Closer Look: Fast Growing Franchise Trends in the Medspa Industry

Welcome to another episode of Atlanta Franchise Today with host Leslie Kuban, expert franchise consultant and owner of FranNet Atlanta. Let’s take a closer look at the rapidly growing medspa industry and a franchise brand born right here in Atlanta, Georgia. Today Leslie is joined by Harvey Hillyer, a doctor of physical therapy and founder of Benchmark Physical Therapy, which is currently one of the largest physical therapy companies in the nation with over 300 locations. Through his healthcare career, Harvey saw a lot of fragmentation and opportunity in the medspa industry, and in 2013, Dermani Medspa was born.

Transcription:

Leslie Kuban:
Harvey, welcome to the show.

Harvey Hillyer:
Leslie, thank you so much. It’s such a pleasure to be here, and I appreciate you having me today.

Leslie Kuban:
Well, I’m excited for our conversation. I was probably one of your first customers right here in Atlanta, nine, 10 years ago.

Harvey Hillyer:
Well thank you for that. I really appreciate that. That’s great. And nine, 10 years, that’s exactly what we love, people that have been with us for a long time. That’s great. Well thank you for that.

Leslie Kuban:
Well, Harvey, we’ve got a lot to unpack here, but first let’s just talk a little bit about your business, Dermani Medspa, and who are your customers, and the services that you offer for us.

Harvey Hillyer:
Yeah, absolutely. I appreciate it. Yeah, so we are a true aesthetic medspa. So we do Botox and Juvederm. In fact, we’re top 25 in the United States with Botox and Juvederm out of 50,000 providers, so that’s a big part of what we do. We do a lot of skin rejuvenation services like chemical peels, microdermabrasions, dermaplaning, so things that people come in for once a month to get on a maintenance program. And then we also do laser hair removal, and then also skincare products. And so that’s really our complimentive things that we do.

Leslie Kuban:
That’s right, aging with grace is what it’s all about.

Harvey Hillyer:
Exactly, exactly. That’s perfect.

Leslie Kuban:
And there’s a lot of growth in the medspa industry, so I have a two-part question for you, Harvey. What’s driving the growth, and how is Dermani differentiated in the industry?

Harvey Hillyer:
Yeah, so a lot of the big part of the growth is the acceptance of the procedures. And so it used to be even nine, 10 years ago when you first started coming to us as a client, the things have really changed where it’s not taboo and people talk about it a lot more. A guy named Joe Jonas, one of the Jonas brothers, came out a couple of days ago and said, “Hey, I’m doing cosmetic injectables now.” He’s 33 years old and talks about that maintenance thing. So people are really realizing that maintenance is key, and there’s folks like men and millennials that are really realizing through Zoom calls and things like that, that they see themselves, that the prevention really comes in. And so that’s really the reason we started Dermani Medspa back to begin with.

The big differentiator that we have is, traditionally the model was that medspas would charge as much as they could and try to get away with it. We came in with a value proposition through a recurring revenue membership model, which is really popular. We also were transparent with our pricing, which a lot of people had these smoke and mirrors when it came to medspas like, “I’ll tell you if you come in what the price is,” But we’re very transparent with our pricing. But with our value came experience, so we based everything on evidence-based procedures. And so what I learned back with my physical therapy days is do things that are based upon peer reviewed articles. The aesthetic space can be very faddy, F-A-D-D-Y, in that a lot of fads will come along. So we really base things on evidence. So those are some of our big differentiators that kind of give us the success.

Leslie Kuban:
And again, as a customer myself and certainly kind of shopping what my other alternatives were, I can vouch for that, that it’s a great experience, but not at a price that’s going to break the bank. So I certainly appreciate that as a customer, Harvey.

Harvey Hillyer:
That’s great.

Leslie Kuban:
So you started the business, you decided to grow. Tell us a little bit about your decision to grow through franchising instead of just continuing to go through corporately-owned locations.

Harvey Hillyer:
So when we first started the company, we didn’t start with the idea of franchising. In fact, in my other company, my physical therapy company, we grew through corporate locations. But with this particular model, once we got to about six locations, after about eight years, we’re like, “Wow, this is a great model for franchising.” It really lent itself to that to be able to grow across the country like that. And so that’s the reason we really decided to do that. And what I’ve realized is that’s a little bit unique in franchising in that, that gives us a good edge, I believe. And the fact that we had operating units that had proof of concept and things like that down. And we’re still operating corporate locations alongside our franchise owners. And so it really is a really good system, and it allowed us to be able to grow the brand across the country with like-minded professionals that can really be involved. So we’re excited about the franchising model for sure.

Leslie Kuban:
It is, and especially when you have, like you said, proof of concept, more than just one location. Every time you open the next location, you continue to refine, and refine, and improve the overall system so that somebody who is new and doesn’t know anything about the business can come in and operate the business with the expectation of success and the playbook that will get them there.

Harvey Hillyer:
Absolutely, absolutely. And being in medicine for several years, you need to do things. I’m used to Medicare scrutiny and things like that, so you need to have your ducks in a row and be doing things properly. And so it was a very easy thing for us to be able to come into franchising and operate the same way. And so having the systems, policies, procedures in place and then with our medical director team as well, too, has been real positive. And so it’s been a really good fit for us.

Leslie Kuban:
And Harvey, a lot of our viewers are entrepreneurs, and they’re thinking about, well, how are they going to scale their business? And franchising might be one of the ways that they’re researching and considering. And I’d like to unpack that just a little bit further here. So as you were thinking about how you want to grow your brand and you were doing research about franchising or other avenues, what was your preparation? What was your research about that led you to want to step into the role of being the franchisor?

Harvey Hillyer:
Yeah, so I had some friends that had also franchised some other larger companies. In talking to them, I was able to get some inside information on what it looked like to franchise and things like that. So the positive thing with doing corporate locations, since I’ve done both, is you do obviously have maximal control over the entities because it is truly yours. On the franchising side of things, however, what I’ve determined is you actually get… It’s like you have a bunch of collective genius that you get from these franchise owners that are… One of our franchisees was actually a vice president for a large rental car company, really had a lot of experience in that regard. He’s brought a lot of unique things to the table. We had other folks. A couple of our franchise owners actually had some Planet Fitness locations, and so they’ve really been able to give some good expertise to us in that. So it truly is this collective genius with all the franchise owners to be able to come together, and so that’s what I would say would be the reason to go down the franchise route would be because of that. And so that’s been a real positive for us.

Leslie Kuban:
You get the collaboration of all these wonderful minds and experiences in different industries, but also with franchising. And that’s great that some of your early franchisees bring a good wealth of franchising experience that will help you collectively refine the model. That’s exciting.

Harvey Hillyer:
Absolutely, absolutely. No, it’s been a real positive with that for sure.

Leslie Kuban:
So as an entrepreneur, things don’t always go smoothly, and growth is not necessarily a straight line. So I’ll ask you a little bit of a personal question. What have you found that’s different or more challenging than you expected as a young emerging franchisor?

Harvey Hillyer:
Yeah, I think that the big thing for us has been that you kind of think… Obviously I’m very biased that we’ve got a great business model, that we’ve got a great concept, especially compared to other franchise opportunities that are out there. And so I think the one challenge has been getting that message and that word out and spreading the gospel, so to speak, of what, I’m a Christian, so spreading the gospel of what it looks like with your business model. And so we’ve recently teamed up with a great franchise development company, BrandONE, that’s really helping us to grow and help us to spread that word as well, too. So that’s probably been one thing that was kind of a surprise. I guess naively, I was like, “Well, of course. Everyone’s going to love this and want to come do this immediately.” And so that’s been one challenge.
And the second thing has been really, which you should be, be discerning with your franchise owners. And so just because someone has the money and the resources, that doesn’t necessarily mean you want to bring them on as a franchise owner. And so being able to take that time and everything, and that’s taken a little bit more, the selective process has taken a little bit longer than I thought. So those would probably be the two things that were not as expected for me when we first started for sure.

Leslie Kuban:
And that’s so important. And it’s kind of a hard urge to fight when you’re young and you’re hungry and you want to grow and someone has the capital and they’re excited. But that alone is not enough to make for a good longterm fit for you or for them. And that’s really important.

Harvey Hillyer:
Absolutely.

Leslie Kuban:
So how would you describe who is the ideal candidate to be a Dermani franchisee? What kind of skills or background would they have? And then what role should they expect to play in their business as a franchisee?

Harvey Hillyer:
Yeah, those are great questions. So what we look for up front is someone that’s either run a business before or has been a manager or an executive at a large business to be able to have that management and people skills. Those are the things we look for. Business experience and then management and people skills, those are the top things that we look for. We are a medical spa, so you do have to have that component, but in different states they’re structured differently and things like that, but we assist with that. And then we have a great medical director team that helps facilitate with that, too, to be able to lean upon for that side of things. So we certainly have that covered to be able to help with that.
And then the way we’ve set things up is really as a semi-absentee model. So I actually live in central Florida now and we’ve got our offices in Atlanta. So I’ve got a great management team there that does the day in and day out. That was by design from day one. It’s our opinion that you should be able to set up a great management team and that you shouldn’t have to necessarily be there day in and day out. And so that’s kind of the way we structured it, and that’s our model basically, is that.

Leslie Kuban:
So someone has to have good leadership skills, be able to empower their team, be involved, be present, but not step on their toes day-to-day.

Harvey Hillyer:
Exactly.

Leslie Kuban:
Yeah.

Harvey Hillyer:
Exactly. That’s the key right there. I think most people want to be autonomous with responsibility. And so to the extent that people can work through teams, that’s kind of what we’re looking for is that. So I tell my team all the time, “If I have to be in the office there, then… You don’t want me looking over your shoulder anyway, but then I shouldn’t have to be there, because that’s your job.” And most people want to respect that and want to work within that. And so when you find really good people, you’re able to empower them that way.

Leslie Kuban:
Now you mentioned the medical component. I want to unpack that just a little bit because your model is different in that way, that there’s some medical compliance and requirements that your business would have that all kinds of franchises wouldn’t. So will you just say a bit more about that, and what does a franchisee need to expect, and how do you help as the franchisor with that puzzle piece?

Harvey Hillyer:
Absolutely. Well, I really see that as one of the big reasons why you would want to own a Dermani Medspa franchise versus a pizza place or a cupcake place. And the big reason is barrier to entry. So basically anybody can throw up a shingle and do a pizza place or a cupcake place, and there’s a lot of things that can happen there. But with us, you do have to have a medical director involved at some capacity. And so we already have a great medical director team that’s been in place for close to nine years now that helps other medical directors. And so it’s a big collaboration on that side of things. So we certainly bring that to the table. And then we also assist with presenting the value proposition to those folks within your community and certainly make sure that things are tidied up on the structure side of things as well, too, depending on the state and things like that. And so those are some of the big value adds, but we truly see it as a plus. And this is all I’ve been doing throughout my careers, working with physicians and things like that. So our team certainly has that dialed in on that side of things as well, too.

Leslie Kuban:
That’s the water you’ve been swimming in, so something you can pass on and assist franchisees who have nothing to do with the medical background, who wouldn’t have a clue how to speak that language then.

Harvey Hillyer:
Absolutely.

Leslie Kuban:
Yeah.

Harvey Hillyer:
Absolutely. So we can certainly layer that part in. And what I think whenever you’re looking at a franchise, the reason you look at a franchise is, it’s something that you may not be able to do on your own, or there needs to be a value add from that franchise owner, so certainly that’s a big part of what we bring to the table for sure in addition to our vendor relationships. Being top 25 in the United States for Botox, you pay a lot less for that and things like that. And so we pass that along to our franchise owners as well, too.

Leslie Kuban:
Right, the supply chain, cost savings. Yes.

Harvey Hillyer:
Exactly, exactly. So we certainly see it as our job to make sure that we are creating that value for our franchise owners.

Leslie Kuban:
So Harvey, a lot of our viewers are also aspiring entrepreneurs. They’re maybe working in a corporate career, they are interested in owning their own business, but they’ve never done it before, and they’re on their journey of due diligence and research and they want to find a good fit for themselves just as much as you want to find good franchisees who are a fit for your business. So any particular due diligence advice that you would give to that aspiring entrepreneur, whether they’re investigating your brand or another brand or a completely different industry? What do they need to be aware of? What do they need to be asking about so they’re choosing the right business for them for the right reasons?

Harvey Hillyer:
That’s a great thing, Leslie. And I really thought through that from being on the other side of the table when we were looking at that. And a couple of big things. First of all, is there a value add provided? What am I getting that I couldn’t do on my own with going with this particular franchise owner? So that’s a big question. The second thing is to really look at the details, because especially in franchising, but then other business opportunities, what are the ongoing fixed costs going to be whether that’s a royalty, whether that’s your rent payments, whether that’s things like that. And truly take the time to model that out and think ahead as far as what that looks like. And so really dig deep into that.
And then also on the initial investment, make sure it’s clear on what that initial investment’s going to look like for you. Make sure it’s something that’s very tangible, that you’re not getting out beyond your skis with to be able to make work. And then certainly something that you have a passion for. I know a lot of people that are prisoners to their day-to-day activities, whether they’re business owners or they work for someone else. So make sure when your feet hit the floor in the morning, it’s something you can be passionate about and enjoy. So I think those would be the things I would certainly look for if I was someone looking to open up my own business for sure.

Leslie Kuban:
And on that last point, that’s the beauty of franchising is because of the proven history of success, the systems for getting started, the systems for growing, it lets somebody spread their wings and do something completely different, but not just winging it and trying to figure it out. It allows someone to find a new chapter, a new pathway, doing something new and different but with a whole lot less risk.

Harvey Hillyer:
Absolutely. And within a structure, within a proven model, something that’s been done before. And so that’s what gets me excited about franchising, because a lot of people have a lot of great management experience and leadership experience. They truly just need that structure for the first time. And that’s the beautiful thing about franchising for sure.

Leslie Kuban:
Well, Harvey, as we start to wrap up here, just any new developments in your industry, the medical cosmetic industry? There’s always new developments. Anything that’s new on the horizon that you’ve got your eyes on that you want to share with our viewers?

Harvey Hillyer:
Yeah, so that’s the cool thing about this industry is there’s a bunch of new things that come along. And like we said at the beginning, we try not to be the first adopters or things that are kind of new and flashy until it’s really been proven, because a surefire way to lose confidence from your clientele is by giving them something that’s not going to work. But there are some things that have really been more tried and true recently. One of which, it’s called PRP. It’s been around for a while. Some people call it the vampire facelift and things like that. But following the research, there’s been some great new research that’s come out through our medical director team that show some really good longterm efficacy with that. So it’s a combination thing with the microneedling.
And then also there’s new devices through HydraFacial, which is one of our devices, so really slick things they’re doing with different boosters and things like that, that they really create no downtime. So when you walk in, it’s going to give you good longterm results, but leave you looking shining and new and fresh. And so those are probably the two newest things that are coming on the horizon over the next couple of months, so to speak. But it’s a fun industry where it’s definitely growing. And what we’re doing today, 10 years from now, there’ll be so many more new things that can be done on the maintenance side of things versus the old plastic surgery kind of stretched look. And so that’s the fun part about it for sure.

Leslie Kuban:
Well my next appointment, I’m going to ask about that vampire thing.

Harvey Hillyer:
Exactly.

Leslie Kuban:
That sounds intriguing.

Harvey Hillyer:
Absolutely. No, it’s really cool. It’s really good stuff, so that’s perfect.

Leslie Kuban:
Well Harvey, thank you so much for joining me. This has been a delightful conversation, and I love especially having conversations with homegrown franchises right here in Atlanta. And then to watch you expand nationwide, because I’ve seen you here for 10 years and now I get to see you as I travel around the country. That’s exciting.

Harvey Hillyer:
That’s excellent. Thank you, Leslie. And thank you again for being a client, and you are the perfect example. We create stickiness that people are with us forever, so thank you for that. I really appreciate that.

Leslie Kuban:
Well folks, thanks for joining me again on another episode of Atlanta Franchise Today. I hope you’ve enjoyed it as much as I have. I look forward to seeing you again next week.

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