New Start-Up Offers Licensing, Franchises Follow

Small-business owner Adie Horowitz offers a service that treats kids with lice using her own line of organic products and the idea is a hit with parents in …

Small-business owner Adie Horowitz offers a service that treats kids with lice using her own line of organic products and the idea is a hit with parents in the New York area where Horowitz is located. Now, she is looking to license her service and products to other entrepreneurs, with plans to franchise in the future. The difference between franchising and licensing, experts say, is that franchising involves more legal fees and costs up front, but results in more control, whereas licensing agreements cost less to make but come with more business limitations. For more on this continue reading the following article from The Street.

Imagine one of the grossest things a kid can get while at school or at camp — lice — and then make a successful business out of fixing it.

That’s exactly how Adie Horowitz, founder of Licenders, got started.

Fifteen years ago, when her children were small, Horowitz got a call from the school nurse saying her daughter had lice. After picking up her daughter from school, naturally she did what any mother would do: called her pediatrician.

"He said ‘Oh, you just go to the store to pick up some Lindane and some Quell and just apply it and don’t worry about it.’ So I got the prescription. I picked up the shampoos and then I looked at the ingredients — these are pesticides," Horowitz says. (Quell is a treatment that includes Lindane as an ingredient.) "These are chemicals that are designed to poison the bug, but you’re applying them to your child’s head. And I refused to do it. I told my husband there’s got to be a better way to do this, but nobody seemed to know it."

Horowitz spent the next few months researching and making calls to figure out how to get rid of lice without using chemicals.

"Our biggest secret is your baking soda in your refrigerator," she says.

She came up with a line of shampoos that uses enzymes to break down the exoskeleton of the bug instead of chemicals that run through the nervous system. She targets high-end clientele with a service to screen and treat kids with lice.

Horowitz has treated the children of daytime host Kelly Ripa and the children of Countess Luann de Lesseps of The Real Housewives of New York City.

The Licenders team screens kids at their school or camp, then notifies parents if there’s lice. They will schedule an appointment to treat the infestation by either going to the home or having the child come to their salon in Manhattan, Horowitz says.

Treatment isn’t cheap. It costs $250 for two hours and $90 per hour beyond that. (Parents can also buy just the products and take care of the problem on their own by watching a step-by-step tutorial of the combing-out process on the company website.)

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Licenders has dozens of contracts with schools and camps throughout the boroughs of New York.

"Camp is the reason why in September schools are so infested, because the kids come back from camp with it," she says.

Expansion plans

Now Licenders is looking to expand. The company has just completed creating a program through which entrepreneurs interested in the lice-treatment business can become licensees.

"A key factor in general in business is really learning how to grow your business. You can’t stay in one place. And if you can’t grow your business, then your competition is going to copy you and they’ll figure out how to grow the business. And that is a challenge," she says.

"Our revenue is over $1 million [per year]. That’s very successful for me, but I want to be at $10 million," she adds.

To get there, Horowitz plans to expand in areas where they company already has contracts — metro New York, New Jersey and Connecticut — and transition the company eventually into franchised operations that she hopes will take off across the country.

"We’re going to give other people the opportunity to run their own business and we’ll show you how to do it," she says. "We spent the past year developing a plan so that every single part of the business is duplicable."

Franchising vs. licensing

For a franchise, "you need to deal heavily with lawyers, and the lawyer fees get pretty costly," says Drew Wolin of FranchiseHelp, a resource for entrepreneurship and franchise opportunities. Franchisors, though, also have "complete control. … If you’re licensing, it’s much more hands-off. You are giving permission to sell a product, but you’re not necessarily overseeing everything and spending too much time or money to ensure that they’re doing everything exactly the way you wanted, which has its inherent downfalls as well."

When you’re franchising, you run the empire. Licensing is more frequently about selling products through other stores and websites, and your product may be on the shelves alongside similar products. There are also more elaborate forms of licensing, as Horowitz plans.

Wolin says it’s common to see license-to-franchise transitions as companies grow from startups into more established businesses.

"Once they have a proven system, then they can franchise," he says.

Dan Martin, CEO of IFX Online, says business owners who choose licensing should be extra mindful of the potential legal pitfalls.

"It’s much, much safer in an operation that benefits from a trademark to franchise it, and really that’s not that much more expensive," he says. Licensing can save "thousands in legal fees. But what can come back to haunt you is control how this [trademark or logo] is used."

For now, Horowitz says, "a franchise is more complicated."

Licensees "don’t necessarily have to open up a salon … They don’t need to have that expense right now," she says. "They can use our salon. But they do need to use our products and follow our customer service and honor contracts the same way we do."

Licensees go through a 60-day training period in which they are taught how to train clinicians to comb out the lice, do sales calls at pharmacies, schools, camps and pediatricians, and how to deal with problem parents, among other things, Horowitz says.

Horowitz expects that after three years, licensees will produce roughly $1 million in annual revenue. She’s also expanding her product line to include bedbug treatment.

"The business is out there," she says.

Here are several other lessons Horowitz has learned through the years:

  • Delegate responsibility.
  • Hire slowly, fire quickly.
  • Networking is essential.
  • Face challenges head-on.
  • Don’t be afraid to make a mistake.
  • Having enough capital is imperative.

This article was republished with permission from The Street.

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