LOS ANGELES — Kalologie is coming to a location near you.
After opening its third corporate-owned unit in Studio City, Calif., last week, the Los Angeles-based hybrid skin care retailer and medical spa is changing its expansion formula. Starting next month, Kalologie will be selling franchises to doctors across the country eyeing opportunities outside of traditional medicine.
"That is a way for us to grow the brand and have a national presence and be really confident that each location is being run with the utmost medical supervision," said Tracy Brennan, who founded Kalologie on Robertson Boulevard in January 2004. Her goal is to sell 20 Kalologie franchises and open 10 within in a year and, by the middle of 2010, have sold 140 franchises and opened 100. Kalologie raised $2.2 million late last year from venture firm St. Cloud Capital in Los Angeles to finance franchise operations. Still, Brennan, her husband, William Brennan, and Kalologie's medical directors, father and daughter Drs. Marvin and Vicki Rappaport, remain the company's principal stakeholders.
Franchises will be placed in major urban centers and later spread to secondary markets. Brennan explained prime locales are shopping destinations such as Robertson Boulevard, where there is steady foot traffic in an upscale neighborhood. She will avoid sterile medical buildings, but mall spots could be necessary in some cities.
Franchise locations are expected to average 1,500 to 1,800 square feet, divided between retail space and approximately four treatment rooms. Kalologie's franchise fee is $75,000 for one location, but it estimates the initial total franchise investment will begin at $280,000.
Brennan noted dermatologists and plastic surgeons are likely franchisees. However, other physicians, including family practitioners and obstetrician gynecologists, could be candidates as well. Selling franchises only to doctors helps give Kalologie instant credibility in new markets, where Kalologie's concept may seem unfamiliar. Additionally, there has been a push for medical supervision at medi-spas and at least one state, Florida, requires a doctor to oversee the staff.
And, Brennan stressed doctors are hungry for alternatives to the conventional medical system. "There are so many doctors who are frustrated and would like to move into the arena of aesthetic services, but don't know how," she said, adding that Kalologie will provide extensive training and leverage its growing size to get rates from vendors not available to single locations.The downside of doctor participation is that many doctors have little business experience. Brennan believes the antidote is strong support from the corporate office, back-of-the-house technology that is codified across the chain and an easy-to-execute store plan.
Brennan enlisted Frank Medrano, a designer with Franklin Studio in Los Angeles, to standardize the look of the locations. A pale green palette is used in the retail area and continues into treatment rooms; carpeting covers floors throughout. The reception desk is set behind the retail space and does not greet customers right away when they enter the store.
"It is a more domestic feeling as opposed to something cold," said Medrano. "It is a very simple concept, but it is about trying to make it comfortable, relaxing."
In every location, the same menu of services is offered, including $250 photo facials, $300-and-up Restylane and Juvaderm treatments, $90 custom facials and $115 enzyme peels. Among the best-selling retail skin care brands are ReVive, Arcona and iS Clinical. Kai, In Fiore, Scott Barnes and Susan Posnick are top body and cosmetic brands, and Barex is the top hair care brand.
Before franchising, Kalologie was put to the test at The Lakes at Thousand Oaks, a lifestyle center at the outskirts of Los Angeles County. After that second location opened in 2005, Brennan discovered subtle differences between its customers and those who visited the original Kalologie. There were more female customers (about 90 percent versus about 70 percent at the Robertson unit,) and those customers skewed to the older end of the 25- to 55-year-old age range and chose costlier treatments more often.
"You always want to make sure [the concept] is something that is proven in multiple locations. With Thousand Oaks, [the consumer] is really more suburban," said Brennan.
Demonstrating the strength of its model, Kalologie's revenue doubled from 2005 to 2006 and is on pace to more than triple from 2006 to 2007. At the Robertson location, about 70 percent of revenues are generated in the retail area, with the remainder generated in the treatment rooms.
Bryan Johns, president and chief executive officer of Innovative Skincare, creator of iS Clinical, believes that Kalologie will translate well beyond Southern California. "It used to be that you would see people who were interested in aesthetics on the two coasts, and in Dallas and markets like that. Now, we are seeing an upsurge in other areas across the country," he said. "People are interested in aesthetics all over. I don't think there is much of a disparity at all."Another opportunity for growth is the international market. Kalologie entered Japan last year under a licensing agreement with Incindy Japan. There are Japanese locations at Kureru Shiroganedai, Shin Marunouchi and Isetan. "This street [Robertson] gets a lot of visibility because of celebrities and retailers," said Brennan. "The Japanese market does love a lot of the concepts from the United States."
In the fall, Kalologie locations in Japan and the U.S. will be stocked with Kalologie-branded products. The line will be introduced with 10 stockkeeping units, including antiaging, antioxidant and exfoliating serums. Anthem Worldwide is creating the packaging, characterized by dark green boxes.
"It is cosmeceutical grade and is incredibly results-driven. If it was all natural without results, then it would be the wrong fit for us," said Brennan. The products have no parabens, no sodium lauryl sulfate and no artificial colors or fragrances.
Before establishing Kalologie, Brennan, a former advertising executive and model, grew interested in skin care largely as a result of skin conditions she attributed to hormonal imbalances and sleep deprivation after the birth of her two sons, now six and seven. She named her concept Kalologie, which rhymes with dermatology, for "kallos," the Greek word for beauty, and "ology," meaning "to study."
"We started talking about the whole convergence of the medical space and the rise of cosmeceuticals, and people doing more of these nonsurgical procedures and doing them earlier on than they used to," she said, referring to conversations with her husband. "It was a way of combining something that I really loved with a real opportunity in the marketplace."
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