Medical Spa MD - Inside Sona Medspa series Part 2: Representations & Promises.
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.
List of Sona Representations:
The following Sona representations were contained in either (or both) the Sona ads, brocures, web site, franchise sites, the franchise agreement, the UFOC and/or given verbally. Many of the promises and reps were made in each of the above places. All the Sona docs were pretty consistent-- kept repeating pretty much the same crap throughout. Three big ones I recall being made verbally are--
- the expectation that a franchisee will see a 20% profit provided revenues exceed $60,000 per month;
- the statement by Dennis Jones that "all you have to do is follow the plan and you were guaranteed to succeed" (he always claimed the failures were due to people failing to follow his "plan")
- When I told Jones and Noon that I was scared to death about telling all these people they can expect 93% to 97% permanent reduction after 5 treatments when I myself did not get nearly that good a result from my five treatments at the Edina, MN affiliate center, they both told me it was due to the fact that "the Edina center wasn't followiong the patented Sona concept and the proprietary Sona treatment schedules". Once again, this turned out to be total bull.
The complete list. Sona represented that:
- It had developed a “proven business model” for removal of unwanted hair through laser technology that could be utilized by franchisees with no prior experience in the field and with great success.
- It had the “fastest, most powerful laser technology and offered services at much lower fees than competitors.”
- It had a “patent-pending” “revolutionary” concept, that removed 93 to 97 percent of hair in all areas permanently in five treatments.
- Sona would offer clients a sixth treatment at no cost if the first five had not removed all hair, but that this was “extremely rare.”
- Sona also said that this “patent-pending process” resulted in hair removal in “less time with better results” and that ensured that franchisees had “a compelling competitive advantage.”
- It was safe to use Sona’s laser hair removal processes two weeks after sun (or tanning bed) exposure sufficient to tan the skin.
- After treatments our clients could immediately return to tanning.
- It had other “proprietary technologies” that gave it a major competitive advantage, including a topical anesthetic called “Sonacaine” that minimized any discomfort resulting from the laser treatments.
- Whereas our laser hair removal competitors would be unable to successfully treat blonde, red or gray hair, we would have an “exclusive license” for a product called “Meladine”.“Meladine” was proven to be effective in clinical studies, and made light colored hair follicles “visible” to lasers.
- The use of Meladine would “enable all hair colors to be treated”, would make our Sona Laser Center far more competitive than other laser treatment venues, and would increase our revenues substantially.
- Its operations typically resulted in a 55 percent gross profit margin or more.
- We could expect to achieve “break-even” with gross revenues between $44,000 to $50,000 per month.
- Sona’s franchise offering circular showed pro formas reflecting financial results at assumed revenue levels ranging from $50,000 per month to $125,000 per month and earnings ranging from $288 to $36,240 per month. The same offering circular stated that average monthly gross revenues were over $65,000. At this level, it was stated that earnings would be $6,768 per month.
- We could expect to receive an actual profit of 20% of gross revenues each month.
- Their company-owned laser centers in Virginia were profitable.
- It had surveyed, reviewed and tested all lasers on the market, and had selected only the best, state-of-the-art lasers, manufactured by Cynosure, for use by franchisees.
- Sona’s program provided “continuous maintenance and replacements to keep each center a step ahead of the competition.
- Sona had “television, radio and print media materials … unsurpassed in the industry” that were worth “hundreds of thousands of dollars”. These materials would be made available to franchisees, not only for the grand opening, but also for “the ongoing success of the center.”
- It had a “corporate marketing director” and “marketing staff.” A grand opening event would be planned and executed by Sona that would include press releases, media packages, radio and television appearances, and an “all out media blitz.”
- It provided world-class, state-of-the-art training “that goes far beyond standard industry practices”. Even franchisees who had no prior experience with the market would be fully trained and able to run their businesses successfully. “There is no more in-depth training to be found.”
- They had custom-designed “world class” software that would facilitate operation of multiple centers including scheduling appointments and managing cash.
- The franchise was a “turn-key” operation; that is, Sona agreed to deliver a center to the franchisee that was ready to operate, requiring only minimal preparation on the part of franchisees. Moreover, Sona claimed that the center could be operated without direct involvement of the owner and entirely through employees (i.e, that it was suitable for investment by an absentee owner).
- Each franchisee would have a dedicated account executive at headquarters who would be available to assist in resolving any problems or issues.
- Franchisees would enjoy a large tax savings due to deferred revenue in the first year of operation.
- The Sona business was “high margin” and a “proven business model”.
List of Sona Promises:
- To provide hundreds of thousands of dollars in new additional advertising each year as part of the base franchise fee it charged us.
- To provide “world class” training and set-up services, software management systems, advertisements, furniture and fixtures, office equipment and software, medical supplies and other supplies and equipment for opening the center.
- To provide sufficient training for the owner and up to four other individuals that would be adequate for them to open and operate the center, together with a set of manuals that would enable owners to operate the business.
- To provide assistance with site selection and lease negotiation.
- To provide advice on construction, set up and opening, organizing the business.
- To provide assistance with determining and assessing the local demographics and hiring staff and a medical director.
- To provide assistance with the installation of equipment.
- To provide reviews and analyses of the operations of the individual franchisee.
- To provide improvements in administrative bookkeeping, accounting, inventory control, and general operating procedures.
- To provide updates to manuals to incorporate improvements and new developments.
- To provide periodic telephone and electronic mail assistance on daily operations, marketing, advertising, financial management, personnel and other operating issues.