Medical, Drug Test Franchises are a new, emerging franchise opportunity

Buying a franchise used to mean getting into the fast food business or opening a convenience store. But these days, franchise opportunities cover the gamut of potential businesses — and an increasing number of would-be entrepreneurs are looking at health care as a place to hang their shingles.
In recent years, home health care and related businesses have been a growing area for franchises. Now the next frontier may be drug and medical testing. Two local businesswomen are pursuing this business niche, one as a franchisor, the other as a franchisee.
Lynette Crow is a former registered nurse who started Conspire, which provides drug and alcohol testing, in 2000 at 1495 Garden of the Gods Road. Believing she had developed a stable business that fills a need, she began looking at franchising the concept in 2009 and now has a franchise in Denver, one about to open in Fort Worth, Texas, and three or four more in the works.
Crow says she knows “conspire” usually has negative connotations, but she likes it and is sticking with the name.
“If you look it up in the dictionary, it means ‘to come together for a solution,’” Crow said.
“People either love it or they hate it,” said Tracy Iverson, director of franchise development for Conspire.
“It draws a lot of curiosity and a lot of questions.”
Drug and alcohol testing for pre-employment screenings, random workplace tests and, increasingly, schools or parents is a booming area, Crow said.
Conducting tests, however, doesn’t require a full-scale laboratory setting (that’s outsourced) or an extensive medical background, since all of the tests are noninvasive, she said.
Conspire also does criminal and online background checks.
“It’s all about safety and prevention,” Crow said.
“For us, there’s a huge need that isn’t going away.”
Amy Mullins worked in real estate and saw trouble coming in that field back in 2008.
After considering restaurants and other franchise opportunities, she bought the area franchise for Any Lab Test Now, which conducts a wide variety of medical tests in a retail setting, most for $49.
She’s working to open a second Any Lab Test Now location by September and plans a third next year.
“It’s not just a business, I truly feel that we’re helping people,” Mullins said.
Mullins’ storefront at 7824B N. Academy Blvd. has a team of phlebotomists for blood draws and other procedures, and some of the testing is done on-site.
With so many people losing their insurance coverage or switching to high-deductible policies, the retail environment and pricing at Any Lab Test Now saves people a lot of money over conventional lab work, Mullins said.
“If they’re high-deductible, they’re better off coming to us,” she said. “If they’re cash-pay only, it’s a no-brainer coming to us.”
She also gets customers who come in for a test out of concern or curiosity, often even before they see a doctor.
“We’re a first step for them,” Mullins said. “There’s so many people that are, ‘Oh, I don’t need to see a doctor, but I do wonder about this.’”
Matt Haller, director of communications for the International Franchise Association, said nontraditional franchises are taking off, and there are currently 295 business categories represented in the association.
“It’s really growing tremendously in these nontraditionally franchised areas — lab testing, home care,” he said. “Anything where you can duplicate the model can be franchised.”
“It’s a message that we really try to drive home — there really can be something for everybody in franchising. A lot of people who might not have considered it because they don’t want to own a McDonald’s, maybe they would be interested in a home-remodeling business.”
As the nation stumbles out of the recession, finding financing to start a new business is still a challenge (see sidebar). Crow said her franchisees so far have paid in cash, either from savings or borrowing from a retirement fund. The total startup costs for Conspire are in the $100,000 range, Iverson said.
“$100,000 isn’t a big investment when you’re buying a business,” she said. “We’re a low-risk concept and we’re need-driven.”
Mullins said going with an established franchise gave her confidence in investing her savings in a new business.
“I wanted to go with a franchise simply because the success rate that the Small Business Administration shows, it’s astronomical how many franchises still exist five years later versus (independent) small business startups,” Mullins said.
“I wanted something that would last.”
Often, entrepreneurs find strength in adversity and strike out on their own in a recession. That’s been hard to do in the current downturn, however, since many people who would like to try their hand running a business can’t get conventional loans and can’t borrow against their house or retirement funds.
Matt Haller, communications director for the International Franchise Association, said there is a $2 billion shortfall in the amount of lending available for franchisees compared with demand.
“The demand is there, but it’s a lot harder for a startup franchisee to get capital,” Haller said. “Borrowers have less capital, they have less assets — real estate obviously took a big hit, home equity lines are virtually nonexistent now.”
That means thousands of potential businesses and tens of thousands of jobs are not being created, he said.
“At a minimum, there is a 20 percent lending shortfall versus the demand that’s out there,” Haller said. “What that means in terms of on-the-ground jobs is 82,000 jobs not created.”
Government-backed small-business lending has rebounded since 2008, said Mia Fagley, business development specialist for the Small Business Administration’s Colorado District.
“The number of loans has increased,” she said. “The dollar amount has increased pretty significantly.”
Indeed, in Colorado the total number of SBA loans to startup businesses in the first two quarters of 2011 is already nearly equal to the total number in 2010 and above 2009’s total.
“Certainly the SBA has been a lifeline — they saw a record loan volume in the fourth quarter,” Haller said. “The joke is that the SBA used to be the lender of last resort, now it’s the lender of only resort.”
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