Risky business: Franchises offer opportunities and gambles

In light of declining reimbursements and greater workloads, the idea of an outside company setting you up with a brand-name medical side business might sound good. But there are many things to think about before taking the plunge.

By Katherine Vogt, AMNews staff. Sept. 25, 2006.

After nine years in practice, Brent Greenberg, MD, was fed up with the hassles that come with the business of medicine. So he decided to look for something that would complement his work and still generate revenue.

What he found was a skin-care clinic franchise looking for physicians to own outlets. In August, Dr. Greenberg and another physician paid a $75,000 franchise fee to open Dermacare of Rancho Bernardo, a laser aesthetic skin care franchise in San Diego.

Dr. Greenberg, a family physician in Escondido, Calif., said the franchise was consistent with his interest in skin care -- and his interest in gaining control of his practice's future by finding something to buttress the reimbursement cuts his practice is seeing.

"For me going into this area, it's part of the desperation factor. I'm tired of working 14-hour days," he said.

It appears that more and more franchises are reaching out to physicians who think the same way. These franchises offer the chance to launch a medical spa, skin-care center, weight-loss facility, smoking cessation center or other services perceived to be in high demand by cash-paying patients.

In return, physicians pay a franchise fee and a portion of all revenue. Also, the physician agrees to operate under the franchiser's rules. There isn't the freedom of an independent business, but franchisers say there aren't as many of the hassles -- including building up a brand name.

There are no exact numbers on franchises with physician owners, but a quick Web search turns up numerous results for chains pitching to physicians.