Dermacare Franchise: A Cash-Based Business Opportunity for Physicians

A doctor's life isn't what it used to be. Those who picture us honing our backswing on the fourth fairway every Wednesday afternoon would be in for a shock. The reality is that we probably spend more of our time tracking down payments from insurance companies than we do on the links. As a result, many physicians are seeking an escape hatch from a variety of factors that are undermining what is widely considered an extremely high-prestige career. For example, since January 2005, some doctors, such as oncologists, have seen lower federal reimbursements for administering certain drugs in their office. As a result, the doctors, who buy the medications directly from pharmaceutical manufacturers, are experiencing tighter profit margins. Other specialists such as OB/GYNs are dealing with skyrocketing medical malpractice insurance rates in the range of $50,000 to $250,000 a year, routinely rising 100 to 300 percent.

But the situation is far from hopeless. Physicians in Arizona and elsewhere have discovered other ways to boost income while staying in the medical field. Specifically, they have invested in a Dermacare Laser & Skin Care Clinics® franchise. Scottsdale-based Dermacare is the only nationwide physician-based laser aesthetic skin-care franchisor. It requires its doctors to establish a clinic apart from their normal practice.

What do the physicians get in return? A Franchise that:

. Has great profit potential. Dermacare's aggressive marketing and prepaid treatment packages greatly increase revenue and ROI, far exceeding industry norms

. Is cash-based. With no insurance component, doctors can devote more of their time to performing and supervising procedures.

. Is a viable financial asset. The franchise can change hands at a profit for the seller. Compare that arrangement with a typical medical-practice sale. When the doctor retires or relocates, his or her traditional practice retains just a fraction of the value, most of it based on durable goods such as equipment and furnishings.

POPULAR TREATMENTS
Dermacare also offers the products and services people want - minimally invasive procedures such as BOTOX® Cosmetics injections, 3D Skin Perfection, which includes FotoFacialT for tone; Laser Genesis to improve texture; and Laser Collagen Acceleration TitanT (to firm up sagging skin and fine lines). Other services include dermal fillers Restylane® and RadiesseT, laser hair and vein removal, laser wrinkle and acne scar reduction, microdermabrasion, BLU-U acne light treatment and laser tattoo removal.

Dermacare thoroughly trains its physicians in all of these procedures in a five-day course. We recently opened a second national training facility in Ahwatukee. This new location augments the other training center in northeast Phoenix and accommodates our fast-growing franchise base. In these training sessions, we offer a mix of didactic instruction and hands-on training with volunteers, because we believe that integrity and reputation mean everything to a doctor.

This rigorous training and certification process underscores the company's dedication to safe and effective procedures, and gives doctors an additional layer of comfort.

MULTIPLE OWNERSHIP BENEFITS
Aside from the training, which truly sets us apart from medspas that often operate in storefront shop and in shopping malls, each Dermacare clinic has exclusive geographic operating rights, enabling physicians to invest in single or multiple locations.

Franchisees run their clinics in Class A medical-office space, general office space or leased or purchased office condos in well-placed, strategic locations. (Owning an office condo yields the tax advantages of ownership in addition to the often substantial property appreciation.) With seven local Franchises - in Ahwatukee, Glendale/Arrowhead, Chandler/Tempe, Mesa/Gilbert, North Phoenix, North Scottsdale and East Scottsdale - Dermacare has gained a solid foothold in the Valley and is expanding rapidly, with franchises currently available in Central Phoenix, Litchfield Park, Surprise, Flagstaff and Tucson, as well as other locations throughout Arizona.

The investment cost totals $500,000, half of which goes toward laser equipment. This portion is typically 100 percent financed over five years, with a $1 buyout. The other $250,000 goes toward 90 days' operating expenses, including salaries, nonlaser equipment leases, interior build-out, a marketing campaign and the grand opening. Eighty percent of this amount typically can be financed. In fact, Dermacare assists franchisees in every aspect of the clinic's operation, including:

. Site location
. Office layout and design
. Staffing
. Equipment acquisition
. Pricing
. Fundamental business structure and planning
. Competitive analysis

The company also continually researches the latest lasers and other clinical equipment. Before we recommend any technology, it has passed the most stringent tests for safety and efficacy. Dermacare also supports franchisees with on-target marketing and advertising. Many businesses fail each year because they lack expertise in these areas, but Dermacare has spent millions on test-marketing vehicles, direct mail pieces, newspaper display ads, radio, TV commercials, and more.

OFFSETTING FISCAL UNCERTAINTIES
Consumer demand for the services offered is growing quickly. For instance, according to the American Society of Plastic Surgeons:

. 8.4 million minimally invasive procedures were performed in 2005, a 13 percent increase from the previous year;

. BOTOX injections jumped 388 percent between 2000 and 2005; and

. Laser skin resurfacing treatments rose 59 percent in the same interval.

These statistics give a mere glimpse of the market's potential. The opportunity for Dermacare and its doctors lies in the safe and professional way services are delivered, a discipline that's tailored for medical professionals. It's a specialty that can offset the hassles and reimbursement uncertainties doctors currently face.

Dermacare franchises also are located in Colorado, Florida, Georgia, Indiana, Missouri, New Jersey, New York, Ohio, Oklahoma, Tennessee, Texas and Virginia.