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Thursday
Feb152007

Medical Spa Franchises & Non-Compete Agreements.

Since Dermacare send me a cease and desist letter, there have been a number of supportive comments from readers. Dermacare is not the first or only medical spa franchise who might not like what I've written. Ron's probably not on the Christmas card list for writing his series on Sona; Inside a medical spa franchise.

compensation.gifDuring our email conversations, Ron has expressed surprise that no other medical spa franchisees have really stepped forward to share their experiences. There's two possible explanations for this; all the medspa franchisees are really happy... or, those who are involved with the current crop of medical spa franchisees are 'concerned' about rocking the boat they're sitting in. Physicians are also know for the being terrified of lawyers and inherently resistant to change. You'll have to make your own decision on that but I'd invite Dermadoc, Ron, Midwest, and anyone else with experiences either way to comment. (I'd also like to hear from physicians who've investigated Sona, Radiance, American Laser Clinic, Solara, or other medical spa franchise to comment on what they found and why they decided not to buy.

Here's an Anonymous comment from the post on Dermacare's cease and desist letter.

I'm enjoying reading this blog. It gives a clear picture of what is actually occurring in our neck of the woods. I'm a franchise owner as well, and have found the start-up to be an incredible journey, but not always fun. Here are my observations thus far:

The franchise I am with, has been very helpful for the most part. I do have a problem with all the energy and money expended to ensure that the corporate name is not "tarnished" however. I have a 10 year contract with no out clause. So should I decide at some time in the future that i no longer want to be a part of the franchise the only way i can do that is by selling my practice. Then I have a restrictive covenant that forbids me from practicing cosmetic medicine anywhere else. I am also restricted in what procedures I can perform in my franchise. The last time I looked, I have an UNRESTRICTED LISENCE to practice medicine. I'm not sure if these non-competes will hold up in court, but, I do know one thing. The franchise will do everything in their power to enforce it. And that i have a problem with.

And here's another comment from What's wrong with medical spa franchises & medspa consultants.

Thank you for these posts. As a franchisee, just starting my clinic, I have spent many a sleepless night worrying how I will succeed in an ever increasing competetive market. When you get right down to it, selling laser cosmetics is nothing more than selling TV sets or cameras. Some companies will thrive, others won't. Up until now, medical cosmetics has been the domain of plastic surgeons and dermatologists. However, in the past few years we're witnessing a whole new realm. And the sharks with MBA's have found a new breeding pool: MD's disatisfied with their current medical practice. They blindside unsuspecting doctors with promises of riches and offer examples of fellow physicians who have prospered. What is not being told are the risks involved, the difficulty of actually opening up a clinic, the costs and the failures along the way.
I, for one, have extended myself far beyond my comfort level. I've trusted those who smile to my face and tell me that they have my best interest in mind, but underneath have scales and circle the tank for any signs of blood or weakness. They expect that I have no business experience and they are correct. I can bring back life to dying infant, but ask me to balance a ledger and I have no clue.
I am their pray and fodder.
Time will tell if I ever get up and running. But, I caution my fellow physicians to be very weary of the sharks and do you're due diligence

About Medical Spa Franchise Non-Compete Clauses 

 
Any lawyers out there? Anonymous is right in that it's probably not enforceable in the medical sense. It may well be entirely enforceable for that location in a business sense. This is often not a problem for a restaurant franchise, but if you're a physician, you might want to think long and hard about what you're getting intomedspamedspa franchise will tell you that this is all 'standard' and 'boilerplate' language and that it's required. It's not. (I did extensive research on franchising when I was investigating offering a Surface franchise.)

Giving you a UFOC is required, a waiting period to accept payment is required, what the franchise agreement says is not required. It's a contract between you and a medspa franchise and is open to negotiation in the same way that any agreement is. Ten years of your life is a lot to sign away. Franchises typically start to have problems after the second year, when the gloss of promises starts to wear thin and the doc starts wondering what they're paying for.

The reason that medical spa franchises give to physicians for this kind of 'buy in' and term is that the costs to the franchise are all up front and that the local name recognition is so valuable that they can charge for it. Read the posts on medical spa franchises and a different picture emerges. 

If you're in a position to have an opinion, please comment, but pick a name... and not Anonymous. If you're willing, on the comments form put your medical spas web address (http://www.medicalspa-whatever.com) so we can see who you are. Of course, if you fear retribution from the medical spa powers, no link is necessary.

Reader Comments (1)

The subject of non-competition clauses is almost universally misunderstood by businessmen. These clauses are a favorite tactic of the "business bullies" who like to draft one sided agreements and try to scare everyone into marching to their tune. For everyone who is curious about this topic-- in particular those of us who signed one-sided mde spa franchise agreements-- I invite you to conduct a quick Google search on the topic of NON COMPETITION CLAUSES. You will find that these clauses and agreements are NOT favotred by the courts. California in particular has pretty much banned them. Most other states use a balancing test to determine whether or not the agreements are unreasonable. As a general rule, courts have always frowned on any restrictions on an individual's right to earn a livelihood. Recently, an MD in Tennessee won his case against his former employer, a medical clinic in Murfreesboro. The court ruled that a patient's right to receive continued care from her physician outweighed the busies interest of the clinic. In addition to concerns about violating a non-compete, each one of us that eventually discovers that we have been "ripped off" by our med spa franchisor faces another potential claim for violation of their "confidentiality clauses". Sona, Radiance, DermaCare and these other medspa "wizards" will very likely claim that we stole their valuable and proprietary business methods and secrets if we try to "divorce" them and open our own private clinics. That will make an interesting case-- especially when we will probably be able to show that their "secrets", methods and business models-- at least with Sona anyway-- were putting families into financial distress all over the USA!!!! My advice to anyone concerned about these types of agreements is to seek out an experienced attorney and get some good advice. You might be pleasantly surprised!

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