Startup Journal:
Jeff Nebot thought he had struck gold. 2 years after opening a laser hair-removal franchise in St. Louis, annual revenue hit $3 million. And over time, the lavish salon added other cosmetic services as Mr. Nebot joined the rush of entrepreneurs into the emerging business of medical spas.
Medspas (also called medispas) offer such medical treatments as Botox injections and laser hair removal in a luxurious environment rather than a doctor’s office. The field has been rapidly expanding in recent years as entrepreneurs and doctors alike have sought to profit from the dual quests of many affluent consumers: prettification and pampering. For an increasing number of those who entered the business, the boom is proving a bust.
In Mr. Nebot’s case, what initially was viewed as a golden opportunity began to lose its glitter when he realized that the cash coming in lagged behind the cash going out for marketing, staff and franchise fees. The gold was gone altogether last April, when he sold the shop’s assets for $2.
Mr. Nebot largely blames his franchiser, Sona MedSpa International Inc. Among his complaints is that the marketing, advertising and other support services Sona provided, in exchange for fees that amounted to about one-quarter of revenue, were inadequate and that he had to develop marketing programs on his own. He also says that while Sona said its patent-pending laser treatment permanently removes 93% to 97% of hair in an average of 5 treatments, such wasn’t always the case.
Sona, of Franklin, Tenn., declined to comment.
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