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Forget Taco Bell- Franchise Opportunities for
Emergency Physicians
Derek C. McCalmont M.D., M.S. Management
General Tso
YUM BRANDS
35y.o. Retire at 50. Live to 100y.o. (die penniless) Inflation 3% Returns 5% Spend $150,000 $7,578,643 per ING
What’s Your Number?
Same Assumptions Plus Income $290,000 (inc. spouse) Savings $200000 IRA $500000 Contributions 5% Includes Social Sec. $5,116,378 per CNN IF- Portfolio returns 11.4% Likelihood- 21%
What’s Your Number
http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
http://www.bloomberg.com/personal-finance/calculators/retirement/
http://money.msn.com/retirement/retirement-calculator.aspx
http://www.schwab.com/public/schwab/investing/investment_help/retirement_planning/retirement_calculator
Online Calculators
BIG!
Your Number Is….
What Can We Do?
Spend Less
Work Longer
Leave less behind for kids
Retire to Mexico
VEGAS IS CALLING!
Start A New Business!
CoffeeDonutsMedicine
What Do We Know?
Franchise Opportunities
What Do They Have in Common?
Well over 3000 franchise businesses in U.S. with 2-10,000+ units.
“Over 50 franchises are sold each day”- Economic Outlook
Top 106 Franchises= 9945 new units/yr. 10 largest franchise systems=%50.2 total
sales Many offer multiple levels of
investment/opportunity from different sized single units to multiple units.
Bricks and Mortar vs. Home vs. Internet
A Few Facts On Franchising
Who’s #1?-
Quick Service Restaurants- Sandwiches (6), Frozen Yogurt (4)
Senior Care (10) Commercial Cleaning- low start-up costs Janitorial Services- 3 in the top 10.
Fastest Growth Categories (By Growth in Operating Units)
What are the largest franchise systems?
Love at First SightSince introduced in 1966, close to 6.5 billion Slurpee® drinks have been sold, almost enough for every person on the planet
Franchise Fees- $0-$100,000+ Standard Royalty Fee- 6% of gross Advertising- $? Usually goes into a regional
budget which may or may not benefit your location.
Total Investment- $2000-$13.5 Million (Hampton Hotels)
How Much Does It Cost?
Business Plan- Needed to secure financing Detailed operating model- limited ability to
adapt (Bigger the company, less variability) Brand- Training- None to months Franchisee support Software
What Do I Get?
Minimal Info on-line Complete an information form (financial) Sign a non-disclosure Attend a “Discovery Day” Obtain a Franchise Disclosure Document Do your own industry research- all
franchises predict growth of their industry- no different than any non-franchise business
How Do I Learn More?
Governed by FTC rules Several Hundred pages long.
Item 19: Financial Performance Representations”?”
The FDD
Coffee andDonuts Anyone?
Multiple Locations only Only 4 markets available in the U.S. KK Factory Store- $1M Finances- $1M in liquid assets, $2M Net
Worth.
Krispy Creme
Franch. Fee $40-80K Royalty Fee 5.9% Total Inv. $310K-$771K Coffee makes up 60% of sales Margins on coffee “exceedingly high” Coffee>breakfast sandwichs>donuts IPO June 2011 $19…March 5, 2013 $38.15
Dunkin’ Donuts
270M Potential Customers 70% drink coffee= 189M Seattle has 1 coffee shop per 2,500 people Nationwide 24,000 to 1 Currently 12,750 shops (SBUX 6,700) Mature market 7,500-1 or 30,300 shops Regular customer is worth $700/yr.
Coffee Industry
Franchise Fee $30,000 Initial Investment $176-$340K Royalty and Marketing 9.24% Net Sales per cup $3.24 Cups to break even 263 Assumes owner functions as manager AM
shifts (assists with customers when busy) 363 cups/day = approx. $100k profit/yr. How many can you sell?
Mystery Coffee FranchiseItem 19
Pro- Modest start-up costs Pro- High Margins! Pro- Relatively easy to learn operating model Pro- Growing market (? Less ideal locations) Con- Owner as manager (to start) Con- Employee turnover/training Con- Need multiple franchises to make
economic sense for doctors Con- Retail experience helpful (but we have
customer satisfaction experience).
Coffee Pros and Cons
Open for 30+ years 8700 centers in the U.S. 85% Open 7 days/wk. Avg. 342 patients/wk. Over 150 Million Visits Annually 50% physician owned 21.7% Emergency Medicine
The Urgent Care Industry
Increased Access Lower Cost Improved Quality ? Only 57% of Americans with a PCP have
access to same or next day appointments 63% report difficulty with access on nights,
weekends or holidays. 20% of adults waited 6 days or more to see
a doctor when they were sick in 2010 45,000 too few PCPs by 2020
Is The Time Right?
Patient Centered Medical Home New accountability New IT “Enhanced Access” Expand office hours and accept more
unscheduled patients vs. partnering for episodic UC visits.
PCP Partners
Avg. cost of an UC visit is slightly BELOW the average primary care visit ($155 vs. $165)
Difference in cost between an UC and ED visit for the SAME DIAGNOSIS ($228-$583).
116.8M ED visits per year x 27.1% (est. 8-57% non-emergent)= 31.64M visits= cost savings $7.22B-$18.45B per annum.
Does NOT include 30M newly insured with no place to go. (Suggests room for additional centers in areas already served)
Lower Cost
Fevers URIs Sprains/Strains Lacerations Contusions Back pain Most can treat fractures and give IV fluids Most have x-ray and lab processing onsite
Common Conditions
NOT freestanding EDs- Not equipped for life threatening conditions.
NOT in-store retail clinics (broader scope of services and ages, primarily physician or physician/MLP staffed vs. MLPs alone).
Many offer scheduled primary care visits and/or physical therapy.
New Options Emerging
Market Niche
Franchise Fee $55,000 Royalty Fee 6% of gross sales Initial Investment $526K-$715K (inc. FF) Net worth $750K, Liquid Investments $350K Multi-unit discounts available. Term- 15 years with 4 optional 5 year
renewal terms. Advertising fees $1000/month spent in local
market plus unspecified “ad fund” contributions when “deemed appropriate”.
Founded 2005 by an EM physician Board Eligible/Board Certified physicians- no
MLPs, no residents In-House pharmacy Lab and X-ray on-site Occupational Medicine Billing Services via “specialized approved”
vendor Software System- Intake, scheduling,
integrated payroll/benefit etc.
No direct financing available. No prior industry experience required Training- 5 days at corporate headquarters
(you pay travel/lodging) plus on-site training around opening, on-line learning modules, webinars etc.
Support- Operations manual, periodic on-site visits, e-mail, phone, on-line support services website, hiring
Assistance with licensing and credentialing Advertising materials Site selection Center design
All Board Certified Emergency Physicians Offers Lab, CT, Ultrasound Accept Chest Pain, Abdominal Pain but no
ambulances Open 8A-10P Online check-in Urgent Care co-pays www.urgencyroom.com
Pro- We know the medicine Pro- Growing Market Pro- No overnight shifts/limited day shifts Pro- Modest volume (30 patients/day) is
profitable Con- Significant start-up costs Con- Unpredictable future reimbursement Con- Focus is on building the business, not
seeing patients. Con- Structured model (Often difficult for
physicians)
Urgent Care Pros and Cons
Questions?