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Episode 108: BYou Laser Clinics: Capturing the $27B Beauty Boom Franchise Opportunity

• Mike Halpern

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Discover how BYou Laser Clinics is disrupting the $27B US aesthetics market. Founder Irena Azaraev reveals how she scaled a 65-unit development deal by attracting multi-unit QSR investors to the world of medical lasers.
Episode Summary: In this huddle, Mike Halpern talks with Irena Azaraev about the "BYou" mission: enhancing natural beauty through 43+ customized treatments. Learn about their proprietary "BYou Academy," their results-guarantee policy, and why this model is perfect for full-time, part-time, or absentee owners.
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Guest Website: BYou Laser Clinics


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Mike Halpern, CAFC
mike@franchiseqb.com

Joining us in the huddle today is Irena Azaraev co-founder and CEO of BYou Laser Clinics. Welcome to the show, Irena. Thank you. Thanks, Mike. Thanks for having me. Of course, it is great. Thanks for joining me today. So you attended York University in Toronto and spent the early part of your career up in Canada and you saw the success of medical laser clinics in Toronto. So you decided to move to New York and establish BYou Laser Clinic in Brooklyn back in 2020. Interesting timing with the pandemic, so I'm curious to hear about that. Tell us a little bit about your background and what led you into the beauty industry and eventually to New York. Absolutely, Mike. I myself, born in Russia, raised in New York, met a Canadian, moved to Canada, lived most of my life in Toronto. And when it was time to come back to New York, for personal reasons, I decided, and at that time I worked in the corporate world for Pandora Jewelry. I had an executive position there. And working with Pandora Jewelry, I realized and learned pretty quick the dynamic between... a franchisor and a franchisee. They have over 900 franchise partners. And pretty quickly I've learned the dynamic and how it works and what the benefits are. And overall, you know, the pros and cons of the franchise world. So when I've decided to tap into the US market and launch my brand, I'm a co-founder, by the way, with my Canadian partners, they already were in the aesthetics industry. So it was easier to... take my expertise of a corporate world and franchise relationships and input that into the US market with their expertise in the aesthetics world. I also have a passion for numbers and passion working with people. And I think when you can combine both of those, you really have a success story here. Yeah, so Irena, did you take the foundation of the business model that you learned up in Canada and then kind of rebrand it and repackage it for the American consumer when you launched BYou? Yes, our Canadian brand, our Canadian sister company called Canada Med Laser Clinics. We have close to 20 locations. We've taken that franchise model. We've tested a lot of programs there and implemented slowly into US market. I've contemplated of opening either in Florida or New York, but I decided to do it in New York. I thought, you know what, if I can introduce the brand in New York in the mid of pandemic. And, you know, at that time I lived in Toronto for 19 years, so New York is pretty new to me. And tap it in the New York market. And if it's successful, it will be successful everywhere. Because, you know, New York has a lot of big sharks. And if you can succeed in New York, you can succeed in anywhere. And then five years later, fast forward five years later, the model became so successful that it's easy now to copy and paste into other states. Love it. So for anyone that hasn't been to a BYou laser clinic, what are the primary services that you offer, you know, within the four walls? Yeah, we offer over 43 different types of treatments and that's what makes us stand out. We're a one-stop shop for all. offer primary treatments, I would say, from laser hair to skin treatments, but within the skin treatments, you have like 17 to 20 treatments alone. But most of the business comes from, it's actually at this moment, I would say it's a mixed of categories, but laser hair to body treatments, to skin treatments. to cosmetic injections and hair restorations. So we offer 43 different. options. So let's kind of talk a little bit about revenue streams. Like if you're a BYou franchise owner, what kind of revenue streams can you enjoy? You have the services, I'm sure that's the bulk of the revenue, but what else is out there for an owner? I would say, you know, we've looked at this model very carefully when we introduced into the US market and we wanted to really pay attention and focus on different types of revenue streams for franchise partners. You know, know, the brick and mortar is suffering a bit. You see it in the retail industry, but in the service industry, I would say even if a client is not showing up to the clinic, we have in e-commerce. is one of the revenue stream of services. E-commerce is big for us. uh Buying packages online. I would say we also have an in-house call center team and we have an in-house virtual clinic. You know what we've learned with pandemic that not a lot of people in this moment feeling comfortable to go out. So we offered a virtual clinic and that virtual clinic caters to all states, all clinics, all services. Another thing, a membership program. And I would say the biggest thing for us is BYou Academy School. We opened up a BYou Academy School in the city in Manhattan, New York. And that school really trains and prepares our team members, our franchise partners, employees and corporate teams, how to sell, upsell and focus on building a beautiful, it's not just about the sales. It's about the experience of the clinics. The brand experience is a must here. And that's where we went. So Irena, the first franchisee was a customer. Tell us that story. That's really interesting. Yeah, the first franchisee was a customer who had just begun the laser treatments with us. She has a young family. had a child, a husband, and she really wanted to just, I think what did well, what really triggered my interest is the fact that she said, I just want to be you. I want to be a woman who's self-sufficient, who's... who can juggle both being a mother, being a family, having a family, young family, and at the same time being an entrepreneur. She goes, haven't made an income in seven years. I would like to really feel confident and comfortable in my skin. And that totally resonated with BYou, what BYou is about. BYou's slogan is, be you and own it. Own that beauty, be confident in your skin. We're not here to change your beauty. We're here to enhance that beauty. And it worked very well. I did not, Mike, think about uh franchising in the first five years because it was important for me to build a foundation and understand how the franchising works. But once we had the opportunity, we took it upon ourselves and really launched our Long Island location. That's awesome. let's kind of continue on that line of questioning. So what is your current footprint of open and operating locations as well as locations that are in development and coming soon at some point once the real estate plays out? yeah, we have we've ventured out outside of New York. We have a few locations in New York that are franchise owned. We're opening next month a Jersey location. We have a in April, we've launched a Knoxville, Tennessee location. In, in January, we're opening two Orlando locations and one Virginia location, Richmond, Virginia. So that Yes, so definitely that's what's in the pipeline at this moment. We've also have some great news. We this year, I did not anticipate this, but this is great for us. We've definitely now started to work with the QSR multi-unit franchisees. And with that being said, I've closed so far franchise agreements of 65 location deal. with different partners. uh thank you. So now we're heading out into the exclusivity of states. So we've sold out of Jersey, we've sold out of Pennsylvania, we've sold out of Connecticut, Michigan, Maryland, Washington, all of Virginia is sold. So yeah, we're pretty excited. Yeah, that's really cool because I spent a lot many years in QSR space and fast casual space. know, those owners are, you know, it's, it's, it's a tough business. There's a lot of employees. There's a lot of moving parts. There's food cost fluctuations. There's, you know, margin erosion as it relates to some of the delivery apps and things like that. So I can see how that's a good channel for you to attract like really good business owners that are looking for their next thing to kind of invest in. And I can see with that recurring membership revenue, it can be very attractive to QSR folks. So thanks for sharing that with us. That is exciting news. So let's talk a little bit about BYou has a results guarantee policy. and really prides itself on taking care of the customer. Tell us a little bit about your philosophy behind that. Yeah, think one of the most important components with the aesthetics industry, it's a $59 billion industry across the world. It's expected to be at $27 billion at the end of this year in the US market alone. So with this type of an industry, you want to make sure you have the right equipment. And we at BYou offering top-notch FDA-approved equipment is the Beamers and the Mercedes out there. And with that being said, we offer a results guarantee policy for laser hair because the equipment is so out there. It's Candela Gentle Max Pro is the top of the best that's out there. And we've decided to offer the results guarantee to our customers to make them feel comfortable and understand that we stand by our equipment and our treatments. and out of curiosity, just so I heard this right, Irena, I know that the beauty industry is enormous and you mentioned that there's a $29 billion industry within it. Is your segment, which is kind of the beauty, medical aesthetics, is that the 29 billion or is it a sub-segment of that? No, it's within that segment 29. is just aesthetics. Yeah. Very cool. So can you share with us a little bit about BYou's mission? I think that's important for listeners to understand kind of your culture. Yeah, I always look at, for example, myself, an immigrant that moved to US, trying to build a dream. US is full of opportunities. with that being said, I wanted to really name the brand that will resonate with all. We're launched in New York. New York is like a huge salad full of different mixed vegetables. And it might sound strange as a metaphor, but it's true. So I really wanted to resonate with all clients. It doesn't matter who you are, a female, a male, 45 % of my customers are male. So that's big, you know, and it doesn't matter, you know, mother or young person, an older woman or a man, trans, gay, whoever you are, we welcome you to come in and to try our services. What also stands out for us, we don't go by the menu. My medical certified estheticians really customize each package as per the individual's needs. Whatever the skin type they have, whatever the medical condition they have, we evaluate everyone individually and build a customized package. And I think that's what stands out with BYou. Also, I would say, because it's a long-term treatment process, they almost become part of the BYou family. So, you know, be yourself and own that beauty. They leave our clinics very confident and comfortable in their skin. And that's the most important mission for us. So let's elaborate, Irene, a little bit more about, if someone's interested in becoming an owner and they want to, you know, they really believe in your mission and they like what you've done with BYou. They want to have a pretty good sense of who's behind the company to assist them. So I know you mentioned a medical director, which you have a corporate. You also have a call center, which I know is really important to new franchise owners. Who else is in your org chart that kind of supports the company and new owners that join the system? Yeah, good question because for me, the building the right foundation is still continues to be a number one thing. You know, I look at the clients, look at, I have, I look at three types of, I have three types of customers. I have BYou customers that come into our clinics. And then I have my franchise partners, which I consider them as my partners. They're my walking testimonials. So in the head office, in our corporate location, we treat them as customers. We have a marketing team. We have operations team and we have call center team and the virtual clinic team actually sitting in our head office. The reasoning to me even closing these deals this year, this year has been doing very well for us is because I invite these partners, I invite the potential prospects to come visit us, to go through the whole journey of experience. It's a partnership, it's almost like a marriage, it's a business marriage. So you want to make sure these are the right partners. I always ask their questions as well as these QSR guys or multi-unit franchise. How are you currently operating? What are you doing on your end? It's not just me selling the brand. It's me understanding who the partner is and if I really want to dedicate and trust my brand with them. So I always say I welcome them to come in to look at the journey, to understand how the clinics work, and then we'll sit at the head office location and meet every individual. management team and understand what each department provides. I would say the operations side, the marketing side comes from BYou corporate. We do not throw it on the owner and say you on your own. It comes from the training comes from BYou, the marketing 360 from lead generation, social media, whatever it is, it comes from corporate and then the operations side. think those three components are so important. And that's what contributes to the profitability of the locations. And that's why our partners, current partners are very happy. Yeah, it sounds like you were forward investing in a team so that when you recruited these great franchise partners, you'd have a team ready to hit the ground running. So let's talk a little bit about that. When someone joins the system, tell us a little bit about hiring, training, BYou Academy that you referenced before. Can you tell us a little bit about that? Yeah, we, knowing that the operations, the prospects are coming in from different types of categories of businesses that they've done, they've never had experience in aesthetics industry, we ensure that the hiring and the training is a lot on us. We offer, we hire a full team. Of course, at end of the day, it's their job to make that decision if they feel comfortable hiring the right team. We will provide three candidates. in the reception, the medical estheticians, whatever the case is. And then the owner group would make that final decision. It's everything is a collaborative work here. We suggest, my favorite word is suggest and propose. So we suggest and we propose and ultimately we have to let the owners feel like they're 100 % owners in this and they're going into this trust has to be met from both parts, right? From myself and them. And then the training begins. The training is one week, you know, theory training online, and then the two weeks hands on. One, the second week is in the clinic before we launch, and the third week is when we launch. We have my team, operations team in the training team that runs and helps the partners to really execute this right. That's great. So, um, I'm curious what a day in the life is like for an owner. And I know that's going to differ depending on if they're like truly an owner operator and they want to be in the shop every day versus someone that maybe is more of a. Yeah. of category of owners. We have full-time owners, we have part-time, and we have absentee owners. So the brand, the model does target all three. If you're talking about a full-time owner, he would come in, he would have most of these owners, they love to build a little office in the back where they would be, you know, and they're operating and they're making sure that the scheduling is right. They're making sure that the team is there and the experience is there, right? Because they've learned all of that through our BYou Academy School. I really want to emphasize on the importance of the fact that BYou corporate location really is responsible for the new clients. When the lead generation, all the bookings, everything we're responsible, the existing clients, the treatments, the clients that already purchased with us, is a lot to do with owner and operators at the clinic level. Yeah. So that's kind of interesting because you're taking accountability at the corporate level for getting the bodies in the door. And then the owner has to like execute, you know, really great hospitality, great service, and just make it a place where they want to become part of the family and come back. Yeah, I looked at this model carefully to uh really reevaluate it to the point where how do we bring, how do we cater to the nurses who are usually full-time owners, because they already know how this work, how do we cater to those who've never been in this industry, like the QSR guys I've mentioned, and how do we cater to the brand new owners who've never been business owners before. So the model is set in such a way that we don't have a risk. There's no high risk to the owner group in the sense of, I have to really run after my revenue and look for it. The business is built in such a way that the marketing strategizes and works on the SEO, works on the social media, works on the campaigns and lead gen, and then it goes into the call center where they provide support to all the new leads. and then scheduling where the owner can come in and look at his schedule and be like, I've got five consults today, girls, what are we doing about it? And then really the most important part, I think, for the owner group is to understand that at the clinic level is their job to motivate, lead a team and execute. You know, when one asks me what makes a great owner, how do you know that's a great owner? I would say, It's one who knows how to lead a team. That's important. That's a huge support for the team, right? To make sure they can execute that big dream. Hey, we need to be here. This is where my clinic needs to be from a revenue stand. And this is how many clinics I'm planning to open this year. So let's do this, guys, and continue to motivate. so that characteristic of leadership is going to be top of the list over medical background. Yes, exactly. And then I would say the second component would be trust. If you don't believe in trust where BYou will be or the BYou's mission or the BYou's formula, we will not be successful. Yeah, okay, fair enough. So let's talk about the cost to get in. I know that your item seven is going to have a very big cost variance based on the condition of the space and the size of the space, et cetera. But can you give us an idea of what it would cost to get into a single unit? would be half a million. The franchise fees 45,000, training fees 15,000, so 60,000 is paid upfront. You're looking at in total half a million dollar investment. Most of the expense comes out of the construction and equipment. Okay. And in terms of item 19 earnings guidance, do you provide candidates with any expectations about performance? Yep, we have an item 19 and you can see all of the details in the item 19. Okay. And does that include performance from just corporate owned stores or does it also have franchisees? all transparency is big with me, Mike. I think that's the only way. No, really, that's the only way we'll be successful. You know, I have to differentiate my brand and really say what makes us stand out. And I think having someone who's very passionate, if you haven't noticed, the passion, the passionate part has to really also be escalated to the to the team, to my team and to the owners. And then, you know, and really understanding what type of support the owner group needs to be successful. Yeah, that's great. Well, Irena, it's been really great learning about your brand. Anything else you want to add to the mix today before we wrap up? Yeah, I think really just focusing on what three strong components that differentiates us from everyone else. would say is BYou has a very strong Academy school that we've opened. We know the model is very strong between North America. We've tested it in Canada. We still have it in Canada and in the US market. It's strong. I would also say customized packages offering customization. for the consumer and understanding what the consumer needs. As a CEO, I always ask myself, how do I stay innovative and how do I stay on trend? Those two components are the most strongest components in the aesthetics industry. Because look at the Kardashians, they're always changing the trend. Morpheus, non-vasive skin treatment, all of a sudden you hear every consumer is asking us, hey, Irena, do you guys have Morpheus treatments? So it's important to stay innovative on trend. and be transparent and honest, not with only your customers, but with our partners, with our franchise. see how that's a lot of consumer driven demand. Well, they'll tell you they're not shy to say, hey, I heard about this service. When is it coming to this clinic so I can enjoy it? Yeah. So yeah, and that's what we are. So be you and on it. Yeah. Well, Irena, this has been great. If anyone listening would like to connect with Irena and her team to learn more about becoming a franchise owner with BYou Laser Clinics, contact me at franchiseQB.com or on x at QB franchise QB. I'll get you connected. Thank you so much, Irena, for taking the time to get in the huddle with us today. Mike, thanks so much for your time. Have a good one.