Inside Franchise Business
Invest in a health-focused franchise and you’ll be buying into technical and business expertise. Here, two franchised firms reveal what the future holds.
Invest in a health-focused franchise and get technical and business expertise.
Let’s start with the Australian landscape, in health terms. We’re an ageing population and allied health (the disciplines that complement general practice such as physiotherapy, chiropractic and osteopathy) is increasingly important both as a treatment and as preventive action.
PHYSIOTHERAPY: BACK IN MOTION
According to IBISWorld, which produces industry-specific reports, there are some key observations of the physiotherapy sector which is outperforming the economy, notably the specialisation of customer segments in a competitive market.
IBISWorld has pinpointed ageing, women, sport, orthopaedic and paediatric treatments as strong areas for specialised practice.
Allied services help boost already good profit margins, the latest report Physiotherapy Services in Australia, July 2018, suggests.
The nature of the service-focused business means economies of scale are irrelevant to physiotherapy firms, the report concludes.
What is relevant is greater work flexibility and the cost deterrent – there’s currently no Medicare rebate available. And while the sector is competitive, there’s been little practice consolidation.
Four major players in this sector each have just 1–2 per cent each of the market share – one of these businesses in Back In Motion.
Founder and director Jason Smith suggests that the IBIS World report doesn’t pick up the pulse of the industry. There’s no doubt that ageing is the landscape of allied health but in reality the biggest driver is technology, he says.
“Technology is one of the big drivers in the next five to 10 years. We are putting a disproportionate investment into technology; tech is the dry creek bed soaking up every cent, finding new and better ways to deliver services with agility.”
Smith is so committed to tech investment that the business acquired a small IT company along with a staff of five full time coders.
“This allows us to build the programs we need and get big data to better inform clinical services. These are the changing contours of our business.”
Smith has deliberated on how best the business can shape itself to the future, and found the solution in a hub and spoke model that allows for flagship stores and versatile delivery of services.
Another is a shift or trend to patient-centred care. Not yet implemented but coming fast is home care – a clearly disruptive model because it will
displace some of the heavy fixed costs of running locations.
But physiotherapy is heavily dependent on health funds for payment of client treatments and they are yet to adapt to the changing market; likewise, insurers and government payers have not created the policy to deal with this, he adds.
At-home care may be the future but it’s a costly process right now, says Smith.
“It’s very hard to get the price point right. It’s much more expensive to deliver at home than in a practice, you lose efficiency. Whoever really innovates home care will have to have big wallets. The price point is tough. Unless a third party pays the premium, we’re going to be stuck for a while.”
Smith is sanguine about how the Back In Motion business will expand. He is considering a diversification into allied health to provide a more holistic offering for clients, including podiatry, osteopathy and chiropractic services. Right now he sees the brand as a leader in the physiotherapy market.
“We are bigger in terms of revenue and footprint than the other three combined,” he says.
For the financial year 2018 Back In Motion recorded 12 per cent organic growth and a comparable rise is predicted for this year’s results. Smith expects to see a further eight practices operating in Australia and four more in New Zealand within the next 12 months.
Accompanying market leadership is interest from investors, who see potential for aggregating some of the practices.
But Smith is wary of corporatisation.
Franchising works as a way to attract more capital to scale and have liquidity and exit options, he says. “We are raising capital and building scale through the group,” he says.
There are nearly 50 practices in the network, who benefit from the back-end systems available in a full-service franchise, including an in-house accounting team that manages invoices, bills and payroll; marketing campaigns; HR support; business coaching; and access to networking and professional development events.
It’s a business that grew from the ground up, founded by Jason and Paulina Smith in a small home-based practice in 1999 and growing significantly from 2006 when it had just seven outlets. Back In Motion has a focus on holistic solutions and after-care and it’s a prerequisite that any physio in the business is a member of the Australian Physiotherapy Association.
Typically a physio business is all about the treatment, and Smith says the clinical aspect has always been well delivered by the partners. However, there is an area of health he believes is being handled badly: customer experience. And so he is focused on a partner mindshift to client centredness – upskilling on how to communicate with clients, to show empathy, and to deliver on customer experience.
Today we have a greater risk of dying from chronic conditions such as type 2 diabetes, osteoporosis, obesity and back pain than heart disease, cigarettes or cancer.
In fact 42 per cent of women and 27 per cent of men over 50 years old will suffer an osteoporotic fracture. The brittle bones of Australians over 50 cost $3.1 billion in 2017 and the total cost over 10 years will climb to nearly $34 billion by 2022.
Musculoskeletal conditioning can provide solutions, says Perry Eckert, managing director, OsteoStrong Australia and New Zealand.
“At OsteoStrong we also work in cooperation with medical professionals. We fill in the blanks relating to exercise dosage for people with low bone density, poor balance and muscle tone, which we know indicates a high fall and fracture risk.”
Eckert says OsteoStrong can deliver results across a broad demographic, even
We are putting a disproportionate investment into technology; tech is the dry creek bed soaking up every cent, finding new and better ways to deliver services with agility.
for children, who up to age 20 are still building bone density.
“For serious athletes, OsteoStrong helps strengthen tendons, ligaments, joints and bones so they can recruit more muscles safely. They can build a stronger foundation based on super bone density for high performance explosive action, fuelling their performance on the track or field and helping to make them fractureand injury-proof,” says Eckert.
OsteoStrong is a US business that started a decade ago. Recently the equipment and marketing has been updated with the involvement of celebrity figure Tony Robbins. He bought into the business after his wife experienced the services to improve a back complaint and his public backing of the brand has had a significant impact on its growth.
There are about 60 OsteoStrong centres open in the US with more than 100 additional businesses to be opening soon.
The first international independent centre opened in Sweden earlier this year and already has nearly 400 members. The plan is to open a second outlet in a few
We fill in the blanks relating to exercise dosage for people with low bone density, poor balance and muscle tone, which we know indicates a high fall and fracture risk.
months with the goal of having a total of 1000 members by Christmas.
Membership numbers are growing rapidly in Spain, and centres are soon due to open in Denmark, UK, Norway, Iceland, Greece and Malta, and Japan, with a number of other countries in the negotiation stages.
In Australia the response has been very positive, says Eckert.
“People get the concept very quickly and can see the business potential and understand that this is an opportunity to help thousands of people. OsteoStrong is a blue ocean business with no known competitors and patent-protected robotic osteogenic loading equipment.
“No other business in Australia is offering musculoskeletal strength conditioning, which can absolutely change people’s lives in such a time efficient manner.”
Hawthorn in Melbourne will be the site of the first centre and the growth plan is focused on 30 franchises in the next 12 months to ensure that the training and operation of each centre is world class and consistent with the OsteoStrong brand and culture.
OsteoStrong centres will have a strong community identity and become education and learning hubs in cooperation with health and wellbeing professionals and allied service providers. Franchisees will be required to adopt this caring culture in all areas of the business operation including staff, associates, community and customers.
An ideal franchisee will have an affinity with health and wellbeing, be hard-working and entrepreneurial. They will need good network and communication skills and have some experience in sales and marketing.
In return franchisees receive a full turn-key service from site selection, finance, insurance, design, fitout, training, equipment package, opening, accounting, operational and marketing support as well as ongoing support and service .
“We are planning to open in all capital cities in 2019–20 including New Zealand. In addition to fixed centres we are also looking for operators of mobile centres, which will operate from modified Jayco RV vans. These mobile facilities will service retirement villages and communities, corporate business centres and inaccessible country areas where fixed centres may not be feasible.”
The partnership with Tony Robbins has exposed Osteo Strong to more than 20,000 motivated people annually through his three events in Australia.
“Tony also brings a huge amount of credibility to the brand, because he only partners with businesses that have clear demonstrable benefits for a maximum number of people,” says Eckert.
“Partnering with Tony Robbins in early 2017 changed the business strategy and focus entirely. Prior to his involvement the business was primarily catering for the needs-based market, comprising post-menopause women with low bone density. With Tony’s business strategy the Osteo Strong market has now expanded to elite athletes and biohackers and the everyday 30-plus time-poor convenience market who are highly health and wellness motivated.”