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Forget Taco Bell- Franchise Opportunities for Emergency Physicians

Forget Taco Bell- Franchise Opportunities for Emergency Physicians . Derek C. McCalmont M.D., M.S. Management. General Tso. YUM BRANDS. What’s Your Number?. 35y.o. Retire at 50. Live to 100y.o. (die penniless) Inflation 3% Returns 5% Spend $150,000 $7,578,643 per ING.

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Forget Taco Bell- Franchise Opportunities for Emergency Physicians

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  1. Forget Taco Bell- Franchise Opportunities for Emergency Physicians Derek C. McCalmont M.D., M.S. Management

  2. General Tso

  3. YUM BRANDS

  4. What’s Your Number? • 35y.o. • Retire at 50. • Live to 100y.o. (die penniless) • Inflation 3% • Returns 5% • Spend $150,000 • $7,578,643 per ING

  5. 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%

  6. Online Calculators • 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

  7. Your Number Is…. BIG!

  8. What Can We Do?

  9. Spend Less

  10. Work Longer

  11. Leave less behind for kids

  12. Retire to Mexico

  13. VEGAS IS CALLING!

  14. Start A New Business!

  15. What Do We Know? • Coffee • Donuts • Medicine

  16. What Do They Have in Common? • Franchise Opportunities

  17. A Few Facts On Franchising • 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

  18. Fastest Growth Categories (By Growth in Operating Units) • 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.

  19. What are the largest franchise systems? Love at First Sight Since introduced in 1966, close to 6.5 billion Slurpee® drinks have been sold, almost enough for every person on the planet

  20. How Much Does It Cost? • 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)

  21. What Do I Get? • 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

  22. How Do I Learn More? • 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

  23. The FDD • Governed by FTC rules • Several Hundred pages long. • Item 19: Financial Performance Representations”?”

  24. Coffee andDonuts Anyone?

  25. KrispyCreme • Multiple Locations only • Only 4 markets available in the U.S. • KK Factory Store- $1M • Finances- $1M in liquid assets, $2M Net Worth.

  26. Dunkin’ Donuts • 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

  27. Coffee Industry • 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.

  28. Mystery Coffee FranchiseItem 19 • 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?

  29. Coffee Pros and Cons • 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).

  30. The Urgent Care Industry • 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

  31. Is The Time Right? • 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

  32. PCP Partners • Patient Centered Medical Home • New accountability • New IT • “Enhanced Access” • Expand office hours and accept more unscheduled patients vs. partnering for episodic UC visits.

  33. Lower Cost • 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)

  34. Common Conditions • Fevers • URIs • Sprains/Strains • Lacerations • Contusions • Back pain • Most can treat fractures and give IV fluids • Most have x-ray and lab processing onsite

  35. Market Niche • 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

  36. 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”.

  37. 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.

  38. 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

  39. Assistance with licensing and credentialing • Advertising materials • Site selection • Center design

  40. 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

  41. Urgent Care Pros and Cons • 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)

  42. Questions?

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