$90-Million Massage Enterprise, Massage Envy, Makes Play in Employee Benefits Market
Written by John Weeks
$90-Million Massage Envy Turns to Employee Benefits Market
Subject: The struggle to
create successful business models in complementary healthcare appears
to have been licked by Scottsdale, Arizona-based Massage Envy. The
5-year-old firm, which offers convenient and inexpensive massages,
anticipates generating $90-million in 2007 at its 265 franchises. Some
15-20 more franchises are opening each month. Recently the firm began
marketing their memberships as an employee benefit
to the 2500 corporate members of Wellness Councils of America (WELCOA). The
model has some parallels in cost, convenience and access with the
Community Acupuncture Network business model. Is Massage Envy an
example of the emergence of a "thriving industry of health creation?"
Send your comments to
for inclusion in a future Your Comments forum.
One doesn't typically see complementary and alternative
healthcare businesses on lists of most successful entrepreneurial
firms. But Enterpreneur magazine recently ranked Scottsdale, Arizona-based Massage Envy #149 in their Franchise 500 list as of January 2007. The 5-year-old firm currently has 265 franchises serving 250,000 members. The firm expects to earn $90-million in revenues this year.
While not expanding quite as fast as Starbucks, Massage Envy has 400 franchises "in development," according to Jesse Curry, the firm's vice president for national wellness development. The firm is opening 15-20 new franchises per month and forecasts a market for 1200 in the United States. Curry told the Integrator that Massage Envy anticipates international expansion.
The genius behind the business model was the realization by founder and CEO John Leonesio,
formerly a successful health club owner, that many people no longer
view massage as a luxury. Rather, an increasing number of people are
routinely incorporating massage in their lives. Leonesio developed a
business model wherein massage could be both convenient and, relative
to prevailing rates, inexpensive. Individuals purchasing memberships receive
at least one $49 massage each month* and discounts on additional
massages. The franchises often stay open until 10:00 PM weekdays,
allowing people ready access to services. The firm employed 1200
massage therapists in 2006.
__________________________________
Massage Envy Growth: At a Glance
Total Franchises
2003
27
2004
49
2005
109
2006
268
Total Massages Given
2006
1.5 million
2007 (projected)
2.9 million
Individual Members
2006
121,000
2007 (current)
201,000
2007 (projected)
260,000
Data provided by Jesse Curry, vice president, Massage Envy.
__________________________________
A View from the Massage Community
What does the massage community think of the model? I asked Jan Schwartz, LMT, anIntegrator adviser. Schwartz is the past chair of the Council on Massage Therapy Accreditationwho presently serves as vice president for education with Cortiva Institute, Inc.
Cortiva is a venture business which presently owns and manages massage
schools in 12 locations across the country. Says Schwartz:
"Massage Envy is a great place
for new graduates to work. Some people in the massage schools say Massage Envy doesn't pay their massage therapists enough. But new graduates have a
chance to get their hands on lots of people. The Massage Envy operating
rules are clear. They offer safe, clean places to work. Also, because
they don't charge much, they get some people to get massages that might
not otherwise."
Curry notes that while only 33% of health club
members use the club facilities in a given month, nearly 90% of Massage
Envy members access their massage benefits at a Massage Envy clinic. In
fact, the membership agreement allows a person to "bank" their visits.
If a person doesn't come one month, he or she can get a "free" visit
the next month. High use patterns among members guarantee the massage
therapists a constant clientèle.
Now Marketing Directly to Employers as a Value-Added Program
Massage Envy came to my attention via a August 31, 2007 electronic newsletter of the Wellness Councils of America(WELCOA). WELCOA
is a not-for-profit organization with 2500 corporate members which
focuses on work-site wellness and employee benefits programs. Subscribers to WELCOA's e-newsletter were greeted with a pitch from Massage Envy about a "unique wellness program."
The employer doesn't
pay anything ...
The value to Massage
Envy
in this give-away is "marketing
access" to the employees.
Massage Envy projects
that 10% of its members
will be through employer
programs.
What are the features? Massage Envy VP Curry
positions the program for employers as an "employee volunteer product."
Employees of participating companies gain a $5 discount on a membership
fee which they "volunteer" to pay. This reduces the cost of the massage
by roughly 10% the the employees of participating employers. If employees have health savings accounts (HSAs) and
the massage is "to alleviate or prevent" health problems, the employee
can use their pre-tax dollars to pay. This effectively reduces the cost
to $31-$36 per visit. In addition, Curry notes that employers can
achieve some savings on their payroll taxes.
For the employer, the bottom line is not challenging. States Curry:
"The employer doesn't pay anything." He quickly adds that Massage Enzy
anticipates that some employers may subsidize the memberships that
their employees purchase. The value to Massage Envy in this give-away
is "marketing access" to the employees. If an employer signs up,
Massage Envy offers "turnkey, promotional packages" for the employer to
get employees to join. Massage envy provides posters, fliers and even
onsite chair massage demonstrations to spark interest.
Curry reveals that Massage Envy's advertisement, placed via its bronze sponsorship in WELCOA, has now run 3 times. So far, he has received roughly 15 responses from companies "all over the country." The
Massage Envy business plan projects eventually bringing in 10% of their
individual members through employer programs. At the present time, that number
would be nearly 25,000 employees.
* In what Massage Envy calls "special markets," the basic fee is $59
instead of $49. These are Chicago, New Jersey, Miami, Las Vegas,
Seattle and California.
Note; Some of the information in this article was garnered from media accessed from articles listed here.
Comment: Three thoughts. First, look at the parallels between
the service model of Massage Envy and that of the community room
acupuncture model promoted by the Community Acupuncture Network. While the one is devoutly venture capitalist and the other birthed in a clinic called Working Class Acupuncture,
both offer drop-in convenience and low cost services. Each makes care
accessible to a broader population due to its lower cost. Each provides
a way for practitioners to make a living who may be challenged by the
typical entrepreneurial, boutique business models. Meantime, each
causes some friction from members of its profession who believe the
business model undermines professional pay scales. Fascinating.
_________________________________
Massage Envy and Community Room Acupuncture: A Look Some Similarities in 2 Emerging Business Models
Massage
Envy
Community
Acupuncture
Network
Lower than Typical Cost
Yes:
$49-$59
Employee:
$44-$54
with HSA:
$31-$36
Yes:
$15-$35
sliding scale
Convenient
Drop-in or
same day
Drop-in or
same day
Access: more affordable
to lower income clientele
Yes
Yes
Opposed by some
inside the discipline
Yes
Yes
_________________________________
Second, I wonder how long it will be until some entrepreneur takes the
community room acupuncture model and franchises it nationally as a
major, corporate, for-profit roll-out. It will happen. The potential
value to employers as an employee benefit is similar.
Finally, I recall work with colleagues in 2000-2002 when we were developing something we called the Design Principals for Healthcare Renewal.
Principal #9 ended with the statement that "the renewed healthcare
system is a partnership between an expanded commitment to the public
health and a thriving industry of health creation." The way that
Massage Envy is incentivized to sell massage to employers,
and thus the health benefits of caring for oneself, is exactly what we
were imagining when we began thinking about the potential emergence of
this industry of health creation.
Send your comments to
for inclusion in a future Your Comments forum.
One doesn't typically see complementary and alternative
healthcare businesses on lists of most successful entrepreneurial
firms. But Enterpreneur magazine recently ranked Scottsdale, Arizona-based Massage Envy #149 in their 
