1. International Expansion Plan
for Dorsia Clinics
Presentation to Otsu GROUP Management
26 May 2012

2. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
2

3. Executive Summary
Deliverables
1
2
3
A five (5) year (2013-2017) international expansion business plan
A global, organizational structural plan for Dorsia
A data-driven model to project future market potential
Recommendations
1
2
3
Promising markets: US, Brazil, China, South Korea, Colombia, Italy*
Primary entry methods: US Commercial Service (US, China), Brokers (Brazil, South
Korea, Colombia), Serendipity (Italy)
Dynamic conception of Dorsia vis-à-vis the target country
Steps going forward
1
2
3
Due Diligence
Master Franchise Charter
Go-to-Market strategy
Report Objective:
To develop a clear implementation path toward establishing
Master Franchising for Dorsia in promising markets
Source: Consultant research; * included per Otsu management discussion with potential Master Franchisee
3

4. Considerations Moving Forward
There are both advantages and considerations to be aware of in expanding Dorsia abroad
Advantages
Considerations
Expansion of services/products tailored to a
specific market (and therefore potential for
larger organizational learning/crosspollination throughout Dorsia franchise
network)
Significant reputational risk should a negative
event occur in one office (especially in an
emerging market)
Opportunity for Dorsia patients of one country
to travel and be seen by clinicians/surgeons in
other countries, increasing a sense of ‘being
close to the patient’ for Dorsia overall
Greater complexity in operating Dorsia
franchises/managing resources, with each
market representing unique
challenges/opportunities (even in such an
arm’s length structure as Master Franchising)
Globally recognized brand increases brand
reputation for individual units throughout the
world
Worldwide platform from which to learn
about individual markets and potential to
launch additional Otsu brands
4

5. Markets Selected
5





After reviewing the international aesthetic market, the international- and country-level
franchising space, and the various regulatory, economic, socio-cultural and demographic
aspects of several key countries, the Consultant has identified five (5) markets for Dorsia to
consider its initial phase of expansion
While the top three (3) countries (US, Brazil, China), based on number of procedures,
represent strong competitive pressures, the cosmetic market in this countries promises strong
potential for Dorsia in the years ahead
Italy, as a sixth market, is included in select slides given previous discussion Otsu
management has held with potential Master Franchisee
South Korea was noted as the top market for cosmetic surgery in the world, with roughly
20% of Korean women said to undergo some form of surgery (notably eye cosmetic surgery)
Colombia, similar to its neighbors Brazil and Argentina, has shown strong growth in the
consumer class and a demonstrated desire for cosmetic procedures for aesthetic reasons
Source: Consultant research
5

6. Selected Markets and Perceptual Catch-all
$50
United States
$46
Want
GDP Per Capita (in $000, 2012)
$42
Germany
$38
Japan
France
United Kingdom
$34
$30
Italy
Spain
South
Korea
$26
$22
$18
Russia
$14
Need
Mexico
Turkey
$10
Brazil
Colombia
China
$6
$2
Should
India
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Rate of Cosmetic Procedures (per 1000 People, 2010)
Source: Consultant research, ISAPS Survey, 2010
6

7. Entry Methods for International Expansion of Brand
Recommended Approach to International Expansion
Primary
Secondary
Serendipity
Trade Missions
Brokers
U.S. Commercial
Service
United States
Brazil
China
Italy
South Korea
Columbia
Serendipity

Franchisee finds Dorsia listed on US industry trade publications or through general networking
Trade
Missions

Sponsored by groups such as the International Franchise Association, trade missions attempt to provide franchisors with
introductions to a number of qualified candidates in each country.
The franchisor is typically responsible for their own expenses (which can run upwards of $10,000), their own follow-up, and
their own negotiations.
Brokers





U.S.
Commercial
Service


Brokers work by promoting your franchise within a particular market, and will often employ a strategy of directly
contacting the best potential partners to determine their interest.
Generally, brokers will not ask the franchisor to visit the country until they have generated some serious interest, and
oftentimes, the candidates will visit you as a first step, thus minimizing your expenses.
More importantly, this direct contact approach will generally result in the best follow-up, as the broker will generally derive
the bulk of their compensation based on "success fees."
These fees generally range between 10% and 20% of the initial fee.
The U.S. Government is even available to assist companies in these endeavors through programs such as the Gold Key
program. After contacting the appropriate U.S. embassy and, for a modest fee, they will assist in researching the market and
identifying potential partners.
They will even set up meetings with these partners
Source: Consultant research, www.franchise-chatter.com
7

8. Preliminary Expansion Plan
HQ
2013
2014
2015
2016
2017
Potential Other
Areas
2013
2014
2015
2016
2017
New York City
Rio Di Janeiro
Belo Horizonte
Delhi
İzmir
Miami
Shanghai
Recife
Guangzhou
Yokohama
Los Angeles
Tokyo
Beijing
Hong Kong
Osaka
Sao Paulo
Mexico City
Mumbai
Medellin
Kaohsiung
Seoul
İstanbul
Bussan
Cali
Taichung
Bogota
Salt Lake City, UT
Taipei
Ankara
Shanghai
Source: Consultant research
8

9. Org Structure
Otsu Management
Dorsia
Dorsia
Americas
North
America
Canad
a
West
Europe
Dorsia
Europe
Dorsia
Asia
China
USA
HQ: NY
Eastern
Europe
Japan/Kore
a
North
Europe
Other
South
America
Country
HQ
Country
HQ
Country
HQ
Source: Consultant research
9

10. Steps Forward
 After reviewing the present Report, Dorsia management can decide which aspect to
develop, keep-on-hand or omit in further strategy development of its brand
 Critical is that the financial model is confirmed relevant and comparable with both
existing and planned Dorsia operations within Spain and internationally
 Following presentation of this Report, the Consultant is ready to work with Dorsia to
implement many of the strategic initiatives considered herein, notably:
Due Diligence:
 Contact and discuss with relevant industry and medical professionals (a list of
organizations in both cosmetic and franchising associations is included in the Appendix
with medical professionals in the corresponding excel sheet)
Master Franchise Charter:
 Framing of Dorsia’s core mission, philosophy and competitive advantages in each target
market in conference with area representatives
Go-to-Market strategy
 Further drill-down into selected countries in terms of market competition, industry
developments, a more granular country-to-country strategic plan (e.g., ‚Expanding into
China for a Master Franchisor: Dorsia‛), additional reach-out to key individuals not
considered herein
 Further development of the preliminarily crafted financial model built for this present
Report
Source: IFS’a 45th Annual Franchise Convention, Haynes and Boon, LP, Consultant research
10

11. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
11

12. Aesthetic Procedure Overview




Plastic Surgery includes the repair, reconstruction, or replacement of
physical defects of form or function involving the skin,
musculoskeletal system, cranio-maxillofacial structures, hand,
extremities, breast and trunk, and external genitalia or cosmetic
enhancement to these areas of the body
Cosmetic surgery is an essential component of plastic surgery where
the plastic surgeon uses cosmetic surgical procedures both to improve
overall appearance and to optimize the outcome of reconstructive
procedures
According to industry analysts, the cosmetic surgery market has
remained relatively stable over the last few years despite the global
recession, balanced by impressive growth in emerging markets and
slower growth in more developed countries, such as the US and
Europe
The rise of ‚medical tourism‛, or travelling to other countries for
medical procedures (cosmetic or otherwise) has vastly shifted the
landscape, with countries like Brazil, China and India becoming
principle medical tourism markets
Source: Consultant research, Frost & Sullivan
12

13. Principle Market Trends to Consider
Four principle trends in both the larger market and internal in Dorsia’s growth make now an
important and timely moment to expand
Demand for international brands


In both emerging and developed economies, there is a growing sense that international brands =
luxury or ‚the better life‛
Emerging classes tend to prefer international over domestic
Growth of Franchising and Master Franchising model




Master Franchising is recognized as a popular vehicle for brand expansion
Brands are quickly expanding abroad, capitalizing on rising discretionary incomes, internet (and
therefore awareness of global brands) and greater globalization ‘flattening’ the world
Of 7,500 master franchisees worldwide, 3,200 of franchisors offer master franchises throughout the
globe (and importantly, a legal, financial and cultural infrastructure)
Overseas, 80% of U.S. franchisor expansion is through master franchising
Growth in cosmetics and general body-orientation


Advance in cosmetic/surgical-related technologies, convergence of global health standards (e.g.,
breast augmentation) and general increase in patient knowledge and power have led to a boom in
cosmetic procedures over the last few years; a trend that is expected to continue across the globe
Demand for cosmetic surgeries has also increased over the years
Dorsia’s unique evolution

Know-how, capital, networks and overall corporate strategy have been proven in the Spanish market
Source: Consultant research
13

14. Major Trends | US | Media portrayal of cosmetic surgery
The show (set in Miami, and
then Los Angeles) began in
2003, and the series
concluded on March 3, 2010,
with the 100th episode.
The show had 45 award
nominations, winning a
Golden Globe and an Emmy.
Series creator Ryan Murphy
has said that the medical
cases on the show are "100
percent based on fact‛
Source: Consultant research
14

15. Major Trends | South Korea - Celebrity Status and Cultural Spread
‚In a country where plastic surgery is common place, measuring and weighing candidates at
interviews is practiced and pop stars are revered—it is not an understatement to say that
Koreans are image obsessed.‛
Source: Consultant research; From Blog post: That ‚Perfect‛ look: Image Obsession in Korea,
http://thethreewisemonkeys.com/2010/11/15/image-obsession-in-Korea/
15

16. Industry Drivers
Rise of emerging markets


Greater role played by emerging markets such as China and Brazil. Example for former: the Second World
Congress for Plastic Surgeons of Chinese Descent was held recently (October 29-31, 2010) in Taipei, Taiwan at the
Department of Plastic Surgery
In Brazil other local developments (e.g., 2014 FIFA World Cup) are boosting image of country as a major destination
Attractive Demographics

Females between the ages of 25-40 account for the largest group undergoing cosmetic surgery, an age bracket that is
increasing in emerging markets, while developed markets, such as the US and UK, have a greying population
which also fuels demand in total procedures, boosting youth and redefining the body to appear younger
Advance in technology

Movement toward digital health systems—at least in developed markets such as the US (as part of President Barack
Obama’s recent healthcare program overhaul)—can increase the efficiency and expediency of select procedures
Growth in non-surgical cosmetic procedures

Industry reports note that non-surgical procedures are increasing in volume faster than surgical (driven largely by
injectable and chemical peels), while surgical procedures are being driven by the development of Minimally
Invasive Surgeries
Increased focus on natural and global cosmetic regulatory structures

Regulation is being developed and refined across several international markets, notably in Europe and Asia (e.g.,
the CEN system is the European equivalent of ISO, a voluntary process where standard institutes of the
participating countries provide committees where all stakeholders discuss a specific topic
Source: Consultant research
16

17. Global Cosmetic Procedures | Number of Procedures and Surgeons Worldwide
Number of Procedures
Surgeons Worldwide
2 North America
4.6 million (25%)
8,042 (24%)
3 Europe
4.0 million (21%)
7,479 (23%)
4 South America
3.7 million (20%)
7,137 (22%)



5 Africa
320,000 (1.7%)
594 (1.8%)
1 Asia
5.9 million (32%)
9,512 (29%)
6 Oceania
166,000 (0.9%)
273 (0.8%)
Asia (essentially China) is the largest regional market in the world, with South Korea
accounting for the largest amount of procedures per Capita
Demographics in Asia, including a relatively young median age, rising discretionary incomes
and a shifting pro-beauty culture makes Asia a must for Dorsia expansion
North America (the United States) follows in terms as the largest national market in the
world, followed by Europe
Source: Consultant research
17

18. Global Cosmetic Procedures | Number of Surgical and Nonsurgical Procedures
Surgical Procedures
Lipoplasty,
23.0%
Other, 32.0%
Breast
augmentation,
15.9%
A bdominoplasty,
7.2%
Rhinoplasty,
10.4%
Blepharoplasty,
11.5%
Nonsurgical Procedures
Other, 19.4%
Botox Dysport,
33.8%
IPL Laser
Treatment, 6.4%
Laser hair
removal,
8.8%
Hyaluronic Acid,
22.5%
Autologous fat,
9.2%
Source: Consultant research, ISAPS Survey, 2010
18

19. Global Cosmetic Procedures | Surgical and Nonsurgical
Source: Consultant research, ISAPS Survey, 2010
19

20. Global Cosmetic Procedures | Top 25 Markets Ranked by Total Procedures
A recent survey by the
International Society of
Aesthetic Plastic Surgeons
(ISAPS) identified the top 25
markets for cosmetic surgical
and nonsurgical procedures
Based on their findings, the
United States, Brazil and
China are the three largest
markets in 2010, with Spain in
13th place, decreased from its
2009 ranking
Colombia made the largest
leap from 18th to 10th place
followed by Italy (13th to 7th)
From these 25, the Consultant
has selected 5 of the most
attractive markets based on a
number of strategic, economic
and demographic criteria
Italy is included based on
previous discussions with a
Master Franchisee
Source: Consultant research, ISAPS Survey, 2010
20

21. Global Cosmetic Procedures | Top 15 Markets, Total per 1,000 People
In terms of procedures performed per 1,000 People,
South Korea is by far the strongest market, with
roughly 7 people/1000 having some surgical procedure,
and over 8 people/1000 having a nonsurgical procedure
Italy ranks second in total amount of procedures per
1000 people (13.4) and Brazil a close second (13.1) with
the United States in fourth place (10.6)
For the majority of countries (save Colombia), the
amount of surgical to nonsurgical procedures
performed are roughly 50/50
Colombia’s surgical procedures is almost double its
nonsurgical
Source: Consultant research, ISAPS Survey, 2010
21

22. Global Cosmetic Procedures | Top 15 Countries, GDP Growth and Per Capita
GDP Per Capita is assumed within the present Report to correlate with market potential
The United States has the highest GDP Per Capita ($50,000) as well as the most amount of procedures
performed, though a medium growth in total GDP (PPP) of 4.5% forecasted to 2017
China, with a much lower GDP Per Capita ($9,000) but with a much greater growth rate (10.0%) represents a
highly attractive market
Spain can be categorized as having an medium-high GDP Per Capita but a low GDP (PPP) Growth Rate to 2017
of 2.4%
Source: Consultant research, ISAPS Survey, 2010
22

23. Currency Movement among Selected Countries against EUR (indexed to 52 weeks)
Source: http://www.oanda.com/currency/historical-rates/
23

24. Currency Movement among Selected Countries against USD (indexed to 52 weeks)
EUR/BRL: 2.5493
EUR/KRW: 1,482.35
1.2786
2,257.72
8.0703
Source: http://www.oanda.com/currency/historical-rates/
24

25. Risk and Opportunity Analysis
l
Source: Consultant research
25

26. Global Cosmetic Procedures | Surgical Procedures Among Six Markets
The United States has ~11x the amount of total surgical procedures as Spain; in terms of specific procedures, the
US and Brazil have ~45x and ~100x, respectively, the amount of Buttock augmentation as Spain; Top 10 and
Bottom 10 highlighted
Source: Consultant research, ISAPS Survey, 2010
26

27. Global Cosmetic Procedures | Non-Surgical Procedures Among Six Markets
The United States has ~11x the amount of total nonsurgical procedures as Spain; in terms of specific procedures,
Laser Assisted Lipoplasty occurs roughly 120 times for every 1 procedure completed in Spain. Boxtox is the
most frequent nonsurgical procedure in every market, save for Italy (where Hyaluronic Acid occurs slightly
more frequently; Top 10 and Bottom 10 highlighted
Source: Consultant research, ISAPS Survey, 2010
27

28. Global Cosmetic Procedures | Top 5 Procedures Among Six Markets
Source: Consultant research, ISAPS Survey, 2010
28

29. Average Surgeon’s Fees in Select Markets
Based on average surgeon’s
fees in five markets (based
on ISAPS data identified)
across five of the top surgical
procedures, fees charged by
surgeons in the US are
roughly 25% to 50% more
than the average figure,
while India is the reverse,
undercutting average fees by
-15% to -30%
Dorsia’s payment to surgeon
fees account for roughly 15%
of the total cost for the
procedure; considering the
average fee of Lipoplasty
(say, $2,321), one would
subtract hospital fees,
administration expenses and
other G&A to reach an
approximate figure paid out,
as profit, to surgeons in these
markets
Source: Consultant research, ISAPS Survey, 2010
Comparison
29

30. Future of Aesthetic Medicine
While many are in the "early stages" today, such technologies will become the norm over the
next 5-10 years; Additional breakthroughs in bioengineering and nanomedicine can lead to
yet-unimagined innovation in surgical and nonsurgical cosmetic procedures, alike
Item
Findings
Comments
Fat-reducing
Technologies
Several fat-reducing technologies have hit the market, such as UltraShape,
currently used in 57 countries and pursuing FDA approval, which uses highintensity focused ultrasound waves to penetrate the skin and break up fat
cells, and Zeltiq, a machine that uses intense cold to destroy fat cells. Such
treatments are powerful and completely non-invasive alternatives to
liposuction and other surgical procedures.
Controversial and has
proven to be not as
affective as advertised
At-home Laser
Removal
Laser-hair removal will be done at home, to be purchased at doctor's offices.
The device pinpoints small areas of skin with every treatment to gradually
improve discoloration and fine lines.
Innovation will lead to
greater acceptance of
cosmetic procedures
No Acid
needed
And in lieu of hyaluronic acid: "In a few years, we'll actually be able to use a
patient's own skin tissue as the basis for a custom-tailored filler that will
ideally last longer—with no possibility of allergy or rejection," says Ranella
Hirsch, MD, assistant clinical professor of dermatology at Boston University
School of Medicine.
Core improvement in the
sector
Rub-on Botox
A new gel is being developed containing botulinum toxin type A to penetrate
the skin topically to smooth wrinkles. The gel is applied, left on for 30
minutes, then wiped off. This rub-on Botox is expected to be available by
early 2013.
Potentially gamechanging innovation that
can disrupt prime revenue
generator for doctors
today
Source: Consultant research
30

31. Select Global Players
Allergan, Inc. is a multi-specialty health care company that develops and commercializes
pharmaceuticals, biologics, medical devices and over-the-counter products for the ophthalmic,
neurological, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention,
urological and other specialty markets globally.
Anika Therapeutics, Inc. develops, manufactures, and commercializes therapeutic products and
devices. The Company's products, based on hyaluronic acid, promote the repair, protection, and
healing of bone, cartilage, and soft tissue. Anika's products include ORTHOVISC and HYVISC
which treat osteoarthritis.
Merz Aesthetics is a division of Germany-based Merz Pharmaceuticals. Merz Aesthetics, with
headquarters in San Mateo, California, operates subsidiaries in 16 countries and cooperates with
more than 30 distributors worldwide. Founded in 1908 by Friedrich Merz, Merz introduced the
world‘s first anti-wrinkle treatment in 1953 after conducting extensive research on the effects of
revitalizing skin care essences.
Candela Corporation develops, manufactures, markets, and services lasers for a broad variety of
aesthetic and cosmetic procedures. The Company's products are used for hair removal, noninvasive treatment of varicose veins, removal of benign pigmented lesions, treatment of scars,
and skin resurfacing. Candela's products are sold primarily to dermatologists and plastic and
cosmetic surgeons
Cutera, Inc. develops and manufactures aesthetic laser systems. The Company markets the
CoolGlide family of products for removal of unwanted hair and treatment of vascular lesions.
Cutera markets the systems to dermatologists, plastic surgeons, and other practitioners
worldwide.
Cynosure Inc. develops and manufactures lasers for medical and aesthetic treatment
applications, including leg veins, hair removal, scar revision, port-wine birthmarks, facial spider
veins, stretch marks, tattoos, and pigmented lesions.
Source: Consultant research, Bloomberg, Company Materials
31

32. Select Global Players (cont’d)
DermaMed Solutions helps spa owners, dermatologists, plastic surgeons and other skincare and
medical professionals expand their practices to include additional services. Entrepreneur Roger
Parkin founded the company in 1998. Inspiration came when an aesthetician suggested he
develop a quieter microdermabrasion machine. The result was MegaPeel®. Besides being quieter
than similar devices, the company’s microdermabrasion system was smaller, was easier to use
and reduced troublesome vibrations.
Valeant Pharmaceuticals International, Inc. is a multinational specialty pharmaceutical company
that develops, manufactures and markets a broad range of pharmaceutical products primarily in
the areas of neurology, dermatology and branded generics in the United States, Canada, Latin
America, Eastern and Central Europe, Australia, South East Asia and South Africa.
ExcellaDerm Corporation manufactures microdermabrasion systems for the removal of the
dead skin cell layer on the surface of skin. Its microdermabrasion systems include M2000
Microdermabrasion systems for use by physicians and their clinical support staff to provide
smoothing, polishing, and planning of the skin; and B2000 Microdermabrasion and B280
Microdermabrasion systems for use by estheticians to provide smoothing and polishing of the
skin for their patients or clients
Genesis Biosystems is a certified ISO 13485 manufacturer of quality aesthetic and biomedical
products. The company stands behind its company’s product brands, customer support,
product warranty and service, and continually strive to produce new and innovative products
to meet the needs of its customers and the aesthetic industry.
Johnson & Johnson manufactures health care products and provides related services for the
consumer, pharmaceutical, and medical devices and diagnostics markets. The Company sells
products such as skin and hair care products, acetaminophen products, pharmaceuticals,
diagnostic equipment, and surgical equipment in countries located around the world.
Source: Consultant research, Bloomberg, Company Materials
32

33. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
33

34. Strategic Considerations
Based on the Ansoff Matrix, Dorsia has four (4) potential strategies to pursue; the main
objective of the present Report is to structure Strategy III: Market Development
34
Brands
Existing
Penetration
Product
Development
(new brands, Dorsia or
otherwise, e.g., Dorsia
Corner Clinics)
Existing
(more Dorsia clinics
within Spain)
New
Markets
I II
III IV
Market Development Diversification
(New markets)
New
(new brands for new
markets)
Source: IFS’a 45th Annual Franchise Convention, Haynes and Boon, LP, Consultant research
34

35. Topics for Dorsia to Consider
In the course of developing this Report, the Consultant found seven (7) main considerations
for Dorsia to keep in mind as it begins to expand globally
Dorsia Today
To Consider for Tomorrow
Marketing
Positioning
With word-of-mouth and promotional
activities serving as powerful mechanisms
for patient acquisition
6% may not be enough to echo Dorsia’s success
in other markets; marketing accounts for major
costs in market elsewhere
Perception
of Dorsia as
a Spanish
Brands
Dorsia maintains a certain advantage in its
‘home market’ by being a Spanish brand
found throughout the country and therefore
instantly recognized as ‘local’ by Spanish
customers. However, the local nature of the
Dorsia brand was not clearly a competitive
advantage (vs. customer acquisitions model,
pricing, etc.)
Ultimately, the attractiveness of the Dorsia
brand will be based on how it is positioned in
the market and how it stands compared to its
competitors. There was little evidence found
supporting the idea that a medical surgical
practice, as a Spanish brand, would be
discouraged in the market. (for example, in
China, specifically, however a recent Spanish
brand-centered forum noted an increased
interest for Spanish brands, though there it was
not clear if this was equal for all products)
Perceived
Competitive
Advantage
(i.e., close to
the Patient)
Either through a) personal consulting, b)
provision of complementary
services/products (e.g., nutritionist,
psychologist), c) monthly games/activities
(‚Cinderella‛ contests), d) larger market
plays (e.g., fashion shows), e) engaging IT
(e.g., mobile apps), etc.
May be difficult for either franchisees or Dorsia
headquarters to successfully or adequately
manage
Source: Consultant research, www.brandsofspain.com
35

36. Topics for Dorsia to Consider (cont’d)
In the course of developing this Report, the Consultant found seven (7) main considerations
for Dorsia to keep in mind as it begins to expand globally
Dorsia Today
To Consider for Tomorrow
Competitive
Edge
Spanish competitors unable to successfully
emulate Dorsia formula to link beauty with
confidence
Competitors in other markets may be more
nimble, or ‘responsible beauty’ mission less a
differentiator in other markets
Quality
Management
Strong emphasis on quality when selecting
franchisees
Critical to be replicated internationally for both
franchisees, or JV partners
Competitive
Pricing
In Spain, Dorsia has, on average, 10-20%
cheaper prices than principle competitors
Clinicas Londres and Corporacion
Demoestetica
Pricing power will differ based on market, and
in several markets higher pricing points may be
preferable (e.g., signaling quality)
Geography
Benefit of Mediterranean weather and
need/desire to show body
Although not specific to Dorsia, this cultural
and climactic factor is noteworthy, especially in
terms of other markets to consider for
expansion
Source: Consultant research
36

37. Market Positioning for Dorsia to Consider in Individual Markets
Depending on the market (competitive setting, GDP per Capita, socio-cultural trends, etc.),
Dorsia may need/want to shift its market positioning
Discussions with Otsu Management have revealed that the first two categories (‚Goddess‛
and ‚Working Women‛) are the desired markets
Motivation
Product
Place
Promotion
Price
Goddess
(all ages)
‚Just‛
Focus on surgical,
emphasize
‚specialness‛
Luxury stores,
high-priced malls
Premium
ads/marketing
Premium price
point (30% above
norm)
Working
Women
(30+)
‚Just for Me‛
Surgical + Nonsurgical,
comprehensive
Both residential
and corporate
settings
Combined with
corporate settings
(e.g., WSJ, etc.)
Medium-High
Soccer Mom
(30-40+)
‚Just for him and
me‛
Comprehensive,
emphasize
functionality
Accessible,
shopping malls,
residential areas
Internet, inserts,
holiday
promotions
Medium
Graduate
(21-30)
‚Just for the
world‛
Focus on surgical
(non-surgical as
complementary)
Accessible,
shopping malls,
residential areas
Focus on internet,
with partner ads
Medium
Student
(18-21)
‚Just because I
want (or to be
like ‘her’)‛
Focus on surgical (nonsurgical as
complementary)
Accessible,
shopping malls,
university areas
Focus on internet,
time with
academic seasons
Medium
37

38. Additional Market Expansion Considerations


Individual countries vary on their level of complexity, quality accreditation and optimal
38
market entry for Master Franchise arrangements.
The two principle entry methods suggested for international franchises are 1) brokers and 2)
leveraging 3rd party resources such as the US Commercial Service and 3) Trade Missions



In terms of ensuring medical qualifications, associations such as the International Society of Aesthetic
Plastic Surgeons (ISAPS) are key in either vetting surgeons or as central network to identify other
medical professionals in the country.
In terms of understanding the country's franchising situation, it is recommended to work with,
or otherwise access professionals associated with the International Franchising Association (IFA).
The following steps are recommended:
1
2
3
4
5
Leveraging the present Report, a dialogue should be initiated between the relevant representative of
each major country at the US Commercial Service, the ISAPS (e.g., several select doctors) and at the
IFA.
The Master Franchise Charter should be drafted by Dorsia noting a brief overview of Dorsia and why
Master Franchising is the strategy being pursued at this junction.
Where appropriate (e.g., China, Korea, Brazil) it is suggested that the Master Franchisee Charter be
translated to ensure smooth dialogue moving forward.
This dialogue with all representatives will be carefully documented and a go-to-market strategy
outlined in further detail, including the identification of local representatives most appropriate for
Dorsia's brand equity.
When/where appropriate, a fee structure (e.g., using third party brokerage or US Commercial
services), along with peripheral fees (e.g., travel, translation, printing) will be outlined and presented
to Dorsia management as part of the later stages of Phase 2: Due Diligence
•
Source: Consultant research
38

39. Status of Critical Elements for Expansion
Currently, Dorsia exhibits most to all of the principle elements needed for successful
international Master Franchising agreements
Commitment at the top
Strategy and Plan
Intranet
Competitive Advantage
Success at Home
Well-documented training,
support and marketing systems
System standards and reporting
processes
Market and competitor research
Trademarks and Other




Clear commitment shown

-
Completed but need further examination in new
markets (based on local regulations)
-
Present report, in process
Potential to purchase off-the-shelf software designed
specifically for medical sector
Based on market; needs clarification – Dorsia must
maintain clear differentiation
Strong growth over last several years, with 60 new units
expected by 2016
Need translation into English, etc.
To be completed once markets agreed upon and
identified (see Appendix for US players)
Registered internationally in select markets (e.g., Japan);
must register in new markets
Source: IFS’a 45th Annual Franchise Convention, Haynes and Boon, LP, Consultant research
39

40. Market Conditions Constraining Diffusion of Franchising in Emerging Markets
Academic, Anecdotal and an analysis of successful market entry strategies (of which
Master Franchising is considered a sub-category) yields the following six aspects to
consider for a successful expansion; below are selected items to consider
Geographical
Distance
Considered a fundamental element in the expansion of (US) international
franchising, noting that distances increases the costs of both monitoring and
logistical support
Cultural Distance
Differences between two cultures (both national and industry-wise) can have a
powerful effect on the success of a venture; that beauty is a culturallyconstrained
Uncertainty
Avoidance
Franchising is considered an optimal strategy as a way of mitigating
uncertainty for international players as locals leverage networks and know-how
in the market
Individualism
The degree of individualism within a society may impact the popularity and
spread of franchises
Political stability
Franchising works well when the political climate is both stable and unstable
Economic Market
Potential
40
Economic market potential here is equated with the country’s GDP, GDP per
Capita and population data as well as those cultural aspects which demonstrate
a sustained interest in cosmetic procedures
Source: Consultant research
40

41. Case Studies for International Brand Expansion
Measure
Political/
Economic
Company
Case
Hilton exited Iran as a result of revolution (1979)
Hotel bombed by terrorists in Indonesia (2003)
Legal/
Regulatory
Lengthy legal battle with Chinese joint venture partner
(2006-08)
Unfavorable lease agreement which led to withdrawal
from EU (1971)
Cultural
Distance
Experienced $1 billion pre-tax loss as a result of
misjudging German consumer and business culture.
Exited market after 9 years (2006)
Company accused of ‚cultural imperialism‛ (1993)
Market
Potential
Lose ‚first mover‛ advantage when German fitness
center copied concept and saturated market (2004)
Company unable to achieve profitability and exited
UK market (1991)
Source: E. Hachemi Aliouche and Udo A. Schlentrich, International Franchise Assessment Model: Entry and
Expansion in the European Union 3 Entrepren. Bus. L.J. 517 (2009)
41

42. Preliminary Expansion Plan
42
in 2012
Throughout Spain
New York City
HQ
2013
2014
2015
2016
2017
New York City
Rio Di Janeiro
Belo Horizonte
Delhi
İzmir
Miami
Shanghai
Recife
Guangzhou
Yokohama
Los Angeles
Tokyo
Beijing
Hong Kong
Osaka
Sao Paulo
Mexico City
Mumbai
Medellin
Kaohsiung
Seoul
İstanbul
Bussan
Cali
Taichung
Taipei
Ankara
Bogota
Source: Consultant research
42

43. Preliminary Expansion Plan
43
in 2013
Los Angeles
New York City
Miami
HQ
2013
Seoul
Shanghai
Bogota
Sao Paulo
2013
2014
2015
2016
2017
New York City
Miami
Los Angeles
Rio Di Janeiro
Shanghai
Tokyo
Belo Horizonte
Recife
Beijing
Delhi
Guangzhou
Hong Kong
İzmir
Yokohama
Osaka
Sao Paulo
Mexico City
Mumbai
Medellin
Kaohsiung
Seoul
İstanbul
Bussan
Cali
Taichung
Taipei
Ankara
Bogota
Shanghai
Source: Consultant research
43

44. Preliminary Expansion Plan
44
in 2014
Salt Lake City, UT
Istanbul
Tokyo
Mexico City
HQ
2013
2014
Rio Di Janeiro
2013
2014
2015
2016
2017
New York City
Rio Di Janeiro
Belo Horizonte
Delhi
İzmir
Miami
Shanghai
Recife
Guangzhou
Yokohama
Los Angeles
Tokyo
Beijing
Hong Kong
Osaka
Sao Paulo
Seoul
Bogota
Mexico City
İstanbul
Salt Lake City, UT
Mumbai
Bussan
Taipei
Medellin
Cali
Ankara
Kaohsiung
Taichung
Shanghai
Source: Consultant research
44

45. Preliminary Expansion Plan
45
in 2015
Beijing
Taipei
Mumbai
HQ
2013
2014
2015
Bussan
Recife
Belo Horizonte
2013
2014
2015
2016
2017
New York City
Rio Di Janeiro
Belo Horizonte
Delhi
İzmir
Miami
Shanghai
Recife
Guangzhou
Yokohama
Los Angeles
Tokyo
Beijing
Hong Kong
Osaka
Sao Paulo
Mexico City
Mumbai
Medellin
Kaohsiung
Seoul
İstanbul
Bussan
Cali
Taichung
Bogota
Salt Lake City, UT
Taipei
Ankara
Shanghai
Source: Consultant research
45

46. Preliminary Expansion Plan
46
in 2016
Ankara
Delhi
Guangzhou
HQ
2013
2014
2015
2016
Hong
Kong
Cali
Medellin
2013
2014
2015
2016
2017
New York City
Rio Di Janeiro
Belo Horizonte
Delhi
İzmir
Miami
Shanghai
Recife
Guangzhou
Yokohama
Los Angeles
Tokyo
Beijing
Hong Kong
Osaka
Sao Paulo
Mexico City
Mumbai
Medellin
Kaohsiung
Seoul
İstanbul
Bussan
Cali
Taichung
Bogota
Salt Lake City, UT
Taipei
Ankara
Shanghai
Source: Consultant research
46

47. Preliminary Expansion Plan
in 2017
Izmir
Taichung
HQ
2013
2014
2015
2016
2017
2013
2014
2015
Yokohama
Osaka
Kaohsiung
2016
2017
New York City
Rio Di Janeiro
Belo Horizonte
Delhi
İzmir
Miami
Shanghai
Recife
Guangzhou
Yokohama
Los Angeles
Tokyo
Beijing
Hong Kong
Osaka
Sao Paulo
Mexico City
Mumbai
Medellin
Kaohsiung
Seoul
İstanbul
Bussan
Cali
Taichung
Bogota
Salt Lake City, UT
Taipei
Ankara
Shanghai
Source: Consultant research
47

48. Preliminary Expansion Plan
Dubai
HQ
2013
2014
2015
2016
2017
Singapore
Other
Sydney
Melbourne
Johannesburg
2013
2014
2015
2016
2017
New York City
Rio Di Janeiro
Belo Horizonte
Delhi
İzmir
Miami
Shanghai
Recife
Guangzhou
Yokohama
Los Angeles
Tokyo
Beijing
Hong Kong
Osaka
Sao Paulo
Mexico City
Mumbai
Medellin
Kaohsiung
Seoul
İstanbul
Bussan
Cali
Taichung
Bogota
Salt Lake City, UT
Taipei
Ankara
Shanghai
Source: Consultant research
48

49. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
49

50. Org Structure
Otsu Management
Level 1
Existing
Structure
Dorsia
Otsu’s existing structure has Otsu as umbrella company for Dorsia and six other brands
Source: Consultant research
50

51. Org Structure
Existing
Structure
Otsu Management
Level 2
Dorsia
Dorsia
Americas
Dorsia
Europe
Dorsia
Asia
CrossRegional
Teams
As a global structure, cross-regional teams between Americas, Europe and Asia would serve as
powerful organizing divisions through to which to communicate franchisee concerns/comments
Source: Consultant research
51

52. Org Structure
Otsu Management
Level 3
Dorsia
Dorsia
Americas
North
America
Existing
Structure
West
Europe
Dorsia
Europe
Dorsia
Asia
CrossRegional
Teams
China
Regional
Divisions
Eastern
Europe
Japan/
Korea
North
Europe
Other
South
America
For each major Regional division, further regional breakdown should be provided to manage
individual markets
Source: Consultant research
52

53. Org Structure
Existing
Structure
Otsu Management
Level 4
Dorsia
Dorsia
Americas
North
America
Canad
a
West
Europe
Dorsia
Europe
Dorsia
Asia
China
Regional
Divisions
USA
HQ: NY
Eastern
Europe
Japan/
Korea
Franchisee
Country
Level
South
America
Country
HQ
Country
HQ
CrossRegional
Teams
Country
HQ
North
Europe
Other
The franchisee will be selected per country, with each regional head (e.g., North
America) covering individual country franchisees
Source: Consultant research
53

54. Org Structure
Otsu Management
Level 5
Dorsia
Dorsia
Americas
North
America
Canad
a
West
Europe
Dorsia
Europe
Dorsia
Asia
Regional
Divisions
Eastern
Europe
Japan/
Korea
Franchisee
Country
Level
South
America
Country
HQ
CrossRegional
Teams
China
USA
HQ: NY
Country
HQ
Existing
Structure
Country
HQ
North
Europe
Other
Franchisee
Locations
Overall number of franchisees depend on success of individual franchisee signing Master
Franchisee Agreements
Source: Consultant research
54

55. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
55

56. Spanish Franchise Footprint in Emerging Markets
There are currently 63 Spanish franchisors with over 2,800 franchisee outlets operating across
various emerging markets
Among 6 countries selected in this Report,
China and Brazil represent largest multiple
Source: Verónica Baena, (2012),"Market conditions driving international franchising in emerging markets",
International Journal of Emerging Markets, Vol. 7 Iss: 1 pp. 49 - 71
56

57. Expansion Model
The present model takes a market-driven
approach, with the total market
(population) and addressable market
(female population between 25-40 years of
age) and assumes a rough figure of a)
patients per clinic, b) total number of
clinics, and finally c) total revenue per
clinic, all based on historical performance
by Dorsia in the Spanish market
Source: Consultant research
57

58. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
58

59. Dorsia Overview
Source: Consultant research
59

60. Dorsia Snapshot
60
Dorsia Snapshot




Operating under the slogan ‘Responsible Beauty’, which can be understood as
the combination of ‘health and natural results’, Dorsia Clinics consist of top
aesthetic doctors, plastic surgeons, endoscopic surgeons and dermatologists in
23 clinics across Spain
Dorsia Clinics is held by Otsu, considered a ‚‘company of companies’, and
specializing in the creation and development of projects through the
identification of an area of opportunity, with whom [Otsu] identifies in its
genesis, vision and values‛
Dorsia Clinics is considered the 2nd largest operator in Europe and 3rd largest in
Spain
Formed in 2002, Dorsia Clinics is dedicated to resolve any aesthetic concern on
a global level by means of surgery and personalized medical-aesthetic
treatments that combine its effectiveness with a consistent follow-up.
Dorsia’s Expansion



Dorsia is in the process of launching a new, innovative format called ‘Breast
Corner‛
With 23 Dorsia Clinics opened currently, Management projects an additional 60
Dorsia Clinics to be opened by 2016
History and forecasted expansion of the Dorsia brand are discussed further in
the Appendix
Source: Consultant research
60

61. SWOT Analysis of Dorsia Clinics
Strengths
Weaknesses











Early and maintained awareness of holistic beauty
(mind and body as linked)
Investment in its people!
Proven business model (approach, marketing, etc.)
Multi-format model (franchisee, owned units)
Entrepreneurial (unique in Spain)
Focused demographic (women between 25-40)
Careful growth (based on acquisition of qualified
franchisees)
Strong consumer engagement (‚Cinderella‛)
Engagement with customers, including surveys, etc.
Strong word-of-mouth advertising



61
Unique vis-a-vis non-adaptive competitors; not so
in other markets where competitors may be more
nibble (flexible in business model) and better
financed
Individuals wearing too many hats at present
stage for international expansion
Principle vision dependent on concept that
beauty is linked with external form, which may,
to a degree, be culturally dependent prime
concern is that Dorsia mission may not be as
robust in other markets
IT System not currently scalable
Opportunities
Threats












Dorsia product (skin care, clothing, etc.)
Private equity as vehicle for financing/increasing Dorsia
scope
Medical tourism in Spain
Partnerships with academia, products, etc.)
Strengthen organizational statistics
Breast cancer reconstruction
Identify additional synergies between Otsu divisions
Quality control department based on training, follow-up –
consider more automatic IT ‘red flags’
International partnerships with soaps, cosmetics
Men! Or at least segue to minor investment (1%-5%) – may
be more profitable in other markets (e.g., Asia)
Greater cross-pollination possible
Source: Consultant research




Relevance of Dorsia Model (to maintain
competitive advantage)
Local and global competitors
Reputational loss
Opportunity costs
Shifting legislation in emerging markets (in terms
of Dorsia’s international expansion)
61

62. IT Considerations
Currently, the one major constraint for Dorsia to seamlessly (and successfully) expand
internationally is lack of a proper IT infrastructure
‚Dotsu‛ was considered previously as a comprehensive IT architecture to assist Otsu
in adding franchisees and coordinating activity between its many clinics (both
franchise and owned); additional Otsu subsidiaries/franchises can be added as
appropriate
There are four (4) critical elements needed for Dorsia’s IT systems:
1. Scalable – the ability to easily add new franchisees/clinics to the system, along
with, at a later date, third party off-the-shelf systems used by Otsu divisions
(e.g., Yoogle, Quick Gold, etc.)
2. Analytics – the ability for a back-office analytic system to better understand
customer experience, local, regional and global trends, user experience with
different Dorsia elements (web, Dorsia Breast, etc.) and potentially predict
challenges in the market (e.g., with multivariable analysis)
3. Flexible – the ability to add/delete/modify procedures and related information
during course of procedural evolution in individual clinics
4. ROI – the Dotsu system was predicted to have 3-5 year ROI – no systems with
longer ROIs should be considered
Source: Consultant research
62

63. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
63

64. What is a Master Franchise
Q: How successful is international master franchising?
A: 30% want to buy another master franchises
Master Franchising is a commonly used way to grow beyond one’s
home territory, whether within a country, or to another country.








Relatively low-cost expansion vehicle
Individual units can provide bottoms-up intelligence for
head office
Less dependent on the US market
New sources of initial fees, royalties and product sales
Increases brand value for all stakeholders
New platform for business growth
Sustainable, incremental and diversified
Leverages your existing intellectual property and
resources
Strength




64
Reliance on identifying quality Master
Franchisees or partners
Cost dynamics differ per region
Transaction costs—both initial and ongoing—may run high based on market
HQ required for each market
Weakness
Opportunity Threats




Learn about local market and translate into
knowledge into further international strategy
Potential for second brand launching if gaps in foreign
markets are identified
Potential synergy with partner/franchisee’s local
networks in other areas (esp. key for Otsu)
Opportunities to expand in selected cities and leverage
partner’s local networks
Source: Consultant research



Increasing global and local competition
Shifting regulatory structures in emerging
markets
Potentially expensive legal battles
64

65. Options to Expand Internationally – Franchise Matrix
Less
Master
Franchising /
Regional
Licensing
Investment
Joint Venture
(direct
franchising)
Area License
Direct Franchise
More
Direct
Investment
More
Control
Source: IFS’a 45th Annual Franchise Convention, Haynes and Boon, LP
Less
65

66. Potential Structures for Franchising
Typical for: Large multinationals (McDonalds, KFC)
to ensure effective control over product quality and
company operations
Offshore Franchise Retail Model
Typical for: Small and Medium-sized franchisors to
leverage local knowledge, networks
Direct Franchising via Local Franchisee
China
The Athlete’s Foot, Inc.
(Franchisor)
Foreign Investor
Chinese JV Partner
Lease Payment
Fixed Payment
Branch
Store
Offshore Investment
Vehicle
Equity JV
Cooperation JV
Branch
Store
Branch
Store
Technology Service Fees
Trademark Licensing Fees
Management Services Fees
Branch
Store
Branch
Store
Franchise Agreement
(Trademark License Contract,
Management Service
Contract)
Royalty and Service
Payment
RetailCo. China Holdings
(Franchisee)
Corporate
Store
Corporate
Store
Corporate
Store
Branch
Store
SubFranchisees
Branch
Store
Source: Fraser Medel, ‚Legal Issues Related to Franchising in China,‛ Franchising in China, Nov. 2003
Global Franchising Operations Management: Cases in International and Emerging Markets Operations
Branch
Store
66

67. Typical Master Franchise Owner
Area Developer
Sub-franchises
Master Franchisee
The area development agreement is one
of the most popular ways to create
multi-unit franchises.
Sub franchising occurs when a
franchisor grants an individual or group
the right to franchise the franchisor's
business in a specific territory for a set
period of time. The franchisor may
reserve final approval of the selected sub
franchisee, the actual operator/owner,
and thereafter the sub franchisor has
total control over the relationship.
Commonly used when franchisors
franchise internationally.
The development agreement allows the
franchisee (developer) to develop and
operate multiple units in a given specific
area. This right is generally accompanied
by obligations to create and establish a
specific number of franchises in the
designated territory over a given period
of time.
The franchisee generally will develop
the territory as fast as possible and is
often required to develop at least one
franchise unit per year in the specific
territory.
The sub franchisor may even use its own
franchise agreement and assumes all
obligations such as training and field
support services to all sub franchisees.
This method of franchising is finding
disfavor with many franchisors because
of the added complexity and legal
liabilities which the franchisor still
retains because the use of trademarks
and trade names related to the franchise
organization.
Source: http://www.bus.lsu.edu
The individual or entity known as the
"master franchisee" is generally granted
the rights within a prescribed territory
and for a specific period of time to solicit
prospective franchisees. The franchisor
directly enters into a unit franchise
agreement with many the prospective
franchisees that it approves.
However, in foreign countries, the
master franchisee will be responsible for
the solicitation and signing of each
franchisee and will generally provide the
training and other services to the
franchisee and usually receives a
percentage of the franchise fees paid to
the franchisor. A master franchisee also
has the right to develop and operate
franchise units within the territory
assigned.
67

68. Initial Costs of a Master Franchise






International legal documents
Manuals
Marketing and promotion programs
Sales
Material preparation
Sales commissions and travel expense






Agreement/disclosure pre
Negotiation of master franchising
agreements
Franchise registration
Local government approval
Trademark registration
Candidate due diligence
Translation
Costs



Unit agreements
Advertising and marketing
Manuals



Recruiting materials
Equipment
Operating procedures
Assistance/Su
pport Costs


On- and off-site training
Pre-opening assistance (e.g., franchise
recruiting and selling)

Supply and inventory sourcing and
approval
Opportunity
Costs

Use of staff/finances which may be
more productive elsewhere

Exclusive commitment to performance
targets of selected market franchise
Goodwill

Value above fair market value of
services and products provided to
master franchisee
Usually reflected in franchise
trademarks and service marks

Measure by reference to: a) Franchise
fees paid in domestic market, b)
Franchise fees paid in international
markets and c) Franchise fees charged
by competitors in local market
Transaction
Costs

Source: IFS’a 45th Annual Franchise Convention, Haynes and Boon, LP
68

69. Typical Master Franchise Structure
Master Franchisor
Master
Franchisee
Master
Franchisee
1. Open locations
2. Manage brand
1. Open locations
2. Manage brand
Master
Franchisee
1. Open locations
2. Manage brand
I. Sales
 Identifies additional master
franchisees
II. Operations
 Supports master franchisees
 Manages the office
 Billing/account management for
Master franchisees
 Relevant administration
Country-level
Individual
Franchisees
Source: Consultant research
69

70. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
70

71. Select Country Overview | United States
The US has the largest and most technologically
powerful economy in the world, with a per capita
GDP of $47,200. In this market-oriented economy,
private individuals and business firms make most
of the decisions, and the federal and state
governments buy needed goods and services
predominantly in the private marketplace.
US business firms enjoy greater flexibility than their
counterparts in Western Europe and Japan in
decisions to expand capital plant, to lay off surplus
workers, and to develop new products. At the same
time, they face higher barriers to enter their rivals'
home markets than foreign firms face entering US
markets.
US’s 2012 GDP is estimated at $15.6 bn. with 2012’17 CAGR hitting 4.5% with an inflation rate of
2.2%. The US is ranked 4 out of 183 countries in the
World Bank Group’s Ease of Doing Business
Ranking due to corruption and government
regulations on business.
Source: Consultant research
71

72. Select Country Overview | United States | Cosmetic
Undoubtedly the largest market on several terms, there will also be HQ of Otsu from which to 72
oversee MF for both US and South America. Cosmetic surgery paid out-of-pocket and several
cities are body-oriented (L.A., Miami) or notably affluent (NY). Demand continues to rise as
the country slowly makes its way out of economic hardship.
Drivers




Demand for body-contouring given high rates of obesity
Television talk shows, reality shows, and online resources
are additionally enhancing public awareness
Celebrities, and cosmetic surgeons and clinics, also stand
as strong factors fueling the procedural volumes
Increased product availability, strong marketing efforts,
value-for-money, more FDA approvals, and expanding
consumer interest and awareness will boost injectable
market
Constraints
 Cost of treatments 30-50% higher depending on
surgery and country compared to
 Greater international mobility of Americans
Source: Consultant research
72

73. Select Country Overview | Brazil
Considered as among the top destinations in
medical tourism (esp. Sao Paulo, Brazil's center
for technological breakthroughs in field of
medical technology and research). Brazilians
have long seen beauty and bodily aspirations as a
right. Known for affordable, safe and innovative
healthcare, Brazil is a must for Dorsia's
expansion.
Its main trade partners are the US, Argentina,
China, Germany, Netherlands, and Nigeria. Its
primary imports are machinery, electrical and
transport equipment, chemical products, oil, and
automotive parts. Exports consist of transport
equipment, iron ore, soybeans, footwear, coffee,
and autos.
Brazil’s 2012 GDP is estimated at $2.4 bn. with
2012-’17 CAGR hitting 5.5% with an inflation rate
of 5.6%. Brazil ranked 126 out of 183 countries in
the World Bank Group’s Ease of Doing Business
Ranking due to corruption and government
regulations on business.
Source: Consultant research
73

74. Select Country Overview | Brazil | Cosmetic
The bulk of plastic and cosmetic surgery clinics are located in the cities of Rio de Janeiro, São
Paulo and Recife and, in fact, Recife is known as the plastic surgery capital in the world and
the most popular city in the north east.
74
Clinics are also now cropping up in other parts of the country, for example, in Fortaleza in the
north east where clinics offer cosmetic surgery at slightly lower prices than in Rio and São
Paolo.
Drivers
 Latin America seen as top market for cosmetic
surgery
 Continued good exchange rate against US
 Beauty seen as a right, not luxury; perception seen
that "surgery improves a woman’s auto-estima”
Constraints
 Public hospitals are poorly funded
Perception by some about quality, give poor status of
Brazil (quality considered top decision factor in
medical tourism)
 Potential for reputational lost
Source: Consultant research
74

75. Select Country Overview | China
China has gone through major economic reforms
in the past 30 years in order to compete better on a
global scale. These reforms have allowed for a
rapidly growing Chinese economy which is now
the second-largest in the world based on GDP.
Its primary imports are electrical and other
machinery, oil and mineral fuels, and optical and
medical equipment. Exports consist of electrical
and other machinery including data processing
equipment, along with apparel, textiles, iron and
steel.
China’s 2012 GDP is estimated at $12.4 bn. with
2012-’17 CAGR hitting 10.3% with an inflation
rate of 4.2%. China ranked 91 out of 183 countries
in the World Bank Group’s Ease of Doing
Business Ranking mostly due to government
regulations on business.
Source: Consultant research
75

76. Select Country Overview | China | Cosmetic
No official figures exist, but the International Society of Aesthetic Plastic Surgery estimated in 76
2009 that China ranked third, behind the United States and Brazil, with more than two million
operations annually.
Cosmetic surgery was only introduced in Beijing in 1994, and the market has evolved
considerably since then. Beijing's China-Japan Friendship Hospital sees a total of 20 to 30,000
people in their plastic surgery department every year, according to department director Dr.
Ma Haihuan. The numbers have been steadily increasing over the past few years.
Drivers
 Rising consumer class and beauty connected with greater
social mobility
 Age not tied with demand; e.g., largest operation is with the
eyes, so age market is much wider vs. 25-40 years of age
 Beauty salons (pedicures, manicures, etc.) offering Botox and
eyelid surgery
Constraints
 Concerns with quality
 Regulatory system seen as not keeping up
 Nor has health standards kept up with demand: celebrity
‚Super Girl‛ died after her windpipe filled with blood
during an operation to reshape her jaw in Hubei Province
 Flow of Chinese patients to South Korea
Source: Consultant research
76

77. Select Country Overview | Italy
Italy has a diversified economy well divided
between the more strongly developed north and
the less developed south where unemployment is
much higher.
Its economy is dominated by trade and
manufacture of high quality consumer goods.
Italy’s main trade partners are Germany, France,
Spain, UK, US, Belgium, Netherlands, and China.
Its primary imports are engineering products,
chemicals, transport equipment, energy products,
textiles and clothing, and food, beverages, and
tobacco. Exports include engineering products,
textiles and clothing, production machinery, motor
vehicles, transport equipment, chemicals, and food,
beverages, and tobacco.
Italy’s GDP in 2012 was $1.8 bn. And 2012-’7 CAGR
is estimated to be 1.9% with inflation rate of over
3.0% Italy ranked 87 out of 183 countries in the
World Bank Group’s Ease of Doing Business
Ranking.
Source: Consultant research
77

78. Select Country Overview | Italy | Cosmetic
Italy is a highly recommended destination for having plastic surgery abroad. The cosmetic
surgery industry in Italy is well developed and tightly regulated. Italy boasts some of the
finest medical professionals in the world, many of whom work in the cosmetic surgery sector.
The majority of private clinics are of a high standard and prices are very competitive,
especially vis-à-vis the UK.
78
Membership with the Italian Society of Cosmetic Medicine and Surgery is another good
indication of quality. The Italian Ministry of Health oversees and assesses all clinics and
hospitals in Italy, keeping a close eye on the plastic surgery industry.
Drivers
 Combination of "surgery and vacation"
 Competitive pricing against other European
countries
 General European focus on beauty
Constraints
 Recent macroeconomic challenges represents
constraint on surgical demand
 Perception of cost (on par with Europe) and quality
(less than US) may impact willingness to see Italy as
attractive market
Source: Consultant research
78

79. Select Country Overview | South Korea
South Korea has gone through an amazing period
of economic growth since the Korean War in the
1950s. It is now comparable to some of the largest
economies in the world with a GDP of more than
one trillion and is becoming a more attractive area
for foreign investment.
Its main trade partners are China, Japan, the US,
Hong Kong, and Saudi Arabia. Its primary imports
are machinery, electronics and electronic
equipment, oil, steel, transport equipment, organic
chemicals, and plastics. Exports consist of
semiconductors, wireless telecommunications
equipment, motor vehicles, computers, steel, ships,
and petrochemicals.
South Korea’s GDP is over $1.6 bn and 2012-’17
CAGR estimated to be 5.5% an inflation rate of
2.9%. The country is ranked 8 out of 183 countries
in the World Bank Group’s Ease of Doing Business
Ranking.
Source: Consultant research
79

80. Select Country Overview | South Korea | Cosmetic
The plastic surgery industry has stormed Asia, and South Korea has the continent's biggest
clientele. The Economist first reported that a 2009 survey by a market-research firm known as
Trend Monitor found that about one in five women from Seoul have undergone some sort of
plastic surgery.
80
The International Society of Aesthetic Plastic Surgery says per capita, South Korea leads the
way with 20 percent of women in Seoul aged between 19 and 49 undergoing the knife.
Drivers
 Korean pop sensations (Goo Hara from hit girl group
KARA) noting their cosmetic surgery
 Flow of Chinese patients from China
 More Korean teens having surgery
 Parents have powerful influence on children
Constraints
 Cultural concerns over obsession with cosmetic
surgery
 China as competitive market capturing medical
tourists
Source: Consultant research
80

81. Select Country Overview | Colombia
Colombia’s economy has experienced a period of
accelerated growth since a 2002 with an average of
7% annual growth. Since 2002, unemployment
has reduced by 25% and poverty has been cut by
20%.
Its main trade partners are the US, Venezuela,
China, Mexico, Brazil, and Ecuador. Its primary
imports are industrial equipment, transportation
equipment, consumer goods, chemicals, paper
products, fuels, and electricity. Exports consist of
petroleum, coffee, coal, nickel, emeralds, apparel,
bananas, and cut flowers.
Colombia’s GDP in 2012 was $500 million with a
2011-’17 CAGR forecasted to be 6.2% with an
inflation rate of 3.3%. Colombia ranked 42nd out of
183 countries in the World Bank Group’s Ease of
Doing Business Ranking.
Source: Consultant research
81

82. Select Country Overview | Colombia | Cosmetic
Colombia has become a hot spot for cosmetic tourism, becoming more popular (i.e., currently
experiencing a tourism boom, with 3% believed to arrive for cosmetic procedures) along with
higher demand for its competitive pricing. Quality of Colombian medicine is perceived as
high. Other major cities, such as Cali and Medellin, are also becoming strong destination
spots outside of Bogota.
82
The news that Argentine soccer star, Diego Maradona, who had become obese, underwent a
successful stomach-stapling surgery in Cartagena, helped further boost interest in the country
as a place for cosmetic surgeries.
Drivers
 Combination of "surgery and vacation"
 Latin America seen as leader in cosmetic surgery
Constraints
 In terms of local demand, poverty and relative poor
nature impacts infrastructure and quality assurance
for doctors
Source: Consultant research
82

83. Table of Contents
Report Overview
3
Global Aesthetic Procedure Market Overview
12
Master Franchise Expansion
34
Organizational Structure
50
Dorsia Financials
56
Appendix
63
What is Dorsia
What is Master Franchising
Selected Market Overview
Relevant Contacts
83

84. Key Contacts Per Country
Country
Cosmetic
Franchising
Other
United
States
International Society of
Aesthetic Plastic Surgery
(0)1-603-643-2325
http://www.isaps.org/
International Franchise Association
1501 K Street, Suite 350
Washington, D.C., 20005
Phone: (202) 628-8000
www.franchise.org
U.S. Commercial Service
Deputy Senior Commercial
Officer: Scott Shaw
(Scott.Shaw@trade.gov)
Phone: 011-55- 11-5186-7191;
Rua Thomas Deloney, 381
Chacara Santo Antonio 04710-041
American Society of Plastic
Surgeons
Plastic Surgery Foundation
847-228-9900
http://www.plasticsurgery.org
Brazil
Brazilian Hospital Medical
Quality Organization
São Paulo Albert Einstein
Hospital
The Brazilian Medical
Association
China
Evercare
http://www.evercare.com.cn
Cosmetic Association of China
Beijing's China-Japan
Friendship Hospital
American Franchisee Association
Telephone: 312-431-0545
http://www.franchisee.org/
Brazilian Franchising Association
Ricardo Bomeny, Chairman
Ricardo Camargo, Executive
Director
São Paulo
Phone: +55 11 3814-4200
www.abf.com.br
U.S. Commercial Service Rio de
Janeiro
Principal Commercial Officer:
Alan Long (Alan.Long@trade.gov)
Ph: 011-55-21-3823- 2000;
Presidente Wilson, 147, 4o Andar
20030-020 Rio de Janeiro, RJ
China Chain Store & Franchise
Association (CCFA)
Guo Geping, President
Lucy Wu Rui Ling, Vice Secretary
General
lucywu@ccfa.org.cn
www.ccfa.org.cn
U.S. Department of Commerce
International Trade
Administration Office of China
Economic Area
14th & Constitution Avenue
Washington, D.C. 20230
Tel: (202) 482-3583
84

85. Key Contacts Per Country (cont’d)
Country
Cosmetic
Franchising
Other
Italy
Italian Society of Cosmetic
Medicine and Surgery (SIES)
http://www.sies.net/
Italian Franchise Association (AIF)
Graziano Fiorelli, Chairman
Italo Bussoli, Secretary General
www.assofranchising.it
assofranchising@assofranchising.it
U.S. Embassy
Thomas Moore, Minister
Counselor for Commercial Affairs
Via V. Veneto, 119/A, 00187 Rome,
Italy Tel.: +39-06-4674-2202
Rome.Office.Box@mail.doc.gov
Korean Society of Plastic and
Reconstructive Surgeons
(KSPRS)
Http://www.plasticsurgery.or.kr/
php/eng/s01_02.php
South Korean Franchise
Association
Hyosan B/D 3F
57-80, Gui-2Dong, Kwangjin-Gu
Seoul, 143-202
Phone: (82-2) 447-6094
www.ikfa.or.kr
The American Chamber of
Commerce in Korea
http://www.amchamkorea.org/
Colombian Society of Aesthetic
Plastic Surgery
Columbian Franchise Association
Apartado Aereo 25200
Cali
Phone: +57 2 330-7827
Colombian-American Chamber
of Commerce:
www.amchamcolombia.com.co
Council of American Companies
(CEA):
http://www.ceacolombia.com/es/
The European Association of
Societies of Aesthetic Plastic
Surgery
http://www.easaps.org/
Italian Society of Plastic and
Reconstructive Surgery
http://www.sicpre.it/
South
Korea
Colombia
Colombian Association of
Hospitals and Clinics:
www.achc.org.co
Doctors of Cosmetic Surgery in
Bogota
www.1stchoicecosmetic.com/doc
tors.html
Association of American State
Offices in Korea
http://www.asok.or.kr
85

86. ¡Muchas Gracias!
86