Massage Envy

Franchise Increases Efficiency with Automated Systems, Adds 100 Locations in 4 Months

Headquartered in Scottsdale, Arizona, Massage Envy opened for business in 2002. After one year, enormous demand for its membership-based massage services prompted the company to adopt a franchise model. The IT consultants at Beratung developed a flexible, scalable solution for Massage Envy based on Windows® Small Business Server 2003, Microsoft® Office SharePoint® Server 2007, Microsoft SQL Server® 2005 database software, Microsoft Dynamics™ GP, Microsoft Dynamics CRM, Windows Vista® Business, and the 2007 Microsoft Office system. Within four months of implementing the solution, Massage Envy opened an additional 100 clinics and reduced its royalty reconciliation process from 30 hours per week to 30 minutes. The company simplified franchise management, enhanced connectivity across the enterprise, and easily integrated a comprehensive solution that will continue to scale with the company as it expands into new markets.

 

Situation

In 2002, John Leonesio decided to create a business built around a new paradigm in wellness services—providing professional, convenient, and affordable massages to people from all walks of life. “After 30 years in the fitness industry, I started seeing a change in the way people perceive massage,” says Leonesio, Founder and CEO of Massage Envy. “It’s no longer considered simply a luxury or an indulgence. People are adding massage to their fitness routines because it helps them to do more during their workouts and to recover more quickly from them. Not to mention, they feel better and healthier as a result.”

“We’ve completely transformed the way we work at Massage Envy. Thanks to these Microsoft solutions, our quality of life is increasing. We actually have free time to … get more massages!” Doug Payne CIO, Massage Envy

Leonesio used his experience with the health club industry to devise a unique business model for Massage Envy. “We wanted to be very affordable, to charge about 50 percent of the industry average for massage, while still providing high-quality services,” Leonesio says. “We decided to use the health club model and created a monthly membership program. A member pays $49 to $59 per month, which includes the first massage, and then only $39 for each additional massage.”

This new paradigm for providing massage services proved to be an immediate success. “We started with one location and planned to open five or six clinics here in Scottsdale,” Leonesio explains. “But demand for the product was so great that we had people approach us asking how they could start their own Massage Envy clinic. We decided that the quickest way to meet the demand and expand nationwide was to use a franchise model.”

Massage Envy converted to the franchise model in 2003 and within one year had expanded from one location to 70 clinics across the United States. “Right away we sold licenses to half a dozen regional developers, who then very quickly grew their regions by opening their own clinics and selling licenses to their own franchisees,” says Doug Payne, CIO, Massage Envy. “This happened within the first year of switching to the franchise model, so we really had no time to establish a corporate IT infrastructure.”

Massage Envy initially relied on Microsoft® Office products, such as Microsoft Office Excel® spreadsheet software, to manage business processes. “During the first two years, we tracked everything manually,” Payne explains. “We wrote down appointment information on scraps of paper and used Excel to track sales and operations, real estate acquisition, project development, training. As we continued to grow, the amount of time it took us to manage the business increased, too. For example, we spent three-and-a-half business days each week processing royalties for our 70 clinics. We also had absolutely no visibility into these processes across the enterprise. We decided that we had to automate and centralize our systems in order to become more efficient as a franchisor and to provide the best possible support to our franchisees.”

Solution

In 2005, Massage Envy began looking for a flexible, scalable solution that would support its exponential growth. “Eventually, we plan to have over 1,200 Massage Envy locations in the United States,” says Leonesio. “We’re also planning to expand internationally. As far as we’re concerned, there’s only one software company that can scale to meet our needs and grow with us, and that’s Microsoft.”

Massage Envy turned to Beratung, a Microsoft Certified Partner and Microsoft Certified Small Business Specialist, to help the company develop short- and long-term solutions based on Microsoft technologies. “Our mission at Beratung is to be a strong strategic partner with our clients,” says Darin Pauls, Founder and CEO of Beratung. “It’s very important to us to collaborate with our clients throughout the entire process to provide them with an overall road map of their systems and processes, as well as the expertise and skill sets needed to restructure their companies and position themselves for growth.

“In developing this solution for Massage Envy, we had to keep in mind high efficiency, automation, reliability, and scalability,” Pauls continues. “The main goal was to provide enough scalability so that Massage Envy could continue its rapid growth without having to add additional headcount. We wanted to design a system that increased efficiency, collaboration, and connectivity, while keeping operating expenses to a minimum.”

Beratung began by developing a royalties processing engine for Massage Envy, implementing a comprehensive enterprise resource planning (ERP) solution using Microsoft Dynamics™ GP business software. “We resolved Massage Envy’s primary challenge right away with the implementation of Microsoft Dynamics GP,” says Pauls. “When we first met with the company, it had one employee who spent three-and-a-half days per week processing royalties. By implementing Microsoft Dynamics GP, we were able to automate the process and trim the time to 30 minutes.”

Next, Beratung incorporated a customer relationship management (CRM) system to help Massage Envy stay connected with its regional developer network. “We deployed Microsoft Dynamics CRM to automate all the internal corporate processes,” Payne says. “Historically, Massage Envy lacked visibility into the distribution of our Web-generated leads and the processes of opening new clinics. Today, we can track all of that with Microsoft Dynamics CRM. We have visibility, automation, and a new level of efficiency that helps us stay connected across the enterprise.”

In order to standardize processes and enhance collaboration, Beratung implemented Windows® Small Business Server at each clinic location. Beratung used the Office Business Applications (OBA) capabilities found in the 2007 Microsoft Office system to integrate the Microsoft business applications with the familiar user environment of Microsoft Office.

Beratung also suggested a software-plus-services model with Windows® SharePoint® Services 3.0, a hosted version of Microsoft Office SharePoint Server 2007. The industry shift toward software-plus-services is driven by the fast-growing recognition that combining Internet services with client and server soft-ware can deliver exciting new capabilities. “From a collaboration standpoint, we’re embracing several of the programs within Office 2007, especially SharePoint Services,” Payne says. “That’s been an amazing toolset for us.” 

To complete the solution, Beratung implemented Microsoft SQL Server® 2005 database software to be the repository for sales data and integrated it with Microsoft Dynamics GP. “Microsoft SQL Server 2005 is the backbone of our corporate office,” says Payne. “All of our Massage Envy clinic transactions roll up into this central database, and then the info is accessed and processed by our royalty reconciliation engine. We’re currently processing 700,000 transactions per day using this system. In the near future, when Massage Envy has over 1,000 clinics nationwide, we’ll quadruple the number of transactions we process each day and this Microsoft-based solution will easily scale to support us.”

Benefits

Within four months of implementing the Microsoft-based IT solutions developed by Beratung, Massage Envy opened an additional 100 clinics and is processing 700,000 transactions each day. The company has also reduced the amount of time it takes to reconcile royalty payments from 30 hours per week to 30 minutes. Massage Envy has simplified franchise management, enhanced connectivity and collaboration across the enterprise, and integrated a complete solution that will continue to scale with the company as it expands into new markets.

Improved Reliability, Enhanced Security

“As far as we’re concerned, there’s only one software company that can scale to meet our needs and grow with us, and that’s Microsoft.” John Leonesio Founder and CEO, Massage Envy

Massage Envy deployed Windows Small Business Server 2003 because it needed a secure and reliable network at the clinic level. “Using Small Business Server, Massage Envy has more control over the clinic networks and operations at those clinics,” says Pauls. “The networks are central to the transmission of financial data between the clinics and the home office, so the reliability that Small Business Server provides is a key element of this solution.”  Payne adds, “With Windows Small Business Server, we can be confident that our network is stable and secure.”

Increased Scalability

The integration of Microsoft Dynamics GP with the company’s royalty reconciliation engine generated tremendous efficiencies in day-to-day operations at the corporate office. “Before Microsoft Dynamics GP, we would spend three-and-a-half days processing royalties for our 70 clinics,” Payne explains. “We now have 370 clinics, and we’re processing royalties in 30 minutes. With this solution, it will continue to take us 30 minutes, even when we scale to over 1,000 clinics nationwide.”

Increased Connectivity, Collaboration

Massage Envy has several employees in the field, including corporate trainers and operational staff. The company uses the Microsoft Office Outlook® messaging and collaboration client with Microsoft Exchange Server 2007 and Microsoft Office SharePoint Server 2003 to help its employees collaborate and stay connected. “It’s important to us that we keep our staff connected to their inboxes, to their schedules, and to each other,” says Payne. “We have a strong integration with our Exchange environment to keep these folks productive and enabled while on the road.

“Massage Envy also has a responsibility to support its franchisees,” Payne adds. “It’s important that we’re connected, that we can provide that support to our franchisees whenever they need it. Our IT help desk, our on-call trainers, and our operational support team respond to incidences remotely, which we do quite often.”

Simplified Franchise Management

Pauls notes, “The solution that Beratung created for Massage Envy is simple, complete, and connected: It’s a click-and-report type of system that doesn’t require a lot of manual entry or manual management; it handles the whole franchise process from start to finish; and it connects not only the clinic locations and the home office, but Microsoft and third-party applications at the corporate headquarters as well.”

“The type of growth that we’ve experienced simply wouldn’t have happened had we not partnered with Beratung and Microsoft,” Payne concludes. “We’ve completely transformed our infrastructure using Microsoft technologies. But even more importantly, we’ve completely transformed the way we work at Massage Envy. Thanks to these Microsoft solutions, our quality of life is increasing. We actually have free time to carry on with the business of living—and hopefully get more massages!”

Future Plans

In 2007, Entrepreneur Magazine ranked Massage Envy as the second-fastest-growing new franchise in the nation, and the company plans to continue expanding, internationally as well as domestically. “This is a new industry, and there are still millions of people out there that we can reach with our services,” says Leonesio. “Our potential is virtually unlimited now that we have the right technology and the right systems in place.”

 

Microsoft Small Business
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For more information on how Microsoft Small Business Solutions can help maximize your business potential visit:
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For More Information

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For more information about Beratung products and services, call (480) 252-8955 or visit the Web site at:
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For more information about Massage Envy Limited, LLC products and services, call (480) 366-4180 or visit the Web site at:
www.massageenvy.com