcare is growing tremendously. The aging population continues to feed the boom for services, as does a proliferation of new treatments. A society focused on health and fitness has more people looking for outlets to cure what ails them, or maintain what doesn’t.

In addition, revenue in the U.S. spa industry alone has grown from $12.3 billion in 2009 to $14.7 billion in 2013, with the number of spa visits increasing by 2.5% from 2012 to 2013. In the hair care segment, revenue is anticipated to grow at an average annual rate of 3.2%, to $58.7 billion by 2019. And as the economy continues to improve, it is expected that more new and return clients will visit these businesses .

Consumers who are putting their health, their bodies, and their dollars in this arena want some credibility behind a concept. Consumer confidence is gained through tested systems and cohesive messaging – the building blocks of a franchise system.

Consider, for example, what Massage Envy® has accomplished through franchising. Massage Envy® opened its first spa in 2009 and grew to over 1,000 units today. The fundamentals of the Massage Envy® model were then used to franchise The Joint – the chiropractic place (500 units in less than 4 years) and recently Amazing Lash Studio (over 300 franchises in two years).

This year, all six massage franchises in Entrepreneur’s Franchise 500 improved over their previous year’s rankings with what the publication calls “a testament to franchising’s power to transform an industry.”

 

Getting the Prescription Right

While there is growing acceptance and interest in franchising in the healthcare arena, the area of medical franchising, in particular, is significantly more complex than franchising a pizza parlor. Franchisors have to consider Stark laws, laws prohibiting the corporate practice of medicine, HIPAA regulations, and Medicare anti-kickback statutes. With expert strategic planning and sound legal advice, franchise systems can be set up to both fall within the safe harbors of these laws and succeed at expansion. Despite the complexity, it is important to bear in mind that many professional care franchises have already navigated these waters (for example, Pearle Vision®, Comfort Dental®, The Joint® and Doctor’s Express®).

 

Laying the Foundation

Just like restaurant, duct cleaning, or auto service franchises, the optical shop, lash extension spa, and hair salon franchise will need best-in-class franchise documentation such as operations manuals, training documents, strategic business plans, financial pro forma,and marketing and sales documents.

For beauty and healthcare companies considering franchising their business in a marketplace full of demand for well-polished concepts, knowing where and how to start the process can be a daunting task. The first advisor to be hired is the franchise consultant.

Franchise consultants can provide objective advice about the franchisability of a business, and play a vital role both in the decision to franchise and in the ultimate franchise structure and expansion plans. Companies will also need to hire a franchise lawyer with experience representing emerging franchisors.

It’s important to consider that while franchising certainly requires an investment of time and funds, the cost of the services of professional advisors to get a franchise company going the right way is often less than the cost of opening one additional company-owned location.

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Mark Siebert is CEO of the iFranchise Group, the nation’s leading franchise consulting firm. Within the health and beauty industry our consultants have worked with concepts in urgent care, home healthcare, dentistry, pharmacy, weight loss, nutrition, massage, optometry, hair care, tanning, skincare, lash extension, nail salons, spas, and fitness. For a copy of our whitepaper, “Franchising: A Business Expansion Solution for the Healthcare Profession,” please contact us at: [email protected] or (708) 957-2300.

 

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