Medical Spa MD - Inside Sona Medspas Part 7: Required IPL's & Lasers

These posts are written by former Sona Medspa owner Ron Berglund to provide an inside view of the way medical spa franchises recruit, train, and support their owners as well as detailing some of the problems with medspa franchises.

Read Part 1: Why I bought a Sona Franchise l Part 2: Sona Promises l Part 3: The Franchise Pitch l Part 4: Legal Structure & Revenue Sharing l Part 5: Opening a laser clinic l Part 6: Medical Directors & Physician Oversight

Sona Medspas: Required IPL's & Lasers

 

What IPL's & lasers did Sona mandate? 

When Sona rolled out its original franchise program in late 2002, the only service specifically discussed in the written documents was "laser hair removal". There were some vague references to other services but there was nothing specified at this point. In addition to a franchise agreement, and possibly an "area development agreement", Sona required franchisees to execute a "laser placement agreement" ("LPA"). The LPA stated that initially two Cynosure Apogee 9300 (long-pulse alexandrite) lasers with accompanying Smart Cool chillers would be installed for each franchised center. Based on sales revenues over the term of the agreement, additional lasers would be installed as different revenue "benchmarks" were achieved.

 

This program seemed like a good deal at the outset. We would not be required to lease or purchase this very expensive equipment (each laser + chiller had a retail list of about $90,000) and all payments and service would be taken care of with our monthly revenue share payment.

 

The standard franchise agreement and LPA provided that Sona's monthly revenue share-- which covered laser placement, service and maintenance in addition to the Sona franchise fee-- was based on a sliding scale which initially ranged from about 27% of gross sales for sales under $60,000 per month dropping to about 15% for sales over $100,000. As the franchise evolved over the first sevral years this program changed significantly. By late 2004 Sona switched to a new program whereby franchisees were encouraged to lease or buy their lasers. In addition to Cynosure lasers, Sona also allowed franchisees to purchase Orion/Alma lasers as well as the Harmony IPL ("AFT") System as the service offerings of Sona had also expanded considerably by this time.

 

What technology decisions were elective?

Initially, franchisees were not permitted to use any equipment except for Cynosure (we found out later in litigation that Cynosure had a significant ownership interest in Sona-- I believe 40%-- which was not disclosed to us).

 

When Sona initially rolled out its new "skin rejuvenation" program a variety of additional equipment-- also Sona mandated-- was required. During the first wave of this program my partner and I leased a $50,000 equipment package which included a VISIA imaging booth, DiamondTome microdermabrasion system, and ultrasound imaging and treatment systems. We also briefly tried to use the Photogenica "Mini V" pulsed dye laser also sold by Cynosure. Subsequently Sona entered into an agreement with Orion (now Alma) and the Alma lasers and Harmony System became available for lease or purchase.

 

Did Sona get kick backs" that you know of?

Many of the franchisees engaged in gossip about this. We heard "through the grapevine" that Sona did not allow us to use Lumenis equipment because Lumenis refused to play these games. I clearly recall a statement by one of the Sona officers at their big national meeting in March 2004 that if we purchased the new skin rejuvenation package from Sona we would be able to take advantage of their volume buying discounts, etc. Naturally, I was dismayed when I later received the cost breakdown on the included equipment and saw that all equipment had been sold to us... surprise!, at retail list prices.

 

Did you interact wth the technology companies directly? 

Since I ended up with ten pieces of Cynosure equipment you can imagine that I interacted with Cynosure a great deal. My interactions with the other companies were minimal. We found the Cynosure lasers to be hugely problematic. The treatments-- whether with the Alexandrites or Nd:YAG-- were extremely uncomfortable for many of our clients. The efficacy was far short of what we had been led to expect from Sona--- and from Cynosure's very limited representations (their web site at the time mentioned that most people are satisfied after four treatments which is ridiculous). Most important, the Apogee 9300s were VERY high maintenance and required extensive service. These lasers are gigantic-- and whenever repairs were required-- even simple flash lamp replacement-- it was necessary to have a Cynosure service technician perform the repairs on site. During part of the time I was operating we had a service technician in the Twin City area but on many other occasions technicians were flown in from all over the U.S.  This was not my problem during the term of my Sona franchise, but when I later effected a "divorce" from  Sona it became a huge-- and expensive-- headache. 

 

One of the biggest problems with the Sona program is that the agreements did not provide for the aftermath. As our lasers began to wear out from extensive use, neither Sona or Cynosure had any specific requirement to replace them with new ones-- even though we were initially still required to fork over typically about 22% of our gross revenues to Sona in exchange for having our equipment provided. The only "blessing" I received is that after using the lasers heavily (and paying for them heavily) for two years I was allowed to purchase them at their depreciated cost of $7500 each. This "blessing" was significantly tempered by the amount Cynosure required for an ongoing service contract (over $12,000 per year PER LASER !) and the value of used Apogee 9300 lasers on the resale market. Needless to say, I was appalled to find that lasers I had payed almost $100,000 each for just a couple years ago were now virtually worthless.