Marty McDermott: As we were saying, Don, we have a great show today. We're meeting Jon Rando and Marcey Donnelly and Lisa with Jon'Ric International franchise opportunity.  Hey, Jon and Marcey, how are you doing?

Marcey Donnelly: Great. Thanks.

Marty McDermott: Is Lisa there, too?

Lisa Savich: I'm here.

Marty McDermott: Hi, thanks for joining us. On the phone with us is Don Johnson, the president of Diamond Financial.

Don Johnson: Thanks for coming on. We've been looking forward to having this show. I've known Jon for a little while now, so let's have some fun and talk about Jon'Ric and see what it's all about. Lisa, I thought I'd start with you. Start with tell us where you and Marcey are calling from this morning. I know you're in different parts of United States right now.

Lisa: Actually, I work at Jon'Ric International. I'm the executive director here and I'm here to talk about Jon'Ric with Jon. Marcey is our brand new franchisee in California.

Don Johnson: Congratulations Marcey. That's terrific. You're in Orlando, Florida.

Marty McDermott: Jon, I'd like to start with you. What were you doing before starting or joining Jon'Ric International Salons and Day Spas' franchise?

Jon Rando: I wish I could tell you something more glamourous, but I was a ski instructor and a ski bum before I started. My mother suggested I go to beauty school and from there I had great time and was very successful.

Marty McDermott: What about Lisa? How did you get hooked up?

Lisa: Well, I do have a background in the salon industry, as well. I did skin care and nails for a while and I also had a business selling aloe vera skin cream for a few years. I traveled around the U.S. at different home and women's shows so I have a pretty extensive background in the industry. I love this industry. The beauty industry is a great one to be in.

Don Johnson: Jon, you said you were a ski bum. Is that why you took Jon'Ric international, so you could ski all around the world?

Jon Rando: A little bit. It started like that. Being a male in the beauty industry, I was very fortunate. It opened a lot of doors. When women are getting their hair done or getting treatments, they love a man's opinion. I was very artsy, I guess before that so it kind of just fell into place and before I knew it, it had just happened.

Don Johnson: Let's talk about the history. You started this back in 1983--you have been doing this for a while.

Jon Rando: For 27 years, we've owned Jon'Ric International. Within the first year, I built two stores. By the third year I had eight stores that I owned myself. We were very fortunate. It was the perfect time. You remember, John Travolta and the Saturday Night Fever movie had come out and that's when I got out of beauty school and just kept growing from there. People were asking me by my second year, 'what a catchy name--is that yours? Is that French? So before we knew it, people were asking us to build the spas for them. We started licensing the name, then before we knew it, we were franchising.

Don Johnson: What year did franchising start, Jon?

Jon Rando: We started franchising about eight years ago. We started licensing out 14 years ago. So, for the first ten years, I owned them all myself. But one man can only do so much by himself.

Don Johnson: You're a very creative person. You mentioned you have an artsy type of disposition, so it seems like this industry is perfect to be creative and you've done a lot of tinkering over the years. Where did you get the concept to be excellent?

Jon Rando: We were able to adjust to the changing environment of the world. When haircuts were popular, then massage was popular, and all these different factors. We were able to mold and move with the terms and the times. We weren't stuck with a formula and we couldn't change it. We are constantly changing and evolving which is the most important part of a franchise. You have to evolve with the times. That's what Jon'Ric International is all about.

Don Johnson: That's what's interesting, Marty. Now doing this show for our third year, we've talked about a lot of stories. Even some of the largest names in franchising have to do that, too. They have to be evolving and changing. That's just business. Period. It's good you guys have stayed on top of that.

Marcey, what was your background?

Marcey Donnelly: I'm part of that group you were speaking about earlier. I had a position at a large bank for 14 years where I managed a team and did large project implementation. I was laid off. I also had a small professional organizing business. Actually, I have no experience in the beauty or spa industry other than as a consumer.

Don Johnson: See, Marty, she's part of that 35-40 percent. Marcey, there are so many franchising opportunities out there. Why did you choose Jon'Ric?

Marcey Donnelly: I did a lot of research and spent many months working with some fantastic franchise people and was just looking for the right industry. When I finally picked the salon and spa industry, the Jon'Ric offer was just better than what all the others were offering. They had a great franchise fee and royalty program. And as Jon was mentioning, his program offers a variety of services to choose from with the flexibility of adding and removing services as the market changes, which is what I think (as you guys were mentioning) for future growth. But most importantly, I just immediately had a connection with Jon and his staff, which are incredibly hard-working, and they offered me the support I needed. They have a great track record, too.

Don Johnson: Jon and Lisa, were you happy with that answer?

Jon Rando: I can tell you that Marcey is going to be an extremely successful franchisee. She has what it takes to take the ball and run with it. She's teaching us things, which is amazing.

Don Johnson: Jon and Lisa, how do you describe the Jon'Ric International franchise opportunity to a prospective franchisee?

Lisa Savich: As Marcey was saying, we're generally very flexible and what makes Jon'Ric International so unique is that we have nine different spa modules from which you can choose. So we have something for everyone's style, personality and what they want to focus on in their business. We have the salon and day spa with the relaxing environment of a relaxing salon. We also have the dental spas.

Jon Rando: On our medical side, were were the first one to have branded dental spas six years ago; we have chiropractic spas, wellness facilities and typical medical spas. We're classifying all of the medical spas as a wellness facility. As the baby boomers all start falling apart, we all need these services. Our latest complement to the spas that we offer is the fitness and weight loss spa. If someone owns a hotel or resort--we are extremely popular with destination resort hotels. We have locations overseas in Dubai, Baharain in the Middle East and the UK. So these destination spas are also very popular now. We do your typical express spas, kiosks, children's spas, gentlemen's salons, tanning--so it's an ever-changing environment in a global sphere because we are Jon'Ric International and international is very important in this global community we have.

Don Johnson: I love the flexibility, Jon, and the fact that you can custom design a franchise system for someone's local market or what they're most interested in. That's really unique and interesting.

Lisa Savich: And as Marcey was saying, we have a 0-percent royalty fee, we do a flat week royalty fee which a lot of companies don't do. That makes us unique. It's very affordable.

Jon Rando: At a fee of $100 a week, everyone can afford one. You don't have to be a multi-millionaire to be able to afford this. That separates us from a lot of them. We don't have a national advertising budget. We don't have management fees. You pay your franchise fee, you pay your royalty fee and you're done. That's it. There's nothing added.

Don It's very simple and having that fixed cost--I can really see that being a selling point. How has technology changed or helped the business? Jon, can you start off talking about that?

Jon Rando: Technology in the industry has evolved. In your grandmother's day, there were funky large hair dryers and certain ways to do things. There were only a certain amount of people that went to a beauty or a barber shop. Now it's evolved into massages, facials and eyebrow threading and waxing, and weight loss. The industry is changing and for the better, I must say. It's a $50 billion industry now and that's just in the United States. Overseas, it's in the trillions. So, it's an industry that wherever you go--whatever country--someone needs a service that we provide, and that's a good problem to have.

Don Johnson: Jon or Lisa, I know you have some kiosks models that are set up in the malls and so forth. Can you talk about that and the advantages of someone starting up with one or a few kiosks.

Jon Rando: The kiosk program was designed because of the current economic times. We wanted to be able to give someone an opportunity to have a franchise for under $20,000. If they did a cart, which is the kind you see in the mall or a kiosk, it ranges from $5,000 to $15,000. And in these they can offer different services--maybe pick 5 or 6 they like and then simply design it. Like Marcey's in the San Francisco area. What's popular in San Francisco may not be popular in New Jersey; and what may be popular in Des Moines, Iowa, may not be popular in Mississippi. With the kiosk program, they can cherry pick whatever services they want to offer in their mall. And being so affordable, you can almost put it on a credit card. That's the beauty of a kiosk and cart program. It's something brand new for this environment.

Don Johnson: I think that was very smart--and we talked about that in Segment 1--some franchises offering lower investment sizes. And in addition to services, you also have some products that you sell on the kiosk. So I guess that's another revenue stream.

Jon Rando: Absolutely. For our weight loss and exercise program, we have DVDs, the bars and the candy, nutritional packages, portion control plates, ...you remember the gentleman who produced 8-minute Ab's DVDs (his name is Jamie Brenkus). He's part of the Jon'Ric organization now. So we have this guy who was a superstar with Kathy Ireland and all these different videos..and trainers for the stars is now part of what we do. Everyone of our existing franchisers, including Marcey, gets to take advantage of this incredible experience. So when you buy a kiosk, you have all these unique opportunities to sell weight loss and help and management. It's a great blend.

Lisa Savich: It's a complete package now.

Don Johnson: I think a misconception about your industry is that some think this is only for women to own, but I guess you have a certain amount of male owners. This is the type of business where you being the CEO and managing (but not necessarily doing) these services. Maybe we can talk about that a little bit.

Jon Rando: That's an excellent question, Don. You would think that most Jon'Rics are owned by women, but they're not. They're owned by men between 40 and 60. Let's say you're a gentleman and you want to buy a franchise and you're not sure if you want donuts or mufflers or dry cleaners. A spa is not necessarily going to jump into your head but I think he'd rather be around happy, beautiful people that smell good than walk around in a restaurant that smells of fried food or something. So, you don't think of this as a thing guys think "this is for me," but it really is. Men do extremely well in this industry. Extremely well. Men own most of the franchises. Women are natural at this. They just know what to do; and men just seem to excel in the spa industry.

Don Johnson: Is that something that surprised you? Did you go out and recruit men, or they just came and wanted to know more about the opportunity?

Jon Rando: It was a total surprise. We have a franchisee in Denver (and he's a CPA, by trade--very stuffy). I said, "Why would you want a spa?" He said, "It's fun. I'm around beautiful people. They're happy. It's an industry where I'm not depressed and it's not just numbers. I see people and I use the spa services myself," he said, "and I'm a spa guy." And that's great.

Lisa Savich: He's doing very well and looking at opening up another location right now.

Don Johnson: Not only that, but him being a CPA, I guess he ran down the numbers and saw it was a great opportunity and a profitable business.

Jon Rando: He's another guy, who like Marcey, is actually teaching us. It's like a family. We all bring something to the table, but it's really great when a franchisee says, "this is what I'm doing and it's really pretty good." Jack and Marcey are just those kinds of franchisees that take what we have and make it even better for everybody. Those are the kind of franchisees that make you smile at the end of the day.

Marcey Donnelly: Actually, I was tracking some of the folks walking through or past my space. Almost 30 percent are men. That was an indication that we really needed to tailor our services to those that guys would want, that didn't think spa services would be for them.