Wall Stree Journal Article on Medical Spa Franchises: Medspa boom is a bust for some

The following article on problems with medical spa franchises ran in the Wall Stree Journal. It's a telling article that points the finger at the current crop of medical spa franchises. I signed up and read it after Ron posted his comments on being an unhappy Sona owner.

Medspa Boom Has Become a Bust for Some

By RHONDA L. RUNDLE: November 21, 2006

Jeff Nebot thought he had struck gold. Two years after opening a laser hair-removal franchise in St. Louis, annual revenue hit $3 million. And over time, the lavish salon added other cosmetic services as Mr. Nebot joined the rush of entrepreneurs into the emerging business of medical spas. Medspas (also called medispas) offer such medical treatments as Botox injections and laser hair removal in a luxurious environment rather than a doctor's office. The field has been rapidly expanding in recent years as entrepreneurs and doctors alike have sought to profit from the dual quests of many affluent consumers: prettification and pampering. For an increasing number of those who entered the business, the boom is proving a bust.

"Several Sona franchisees, though not Mr. Nebot, are in private arbitration over problems that include misrepresenting a complicated business as a turnkey operation and failing to provide needed support. Sona officials declined to comment.

Several franchisees of Radiance MedSpa Franchise Group PLLC, a franchiser in Scottsdale, Ariz., say the company's financial projections overestimated revenue and underestimated initial start-up costs, including working capital.

The president of Radiance, Charles L. Engelmann, recently said: "There are currently 32 open stores and we will have 47 or 49 open by the end of the year. None of the stores have closed." He also acknowledged that some franchisees are attempting to get their money back.

"I can't be my own medical director any more, which is an added expense I can't afford," says one Florida physician who is not a dermatologist. He says he is "facing personal bankruptcy and trying my best to get out while there is something left for my family" after miscalculating what it would take to market, advertise and build his business. Indeed, many medspa owners are doctors who hope to make easy cash at a time when income is shrinking from their traditional medical practices.

You can read the entire article on the Wall Street Journal site here. It does require a subscription. 

Comments

[justcurious]

Thank you for listening to your readers (particularly Ron in this case) and posting this article. This type of response is one reason why this website is so helpful!

[BurnedMD]

Having dealt with American Laser Centers total lack of respect for both physicians and patients, I can attest to the tone of this article personally. I lost both large amounts of money and time, as well as the goodwill of many patients. My association with ALC nearly cost me everything that I'd spend many years working hard to build. I ended up with burned patients and malpractice claims. Thank you for posting this type of information and potentially saving others from learning the harsh lessons I've endured.

Forgive the anonymity of this post but ALC is run by individuals who take any opportunity to threaten anyone who won't tow the company line. Be wary. Good luck.