One of the fastest-growing beauty industry segments is the medical spa industry, which combines the health and beauty expertise of spas and salons with the technical know-how of the medical industry. Medical spas, frequently called med-spas or medispas, allow consumers to get services such as laser hair removal and skin rejuvenation performed in a spa-like setting.
The industry is booming as the number of med-spas has tripled in the last three years. Today there are between 1,250 and 1,500 med-spas in the United States. Those numbers are up from about 450 just three years ago, according to the International Medical Spa Association (IMSA).
New technology is behind much of the growth in the industry, as new procedures are enabling people to beautify themselves using non-invasive methods, according to Hannelore R. Leavy, executive director for the IMSA. Another impetus for the popularity is the aging population. “An aim of baby boomers is to stay healthy, young, and beautiful,” she says.
Another allure of med-spas is the fact that they are associated with wellness rather than sickness — as other medical institutions often are.
“We’ve done so many focus groups and people want to go to a spa to have these services done. They do not want to go to a medical office where there are sick people,” says Mona Sappenfield, president of Mona Spa & Laser Center, a franchise company based in Memphis, Tenn.
With all of these variables in place, the med-spa industry is poised to grow for years to come, providing much opportunity for salon professionals.
Tapping the Market
With such a prime consumer base, it’s no wonder that more and more entrepreneurs are looking longingly at the med-spa market.
Chicago resident Julie Compton opened a med-spa in Oakbrook, Ill., with her husband earlier this year. A hair salon owner, Compton wanted to go into the med-spa industry because she saw the similarities with her current occupation. “The salon industry was already about looking good and preserving our youth and feeling our best,” she says.
But there were also a wealth of differences between the salon industry and med-spas. “It’s not just luxury,” Compton says. “These are medical professionals who analyze the challenges you’re having with the skin and hair and come up with a plan. You have medical rooms. You’re going into a more sterile and safe environment for these kinds of treatments.”
To better understand these differences as well as the complex regulatory issues surrounding the field, Compton chose to open a med-spa with the help of Solana MedSpas, a company that has developed more than 70 high-end med-spas across the country. In return for help setting up, staffing, and marketing a med-spa, Solana MedSpas receives approximately $80,000 up front and 6% of the med-spa’s gross earnings.
The cost was well worth it, says Compton, because the expertise of Solana MedSpas took away much of the learning curve. “They think with us, they think for us, they handle any challenges personally, and they are a phone call away,” Compton says.
From Nails to Med-Spas
While Compton came from the hair industry, the med-spa concept is ideal for nail professionals, as well, says John Buckingham, chief executive officer of Solana MedSpas.
“The biggest pro for nail salons is that this is the same customer. The demographic is high-end females. So to offer these services to a loyal, local customer base that they already have is an incredible no-brainer,” Buckingham says.
There are also similarities between the two industries, Buckingham says. “I see med-spas as being a local business, much like your nail and hair salon businesses, built by trust in local reputation with local women primarily owning the business,” he says. Since salon owners don’t have to go out to find their customer base, they can often save on marketing costs.
“They don’t have to do a whole lot of marketing up front because they already have the customer,” says Buckingham. “Internal marketing is where they’re probably going to spend most of their time and energy, and that doesn’t cost much.”
Another plus for salon owners is that they may already have a location for the med-spa.
For Compton, the most difficult part of opening BoDY MedSpa was finding the land. Salon owners that have one or two extra rooms don’t have that problem. Or they may only have to add on to their existing location rather than find a new one entirely.
“If you’re going to add on to your salons, you have to have separate rooms blocked off,” says Buckingham. “You can’t have hair near a laser — you have to have walls and doors to separate the med-spa space.”
Discerning the Rules
Location isn’t the only thing med-spa owners have to worry about. Perhaps a greater concern is the host of regulatory issues med-spa owners must deal with. And this is where a franchise operator is especially handy.
“There are a number of complex issues,” says Charles Engelmann, president and chief executive officer of Radiance Medspa, a franchise company based in Scottsdale, Ariz. “If you’re not a physician, it may be illegal in your state to own a med-spa. In our business model, we can have non-physician owners in our group and we have a business plan to do that. Another thing is understanding the scope of practice, what level of licensure is required for each practitioner to perform each individual treatment modality. Then it’s understanding what the med-spa should look like, the licenses that are necessary for the facility, what type of staff is needed, and how to structure the organizational chart,” Engelmann adds.
For example, services performed by med-spas must be supervised by a medical doctor. The rules about who can do the actual procedures vary from state to state. For example, in one state a nurse practitioner might be able to perform a certain service, but in another, only a medical doctor can do that same task.
In some states, a nail technician could not be a majority owner of a med-spa. Instead a physician would have to own 51% of the business. “In those states if someone who owned a nail salon wanted to open a med-spa, they would have to partner with a physician,” says Sappenfield. A franchise company such as Mona Spa & Laser Center helps interested parties come together, so if a salon owner wants to open a med-spa, it would match the owner with a physician with similar intentions.
Even organizational structure would have to be legally worked out. For example, it is against the law for a lay person or a lay organization to hire a medical doctor. “Only doctors can practice medicine, and the law assumes that if a lay person is paying a doctor, he or she can influence the doctor’s choice of patient, type of treatment, and products to recommend,” says Buckingham.
As a result, med-spa owners must work out legal arrangements that keep all of these provisions in mind and they must also keep abreast of any regulatory changes. Franchise companies know and understand these regulatory issues and take care of them for franchisees. In other words, they know the rules so the franchisees don’t have to worry about missing something.
Running the Business
Although franchises have certain rules that franchisees must follow, franchisees are free to express their own individuality as business owners.
“There is a lot of autonomy,” says Engelmann. “We provide the tools, but they decide how they implement those tools and drive their own success.”
As a result, different franchisees often get different results. “We’ve got some franchisees that outperform others because of the way they implement a lot of the things they do,” says Engelmann.
Being a franchisee can also save med-spa owners money in the long run. Often, franchisees can take advantage of special deals with equipment vendors.
“You’re not buying a laser or product without vendor support or without discounting — you’re much more profitable in terms of buying power than you can be on your own,” says Sappenfield.
Likewise, franchisees can save money on advertising costs because they’re benefiting from any national marketing efforts that other franchisees have undertaken.
With all of the possible savings, “all of a sudden you’re operating with a good 15% to 25% more profitability and sometimes that’s all people need to be successful,” says Sappenfield.
The Costs Involved
Of course med-spa owners must pay for their support.
“To start from scratch, this is a half-a-million-dollar investment,” says Buckingham. Salon owners might be able to save on real estate, but they can expect to spend at least $150,000 on equipment and perhaps another $200,000 per year on physicians’ and nurses’ salaries.
Then there’s any up front costs that must be given to the franchise company. And most franchise companies take a percentage of the profits, which generally falls between 4% and 8%.
There’s also the issue of liability. Physicians have their own medical malpractice policies, but med-spa owners will have to purchase some as well. However, compared to other types of business insurance the cost of med-spa insurance is relatively low because historically there have not been many claims. “You can get insurance for less than $10,000 a year because these procedures are so safe and so effective. There are virtually millions being performed without any problems,” says Buckingham.
On the flip side, med-spa owners charge more for their services than do other salon operators. The average service cost for a med-spa is $300, Buckingham estimates. Compare that to the cost of a nail salon’s current services, and the potential for increased profitability is enormous.
Med-spas also tend to bring in customers with more disposable income. Because the services cost more, customers naturally have to have more money. However, perhaps more importantly, med-spa customers are committed to their looks. Salon owners can take advantage of that commitment by turning around and offering more beauty products and services.
Rising to the Challenge
Although the industry has the potential for growth, med-spa owners should not expect riches immediately, says Marria Pooya, who owns a Radiance franchise in Greenwich, Conn.
“There are a lot of people wanting to get into this business now because it’s very, very lucrative, but it’s not an easy business,” Pooya says. “It’s not a business where tomorrow you’re going to open the door and people are just going to come in. You need to be dedicated to the business.”
But that’s not to say that success can’t be had, Pooya says. “If you do work hard and you start establishing your brand, that’s when people start coming in.”
Being part of the Radiance franchise family has helped Pooya tremendously. “It does pay to be part of a franchise because you get the name recognition,” she says.
Salon professionals who decide to go the franchise route should be careful to test the waters, says Engelmann. “You need to evaluate the different franchisors in that marketplace to see who’s most aligned with you as an individual,” he says.
Salon professionals might also want to look at how long that med-spa franchisor has been in the business.
It’s also imperative to understand the industry. Associations such as the IMSA can provide additional insight into industry trends and changes.
Finally, it’s important for potential med-spa owners to buy into the med-spa concept. After all, a company can’t sell a service effectively if it doesn’t understand it or believe in it.
The bottom line is a successful med-spa needs a certain level of expertise to make sure the regulatory and medical issues are ironed out so that salon owners don’t have to worry about them. A franchise company can provide that guidance.
“People want quality, they want safety, and they want well-trained people. To do that, you have to have relationships with people who’ve done it for many years,” says Sappenfield.
Tamara E. Holmes is a freelance writer based in Largo, Md.
Med-Spa Franchise Resources
If you’re considering taking the plunge, here are some med-spa franchisors and developers you can check out.
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