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« States taxing plastic surgery & cosmetic medicine. | Main | Dermacare, Sona, American Laser Centers, & the rest. »
Tuesday
Feb202007

Dermacare Medical Spa Franchises Unite?

 big-trouble.gifJust when I thought I was out of the Dermacare saga...

I had an interesting weekend. I spent a fair amount of it talking to and exchanging emails with unhappy Dermacare medical spa franchises. Sheesh... It's a hornets nest. One of the Dermacare owners sent me this email from Carl Mudd, Dermacare's CEO: 

From: Carl Mudd [mailto: Carl@DermacareUSA.net]
Sent: Monday, February 05, 2007 6:54 PM
To: Carl Mudd
Subject: Blog email

To All Franchisees:

   I wanted to make everyone aware of this press we are getting in this public chat space. This type of thing hurts all of us and takes money from the pockets of all franchisee's as this is clearly available to the entire public.

   Perhaps those of you who find this type of thing offensive could respond appropriately.

http://medspa.squarespace.com/the-blog/2007/1/22/dermacare-laser-skin-care-clinics.html

 

Carl Mudd

CEO/ President
Dermacare Laser & Skin Care Clinics(R)
DLC Dermacare LLC
4835 E. Cactus Rd. Suite 345
Scottsdale , AZ 85254
(602) 424-0788 Phone
(602) 424-0811 Fax
(877) 700-0788 Toll Free
www.DermacareUSA.com
Carl@dermacareusa.com

Offensive? It seems that there's much unrest in Dermacare land.

The first two years of owning a franchise are historically the 'honeymoon period' in which the franchisor offers the most support and training. Franchisees tend to get more unhappy as time goes by since the franchisor has less to offer. The trouble with a franchise as young as Dermacare does not bode well.

First, while I was not a recipient of Mr. Mudds email, his reference to 'offensive' makes me think I should make my position know lest you a think I've got a history with Dermacare.

Mr. Mudd says that this is taking money out of all Dermacares franchisees pockets. Ehh?

The real problem for Dermacare and Mr. Mudd is not potential Dermacare patients who might stumble across this site, it's the physicians who are reading and may have second thoughts about getting involved with a business in which the franchisees are terrified that Dermacare will find out who they are... and the existing Dermacare franchises who now have a place to post their opinions in a group without having to remain in isolation.

Since DermaDoc first started commenting I've received three other direct contact (by phone or email) from Dermacare franchise owners. While I still don't know who DermaDoc is, I now know some others... and they're even less happy than DermaDoc. I've been sworn to secrecy but suffice it to say that there's trouble brewing. I don't have much experience with Dermacare (other than their threatening letters) but the owners seem to think that it's run by the Sopranos and if anyone finds out they've talked Paulie Wallnuts will be by to wack'em. 

Here's the consensus from the four contacts I've received (Three owners and one in 'corporate'.)

  • No one is happy with Dermacares corporate support. It sounds errily like Ron's experience with Sona.
  • Dermacare's turnover at headquarters must be tremendous. Three of the four mentioned that they're constantly working with new people who they don't know. 
  • They're ecstatic that this site exists and that there's a venue where they can air their grevences without being identified and targeted for cement shoes.
  • They don't want to say what they really think since they're already in Dermacare's boat and don't want to sink it underneath them.

 So I'm going to post a new thread for discussing medical spa franchises. If you're an owner or medical director, please feel free to comment or contribute. If you're one of the owners who Mr. Mudd feels should be running to Dermacares defense or feel that this site's 'offensive', we're happy to hear from you too.

So, while I'll occasionally mention Dermacare, Sona, Sleek, American Laser Clinics, Solana, Solara, and whoever, it's up to you as individual readers to draw conclusions.

Reader Comments (17)

I, too, am a Dermacare franchisee. And I appreciate the frustration around the country amongst the other franchisees. Although this blog is an excellent forum, the reality is that most of us have already been in contact with each other in one way or another so nothing here surprises existing franchisees. That said, I may be the only happy franchisee (SHOCK!). No ties to corporate -seriously.
When I first started looking into the laser aesthetic industry, I quickly discovered that there is tremendous bias with very little objective data. It seemed to me every laser company had a hired doctor-schmoe who had published something in a Derm journal. That doctor's reputation added credibility to the company's product. Problem is, how as a new provider in this industry can you get reliable information to choose the right product for the right procedure? The competition amongst the manufacturers lends to finger pointing and truth-bending. Now, set aside the lasers for a second. The vast majority of physicians have little or no marketing experience. In our medical practices 95% of our patients come from either word of mouth or insurance company listings. We've never had to really be creative and market ourselves. And let's face it, this is a marketing business. The actual services provided are really not as crucial as being able to get clients to respond to advertising vehicles and getting them to purchase treatments at the time of consults. A doctor at that point can sell him/herself as the credible authority. But as has already been said in a previous blog, the clients don't care about the grandiose largest operation in the planet, they just want to get the hair off their chin for a fair price and feel comfortable with who is providing the service.
I for one was miserable in medicine. I won't go into the rant of managed care, but I felt no control, dwindling income with double digit cost increases. The laser industry seemed like a good idea. I've been open less than a year, and I am having the time of my life! Happy customers, happy medicine. No one in my medical practice ever said to me, "Doc, I LOVE MY CHOLESTEROL LEVEL!!!", but MAN!, do they love their Botox or IPL treatment! No, I haven't broken even yet, but every month is getting better than the last. Could Dermacare corporate do a better job helping me with marketing -- of course. Could they be more supportive with organizing my office, better sales training, better most-everything, yes. But ultimately, this is my business. I'm learning a ton. I'm excited about medicine again. And although the corporate office may appear impotent in delivering what it promised, I think we have a good group of franchisee owners who have the same desire to provide good services and to ultimately fulfill the original dream of Mr. Mudd, to create a national brand in laser aesthetic skin care that is known for safety and efficacy. Trust me, I'm in no way advocating joining this company as a franchisee right now until the corporate infrastructure either goes through its growing pains or sells to a VC that can do a better job supporting its franchisees. But I really think I saved a lot of money trying to figure out all of this by myself while avoiding the mistakes made by others. I think if you are new to this industry, you'll be even more frustrated trying to go alone than joining an existing company that has done a lot of the work for you. The question is, is it worth the caustic franchise agreement details. Again, it's your business and you have to make it work. If DC Corporate isn't delivering what I expected it would, well, I'll spend my time finding others who can help me, and keep an arm's distance from them for now.
Dear Dermacare Franchisee:

Thanks for being the first franchisee of another med spa franchise to step up to the plate. Not to try to "burst your bubble"-- but if you had interviewed me at my one year point in the Sona franchise (or Jeff Nebot from St. Louis) I would have probably told you that I thought this opportunity was the greatest thing since sliced bread. It concerns me that you aren't "raking in the money" your first year if your busines model is simlar to Sona's (i.e., emphasizing prepaid packages, etc.). For most of us, the real "fun" began 18 to 24 months into the business when expenses begin to overtake revenues. At he same time, some of your "bread and butter" lead sources seem to lose their effectiveness. Suddenly, you are working harder and harder but each month you fall further behind financially. I hope Dermacare has found a busines model that really works. Most of us have found that the true profit margins in this business are razor thin-- to allocate 10% or whatever right off the top for often worthless franchise fees or royalties is sometimes the straw that breaks the camel's back.
Certainly an open debate of this kind can only help the physicians... franchise owners of not. I'd think that the best solution for Dermacare would be to create happy franchisees and not focus on selling new ones.

Value your existing customers. That's business 101.
02.21 | Unregistered CommenterJC MD
All I can say at this particular juncture is - wow.

I was hoping I was the only overly frustrated franchisee but apparently not. Good I am not alone, but bad that there is such a foundational dysfunction in an organization that was able to talk us into forking over lots of our hard-earned cash.

I will reiterate that there is a difference between 'unhappy' franchisee and 'frustrated' franchisee. I tend to follow 'just another franchisee's suggestion to run our own business and keep an arm's length from corporate. Hopefully they will straighten things out a bit and get us all back on track.

As a quick side - the news from Brooklyn is the clinic closed and corporate is scrambling trying to sooth a lot of angry clients. Good luck with that from Scottsdale...

I'll be watching the flow - let's keep the dialog open here everyone!
02.21 | Unregistered CommenterDermaDoc
PLEASE NEVER FRANCHISE !! Dermacare, Sona, Solana all have been the biggest gimmick scam for me. I went with dermacare and now have taken such a big hit, I may lose my house. This middle eastern guys at Dermacare just want your money. Study the industry on your own and it will save you a fortune. DO IT ON YOUR OWN - statistically I found out its just the same. -- Very upset MD
MDDermacare -
I'm sorry you are having such financial issues, I understand and truthfully we are struggling like most of the clinics. There are some excellent sources out there for medical practices besides clunky old banks. Do a Google search on physician practice financing and see what you can do. Maybe if you can refinance and lower your monthly costs you can turn around. Don't give up, there is still a lot of potential in this industry, unfortunately it seems that it is going the way of the Walmart price point philosophy, so all we can do is regroup and be ready for the next wave of competition. Also, check out the laws in your state, most states won't allow a creditor to foreclose on your home if you are making the mortgage payments even if you have it assigned to another creditor for collateral.
Can you tell I've been thinking about this a while...?
Good luck - I'll be glad to help with any advice I can offer to specific questions.

02.23 | Unregistered CommenterDermaDoc
I found some interesting tidbits of information about Dermacare on the Arizona state corporations registry. Seems they filed as recently as 2006 as a real estate firm. I know the CEO's previous business was real estate (interestingly, and if I am interpreting the legal-ese correctly, in the UFOC disclosures it indicated that the company that became Dermacare never actually did any real estate transactions...). They have been late a few times filing the corporate annual report with the state, to the point of having an administrative dissolution a few years back, then being reinstated. The annual reports are available online if anyone would like to see them. The Arizona state website can be searched for 'corporation' which leads you to the corporate directory and a long page of various filings and reports for DC corporate including the name change a few years ago.
The CEO also has a little history of traffic violations apparently (although I am certainly not one to wag a finger at that myself). That can be searched on the county, state and city registries for the court system.

Viva the Internet!

Tell me again how the CEO found his way into the esthetics business?

Despite what terrors the franchisees are experiencing, and what slick moves corporate is trying to pull on almost all of us, we do have to remember this is a business we entered into and some of the responsibility for its success rests with us. I've heard that the CEO feels businessmen can't be trusted (ironically) and physicians are not smart enough to know how to run a business, so I suppose we will just have to prove him wrong. I don't think most franchisees are too concerned about sharing a part of their success with corporate, but I think we all expect them to share part of the failure too and that is where I see the disconnect between the two sides. If a clinic goes under, corporate has no liability and gets to keep the franchise fee and any other obligations due them under the contract. Let's look at some numbers: about 25 clinics doing about $50K revenue per month with 5% going to royalties gives Corporate about $125K per month revenue. Each additional clinic sold adds about $75K revenue (albeit one time) to corporate. They will essentially match the royalty income if they only sell about 2 clinics per month. Considering their projections were to have hundreds of clinics over the next 5 years, where do you think they were counting on their revenue to come from? Half the current clinics could close and they would only have to sell one extra franchise per month to make up the difference in revenue. Face it, they are looking at royalties as a long-term revenue source - the short-term goal is getting clinics sold. One hundred mediocre clinic royalties would be easier to obtain than 25 exceptional ones since they would actually have to work with the 25 existing clinics to build the revenues to that level. It's much more of an ego-stroke for corporate to have 100 clinics, even barely surviving ones, than 25 well preforming ones when it comes to industry presence and market penetration.

Darn that MBA...
02.23 | Unregistered CommenterDermaDoc
OOps.. I knew something wasn't right there...
25 clinics doing $50K per month at 5% royalty only gives Corporate about $65K per month, not $125K, so they really don't have a lot invested in helping us incrementally bump up our revenue vs selling new clinics.

I should use a calulator that late at night, sorry!
02.24 | Unregistered CommenterDermaDoc
Hey...I love this site. I've been working for Plastic Surgeons since 1991 and have watched the evolution of esthetic medicine over the years,(from the middle of the battle field). 2 years ago, I was aggressively "head hunted" by American Laser Centers because of my experience & reputation and was made an offer I literally couldn't refuse. I was hired to open,manage, hire & train staff for a new facility in Pennsylvania, with plans to open 4 more in the region within 2 years. Things started to concern me from the very 1st day of corporate training in Dertoit. The emphasis wasn't on medicine but rather 2 of the 3 days were spent on hard-sell, "time share sales" tactics...ass-covering and learning how NOT to honor the bogus 2-year guarantee they offer on their laser hair removal services. I lasted in the position for 1 year before I returned to a legitimate medical practice, where the patient's care is closely supervised by a doctor. Now I can sleep at night.
02.27 | Unregistered CommenterAdrienne
as a dermacare franchise owner i am not at all satisfied with corporate. Promises are great but no execution! i agree with the majority - the ceo is the problem!
02.27 | Unregistered Commentermd skin
Adrienne,

I have experienced what you have described in working as a midlevel provider at various franchises. Quite frankly, I have given up trying to find one in which the practice of medicine is on an equal par with the perceived financial gain of the franchisor.

By the way, I am not including DermDoc in this assessment, as this doc is one I would love to work with!
Sorry, I meant DermaDoc!
Hey Fiona-

Thanks!
It has always been my pleasure and honor to work with mid-levels, they are often more patient oriented than the docs they work with and I have a huge respect for that.

I also can agree with your assessment of the franchisees you have worked for. I love medicine but the way theindustry is going, I felt I had to have a back-up plan. They way DC is acting, that may just be running a hot-dog stand somewhere.

Good luck to you!
02.28 | Unregistered CommenterDermaDoc
Just a brief frustration -
I assume all the franchisees got the email today saying that we have exactly one week to prepare the design we want for the mailer going out to the printer in 3 weeks. Granted the mailers have been decent quality, but it would be nice if we had a little warning of these things. The 'seasonal mailer' idea was pitched months ago with no small fanfare. After the expectations we were handed didn't materialize ( as usual), we could at least be kept informed about what is really coming down the pipeline rather than a bunch of promises and we have to wait and guess which one is going to happen at a moment's notice.

Oh well, a little cranky tonight I suppose. Comes from having no response to simple inquiries and being given little time to respond to theirs.

I would like to hear anything more about the legal action being taken by the group of franchisees. I am just not entirely sure it isn't a scam for corporate to find out who the dissenters are.

Geez, I hate being cynical.
03.15 | Unregistered CommenterDermaDoc

I hope what I am hearing from all of you other FRANCHISE OWNERS isnt where I am headed. We all need to remember the word "MEDICINE" when it comes to a livelihood. It seems that DERMACARE is focused on the word "FRANCHISE" followed by "MARKETING" "SALES" "PROFIT". Thats GREAT for DERMACARE, but DERMACARE forgot to put in words like YEARS OF PERSONAL HANDS-ON EXPERIENCE! Thats because noone but a trainee touches the "CLIENTS". THEY ARE PATIENTS, BY THE WAY.

Great point Doc In Shock? What about us burnt patients? Don't we come first ever, even after being burnt by RN's you are supposedly supervising but are actually, in my case, no where to be found? I now have a severe 2nd to 3rd degree burn scar mid face. No Dermacare MD ever called or offered to see me!I've asked and won't even be told the physician's name in charge of the Brentwood , TN clinic. Guess I'll have to have an investigation done. I will not back down.They hurt me and tried to ignore it. I believe it's called negligence, and practicing illegally without a physician.

07.11 | Unregistered CommenterLaserBurnt

To understand why there is any "fear" of being identiied by corporate is very dramatic and the Dermacare client/public would not understand that this "fear" is NOT folly. But if the job postings at corporate are any indication, there is a very scary bunch of demands, ultimatiums and requirements that go beyond any job postings I have seen. Why would anyone apply for work that will clearly be difficult and involve a cult like enironment.

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