Solana Medspas is out of business?

Seems that Solana Medspas site is down. I've received two emails this morning asking if they've gone out of business and this comment on a Solana discussion thread in the forums:

"Well it looks like Buckingham and company can't hurt anyone else. The website is down and they are nowhere to be found. Hey, Over It...the truth hurts. Are you sure you aren't a Solana Owner in denial or just covering your rear end? Between the University of Arizona charges, Brooks College 60 Minutes expose and firing, Health West fiasco and connections, continuing client failures, deadbeat dad website stating a failure to pay tens of thousands in child support to his ex-wife (which was the final straw on why we didn't contract with Solana), etc... Wake up everyone associated or affiliated with Buckingham. it is time you recognize him for who he is before he hurts more people."

 I don't know why the Solana Medspas site is down but it can't be a good sign. (The first time you load the page you may see a little 'Solana Medspas Logo' flicker for just a second before you're redirected to the under construction page. This is usually a sign that the ISP has suspended the account.

Dermacare sues everyone on Medical Spa MD?

It appears that Dermacare has thrown in the towell regarding it reputation.

I received this email from Dermacare and it's CEO Carl Mudd regarding a suit that Dermacare has filed. Since this is the first contact I've ever had with Dermacare, I'm a little surprised. It makes me wonder what's been going on on that Dermacare thread that has 700 comments. 

Rather than engage in a back and forth or aim for clarity, which is what I would have recommended, or complaining to me that some of the remarks have crossed a line, (I have actually taken down many comments if they contain profanity directed at any specific individual.), Dermacare and it's CEO Carl Mudd have actually gone and filed suit. (I also received a PDF of the suit naming multiple John and Jane Does.)

Here's the email: 

VIA E-MAIL AND U.S. MAIL

Jeff Barson
(I've removed my address here)

                Re:         DLC Dermacare, LLC v. John and Jane Does – CV2008-090071

Dear Mr. Barson:

My office represents DLC Dermacare, LLC (“Dermacare”) and its CEO Carl Mudd.  I am writing in regards to the blog that you host located at www.medicalspamd.com .  As you know, you have allowed numerous persons to post information related Dermacare and about Mr. Mudd personally on your site.  The information posted is overwhelming incorrect and has served as a discussion board for Dermacare franchisees to not only discourage potential franchisees from partnering with Dermacare but to also promote the breaching of current franchisee agreements held by many of the bloggers on your site.

The comments that you have allowed to be posted on your site have evolved from mere discussions/complaints into actionable claims against the bloggers and possibly even you personally.  Pursuant to our filing the above referenced complaint we are now seeking the Internet Protocol (IP) address and the Internet Service Provider (ISP) for each of the following bloggers on your site:

• Dermadoc
• Mr. Bob
• Just Another Ex
• Passive Conduit
• Pm
• Jennifer D
• Pengy
• Mr. Freeze
• Bastard Son of Dermadoc
• GH
• Maxwell Smart
• The Clinician
• The Real M. Smart
• John Galt
• George
• Max
• XYZAL
• Christmas
• Maxwell’s Silver Hammer
• The Passive Conduit
• The Riddler & The Joker
• DoubleDermadare You
• Mad Max
• Manic Max
• Mad as Hell in Dermacare Hell
• A current Franchisee
• FreeTheDerm@ yahoo.com
• WPS
• Insider
• Thomas Jefferson, Jr
• TF
• T. Jefferson, Jr.
• The Joker
• Curious
• Mr. X

Please provide the IP address and ISP for each of the above names no later than Friday, January 18^th, 2008.  Should you not provide the requested IP addresses and ISP by this date I will be forced to have you served with a subpoena to obtain this information.  I have included a copy of the lawsuit that was filed in this matter for your files.  If you have comments or questions please direct them to my office.

                  Sincerely,

John N. Skiba

One North Macdonald Road, Suite 201
Mesa, Arizona 85201
Tel. 480.361.5643
Fax 480.704.3071
www.skibalaw.com

You can download the actual PDF of the Suit here.

I wasn't asked to keep any of this confidential so here it is. 

 

So what's Dermacare and Carl Mudd doing?

This is what is know as a CyberSLAPP suite. Basically it's a way of intimidating critics by threatening to find out their identity and hit them with some kind of suit. (read below)

You'll notice that Dermacare and Carl Mudd are demanding that I turn over everyones ISP. For those of you who are not that technically savvy, ISP = Internet Service Provider, which I have absolutely no way of knowing anyway as far as I can tell. The IP address is different. That's a unique identifier and could be used to find out who someone is.

These kinds of suits have become increasingly common as a way of combating free speech on the internet. It used to be that if someone said something unkind, it didn't matter that much since only a few people would hear about it. The net changed all of that and now someone who's unhappy with you or your business can be found by everyone so those whe illicit a lot of negative comments tend to have a rougher go of it.

My guess is that this is intended to intimidate those who may comment in a negative way about Dermacare or Mr. Mudd, and to find out who everyone is. While anonymous speech is protected by the constitution, its still unnerving to have someone you've been talking about know exactly who you are, especially if you're in some kind of business relationship. By filing a real suit against 'everyone' in the form of John and Jane Does, it allows him to issue a legal subpoena to get information. (It's basically a cynical way of using the courts which is why some states like California have laws specifically against this.)

Here are some links about these kinds of CyberSlapp suits and where the law comes down on free speech and other issues around this:

Chilling Effects Clearinghouse: A joint project of the Electronic Frontier Foundation and Harvard, Stanford, Berkeley, University of San Francisco, University of Maine, George Washington School of Law, and Santa Clara University School of Law clinics.

Do you know your online rights? Have you received a letter asking you to remove information from a Web site or to stop engaging in an activity? Are you concerned about liability for information that someone else posted to your online forum? If so, this site is for you.

Defamation
The law of defamation balances two important, and sometimes competing, rights: the right to engage in free speech and the right to be free from untrue attacks on reputation. In practice, the filing or even the threat to file a lawsuit for defamation has sometimes been used as a tool to shut down legitimate comments on the Internet.

John Doe Anonymity
Do you post to a public message boards or discussion areas on websites such as Yahoo, AOL or Raging Bull? Do you use a pseudonym, fake name or a "handle"? Has someone asked the host of the discussion or your ISP to turn over information about you or your identity? If so, then the John Doe/Anonymity section may answer some of your questions.
Topic maintained by Stanford Center for Internet & Society

Protest, Parody and Criticism Sites
The Internet, which offers inexpensive access to a worldwide audience, provides an unparalleled opportunity for individuals to criticize, protest and parody.

The following is long but you'll come away with a much better understanding of what this all means: 

About Defamation:

Question: What are the elements of a defamation claim?

Answer: The party making a defamation claim (plaintiff) must ordinarily prove four elements:

1. a publication to one other than the person defamed;
2. a false statement of fact;
3. that is understood as

a. being of and concerning the plaintiff; and
b. tending to harm the reputation of plaintiff.

4. If the plaintiff is a public figure, he or she must also prove actual malice.

Question: What defenses may be available to someone who is sued for defamation?

Answer: There are ordinarily 6 possible defenses available to a defendant who is sued for libel (published defamatory communication.)
1. Truth. This is a complete defense, but may be difficult to prove.
2. Fair comment on a matter of public interest. This defense applies to "opinion" only, as compared to a statement of fact. The defendant usually needs to prove that the opinion is honestly held and the comments were not motivated by actual "malice." ( Malice means knowledge of falsity or reckless disregard for the truth of falsity of the defamatory statement.)
3. Privilege. The privilege may be absolute or qualified. Privilege generally exists where the speaker or writer has a duty to communicate to a specific person or persons on a given occasion. In some cases the privilege is qualified and may be lost if the publication is unnecessarily wide or made with malice.
4. Consent. This is rarely available, as plaintiffs will not ordinarily agree to the publication of statements that they find offensive.
5. Innocent dissemination. In some cases a party who has no knowledge of the content of a defamatory statement may use this defense. For example, a mailman who delivers a sealed envelope containing a defamatory statement, is not legally liable for any damages that come about from the statement.
6. Plaintiff's poor reputation. Defendant can mitigate (lessen) damages for a defamatory statement by proving that the plaintiff did not have a good reputation to begin with. Defendant ordinarily can prove plaintiff's poor reputation by calling witnesses with knowledge of the plaintiff's prior reputation relating to the defamatory content.

Question: Can an opinion be defamatory?

Answer: No — but merely labeling a statement as your "opinion" does not make it so. Courts look at whether a reasonable reader or listener could understand the statement as asserting a statement of verifiable fact. (A verifiable fact is one capable of being proven true or false.) This is determined in light of the context of the statement. A few courts have said that statements made in the context of an Internet bulletin board or chat room are highly likely to be opinions or hyperbole, but they do look at the remark in context to see if it's likely to be seen as a true, even if controversial, opinion ("I really hate George Lucas' new movie") rather than an assertion of fact dressed up as an opinion ("It's my opinion that Trinity is the hacker who broke into the IRS database").

Question: Is there a difference between reporting on public and private figures?

Answer: Yes. A private figure claiming defamation — your neighbor, your roommate, the guy who walks his dog by your favorite coffee shop — only has to prove you acted negligently, which is to say that a "reasonable person" would not have published the defamatory statement.

A public figure must show "actual malice" — that you published with either knowledge of falsity or in reckless disregard for the truth. This is a difficult standard for a plaintiff to meet.

Question: Who is a public figure?

Answer: A public figure is someone who has actively sought, in a given matter of public interest, to influence the resolution of the matter. In addition to the obvious public figures — a government employee, a senator, a presidential candidate — someone may be a limited-purpose public figure. A limited-purpose public figure is one who (a) voluntarily participates in a discussion about a public controversy, and (b) has access to the media to get his or her own view across. One can also be an involuntary limited-purpose public figure — for example, an air traffic controller on duty at time of fatal crash was held to be an involuntary, limited-purpose public figure, due to his role in a major public occurrence.

Examples of public figures:

• A former city attorney and an attorney for a corporation organized to recall members of city counsel
• A psychologist who conducted "nude marathon" group therapy
• A land developer seeking public approval for housing near a toxic chemical plant
• Members of an activist group who spoke with reporters at public events

Corporations are not always public figures. They are judged by the same standards as individuals.

Question: May someone other than the person who originally made the defamatory statement be legally liable in defamation?

Answer: One who "publishes" a defamatory statement may be liable. However, 47 U.S.C. sec. 230 says that online service providers are not publishers of content posted by their users. Section 230 gives most ISPs and message board hosts the discretion to keep postings or delete them, whichever they prefer, in response to claims by others that a posting is defamatory or libelous. Most ISPs and message board hosts also post terms of service that give them the right to delete or not delete messages as they see fit and such terms have generally been held to be enforceable under law.

Question: Can an ISP or the host of the message board or chat room be held liable for
defamatory of libelous statements made by others on the message board?

Answer: Not in the United States. Under 47 U.S.C. sec. 230(c)(1) (CDA Sec. 230): "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." This provision has been uniformly interpreted by the Courts to provide complete protection against defamation or libel claims made against an ISP, message board or chat room where the statements are made by third parties. Note that this immunity does not extend to claims made under intellectual property laws.

Question: Must an ISP or message board host delete postings that someone tells him/her are defamatory? Can the ISP or message board delete postings in response to a request from a third party?

Answer: 47 U.S.C. sec. 230 gives most ISPs and message board hosts the discretion to keep postings or delete them, whichever they prefer, in response to claims by others that a posting is defamatory or libelous. Most ISPs and message board hosts also post terms of service that give them the right to delete or not delete messages as they see fit and such terms have generally been held to be enforceable under law.

About John Doe Anonymity

Question: How is Internet anonymity affected by John Doe lawsuits?

Answer: Often called "CyberSLAPP" suits, these lawsuits typically involve a person who has posted anonymous criticisms of a corporation or public figure on the Internet. The target of the criticism then files a lawsuit so they can issue a subpoena to the Web site or Internet Service Provider (ISP) involved and thereby discover the identity of their anonymous critic. The concern is that this discovery of their identity will intimidate or silence online speakers even though they were engaging in protected expression under the First Amendment.

Question: Why is anonymous speech important?

Answer: There are a wide variety of reasons why people choose to speak anonymously. Many use anonymity to make criticisms that are difficult to state openly - to their boss, for example, or the principal of their children's school. The Internet has become a place where persons who might otherwise be stigmatized or embarrassed can gather and share information and support - victims of violence, cancer patients, AIDS sufferers, child abuse and spousal abuse survivors, for example. They use newsgroups, Web sites, chat rooms, message boards, and other services to share sensitive and personal information anonymously without fear of embarrassment or harm. Some police departments run phone services that allow anonymous reporting of crimes; it is only a matter of time before such services are available on the Internet. Anonymity also allows "whistleblowers" reporting on government or company abuses to bring important safety issues to light without fear of stigma or retaliation. And human rights workers and citizens of repressive regimes around the world who want to share information or just tell their stories frequently depend on staying anonymous – sometimes for their very lives.

Question: Is anonymous speech a right?

Answer: Yes. Anonymous speech is presumptively protected by the First Amendment to the Constitution. Anonymous pamphleteering played an important role for the Founding Fathers, including James Madison, Alexander Hamilton, and John Jay, whose Federalist Papers were first published anonymously.

And the Supreme Court has consistently backed up that tradition. The key U.S. Supreme Court case is McIntyre v. Ohio Elections Commission. http://www.eff.org/Legal/Cases/mcintyre_v_ohio.decision

Question: How do CyberSLAPP plaintiffs discover the identity of anonymous Internet critics?

Answer: CyberSLAPP plaintiffs usually get the personal information you gave an ISP or online message board when you signed up (name, address, telephone number, etc.). Some web sites that host discussion boards might only have your e-mail address, in which case a second subpoeana to the ISP that hosts that address will reveal your identity. In many cases, even more detailed information about your use of the Internet can be obtained; it's important to realize that when you go online, you leave electronic footprints almost everywhere you go. (With advanced knowledge of the Internet, however, there are ways to cover your tracks.)

Question: Don't judges review subpoenas before they are sent to ISPs?

Answer: No. The issuing of civil subpoenas is not monitored by the court handling the case. Under the normal rules of discovery in civil lawsuits, parties to a suit can simply send a subpoena to anyone they believe has information that could be useful. That information doesn't even have to be relevant to the lawsuit, as long as it could possibly lead to the discovery of relevant information. The only way that a court will evaluate an identity-seeking subpena is if either the ISP or the target of the subpoena files a motion asking the judge to block the subpoena. Unfortunately, in practice that rarely happens. That is because these subpoenas usually have a short, roughly 7-day deadline, and because many people never even find out that their Internet data has been subpoenaed.

Question: Isn't my ISP required by law to tell me if someone asks for my Internet-usage records and identity?

Answer: Unfortunately, in practice CyberSLAPP subpenas are rarely challenged becaue ISPs often fail to notify the individual who's personal information is sought. Even when they do, the short deadline (often as little as 7 days) does not provide enough time for the speaker to find and hire an attorney and the attorney to prepare the Constitutional arguments necessary to defend against the subpena.

Question: What is a "motion to quash" a subpoena?

Answer: This is a formal request for a court to rule that your information should not be given to the requesting party. This normally includes the request, plus a legal brief (sometimes called a memorandum of points and authorities) explaining why, by law, your information should not be turned over. Samples of briefs filed in John Doe cases are available at:

EFF Archive, Cullens v. Doe, http://www.eff.org/Privacy/Anonymity/Cullens_v_Doe/
http://www.citizen.org/litigation/briefs/IntFreeSpch/articles.cfm?ID=5801

Question: What should I do if I receive notice that my ISP has received a subpoena for my data?

Answer: First you should decide whether you wish to fight to protect your identity, Internet usage records, or whatever else is being sought. You might want to ask your ISP for a copy of the subpoena if they haven't already provided one. If you decide to fight it, you should inform the ISP immediately, and you may want to request that they delay compliance to give you time to find a lawyer. Then find a lawyer, who will file a motion to have the subpoena thrown out. (If your lawyer can later prove that the lawsuit was frivolous, you may be able to recover legal fees if your state has passed an anti-SLAPP statute.)

Question: What are the typical claims behind a CyberSLAPP suit?

Answer: The most common complaints by CyberSLAPP plaintiffs are defamation, trademark or copyright infringement, and breach of contract. Speech that involves a public figure - such as a corporation - is only defamatory if it is false and said with "actual malice." It also must be factual rather than an expression of opinion. In the US, because of our strong free speech protections, it is almost impossible to prove defamation against a public figure. Trademark and copyright complaints typically claim that defendants have violated intellectual property rights by using the name of a corporation or its products, or by quoting from some of their copyrighted materials such as an annual report. In reality, the First Amendment includes a clear right to criticize and discuss corporations and their products, and the law includes clear exceptions for the "fair use" of protected material for those purposes. Breach of contract suits often involve a claim that anonymous speakers might be employees who have violated a contract by releasing confidential information. Of course, the right to anonymous speech is meaningless if a corporation can unmask your identity at will because you might be an employee breaking a promise of confidentiality.

Question: How do judges decide whether to let a subpoena go forward?

Answer: This is a very new area of the law, and there are few well-established principles. The courts do have a duty to balance the right of anonymity against the need to prevent true defamation. So far there have been both good and bad rulings from judges; fortunately several have ruled that the plaintiff must prove that his case has at least a theoretical chance of prevailing before anonymity can be stripped away. Other cases have established a set of key factors to be used in judging anonymity-stripping subpoenas. In most of these the key factors are 1) that the party seeking the subpoena provide evidence that the identity is needed; 2) that the identity is directly needed for a key element in the case; 3) and that the identity information is not otherwise available to the party seeking it. While not yet firmly entranched in the law, these common-sense principles are clearly the right way to ensure that First Amendment rights are protected while still allowing identity to be revealed when there is a genuine need to do so.

Question: What are some of the important cases in this area of law?

Answer: Important CyberSLAPP cases include Dendrite v. Does, http://www.citizen.org/documents/dendriteappeal.pdf,
Melvin v. Doe, http://legal.web.aol.com/decisions/dlpriv/melvinop.html,
Doe v 2TheMart.com, http://www.eff.org/Cases/2TheMart_case/20010427_2themart_order.html,
Global Telemedia International v. Doe, http://www.casp.net/busted.html. Additional information about these and other cases can be found by searching the Internet or looking on the Web sites listed below.

Question: Can I do anything to help change this situation?

Answer: You can do several things. Be educated about your rights. Find out your ISP's policy on the handling of subpoenas, and encourage them - and any Web sites you frequent - to adopt good policies, especially a pledge to notify you of any subpoena before any private information is disclosed. Encourage your state legislators to pass legislation requiring such notice, and press them to amend state anti-SLAPP statutes to explicitly include Internet anonymity cases.

Question: What other resources are available?

Answer: Web sites dealing with this issue include:

www.aclu.org,
www.citizen.org,
www.eff.org,
www.epic.org,
www.johndoes.org,
www.casp.net,
www.cybersecuritieslaw.com,
cyber.findlaw.com/expression/censorship.html

Question: Can someone ask for my identity even if I am not the Defendant in the case?

Answer: Yes. The rules of civil discovery allow a party to a lawsuit (the plaintiff or defendant) to ask anyone for any information that may lead to the discovery of relevant evidence to their case. However, your ability to quash such a request if you are not named as a party to the lawsuit is the same as if you are named. You can still file a motion to quash. Below is a link to the case files for such a case:

http://www.eff.org/Cases/2TheMart_case/

Question: I am in California. Do I have a right to both resist such a subpena and to ask a court to throw out the case, right away, and award me attorneys fees?

Answer: Yes. California has a specific statute, called the anti-SLAPP statute, that allows an early motion to be brought to have a case dismissed if it is aimed at silencing protected expression and participation in matters of public concern.

Code of Civil Procedure § 425.16(b)(1) provides:

A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.

A legal brief explaining the California statute further in a case involving claims of online defamation is available at:

http://www.eff.org/Legal/Cases/Kesler_v_Doe/

Question: What are the key federal decisions involving anonymous speech?

Answer: 1. Buckley v. American Constitutional Law Foundation (1999) 525 U.S. 182, 197-200;

2. McIntyre v. Ohio Elections Commission (1995) 514 U.S. 334. In that case, on page 357, the Supreme Court said:

"[A]n author is generally free to decide whether or not to disclose his or her true identity. The decision in favor of anonymity may be motivated by fear of economic or official retaliation, by concern about social ostracism, or merely by a desire to preserve as much of one’s privacy as possible. Whatever the motivation may be, . . . the interest in having anonymous works enter the marketplace of ideas unquestionably outweighs any public interest in requiring disclosure as a condition of entry. Accordingly, an author’s decision to remain anonymous, like other decisions concerning omissions or additions to the content Amendment.
* * *
Under our Constitution, anonymous pamphleteering is not a pernicious, fraudulent practice, but an honorable tradition of advocacy and dissent.

3. Talley v. California (1960) 362 U.S. 60. (holding unconstitutional a state ordinance prohibiting the distribution of anonymous handbills)

4. Lamont v. Postmaster General (1965) 381 U.S. 301, 307 (finding unconstitutional a requirement that recipients of Communist literature notify the post office that they wish to receive it, thereby losing their anonymity);

5. ACLU of Georgia v. Miller (N.D. Ga. 1997) 977 F. Supp. 1228 (striking down a Georgia statute that would have made it a crime for Internet users to “falsely identify” themselves online).

Question: Aren’t people required to explain why they’re subpoenaing my identity and other information?

Answer: Not with the initial request. The reasons for the subpena are only provided if the subpena is challenged, through a motion to quash. In opposing the motion to quash, the person seeking the information must demonstrate, at a minimum, that it is likely to lead to the discovery of information that would be useful in a lawsuit.

Question: I signed a confidentiality/privacy agreement with my ISP that provides that they will not release my information. Doesn’t that protect me?

Answer: No. Most privacy agreements state that information will be turned over in response to legal requests, and a subpena is such a request. Even if the agreement does not say so, a legally issued subpoena overrides such agreements as a matter of public policy. Each ISP has a different policy about notifying users when their information has been subpoenaed, but they cannot simply ignore a subpoena under the law without risking legal santion themselves.

Question: What does "respond" to the subpena mean?

Answer: Usually, it means that the ISP will give the requested information to the requesting person. In some cases, ISPs have resisted requests for information on behalf of their customers, but this is not the norm. Unless specifically told differently by your ISP, you should assume that your ISP will turn over your information as part of its response.

Question: Can an ISP or the host of the message board or chat room be held liable for defamatory of libelous statements made by others on the message board?

Answer: No. Under 47 U.S.C. sec. 230(c)(1): "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." This provision has been uniformly interpreted by the Courts to provide complete protection
against defamation or libel claims made against an ISP, message board or chat room where the statements are made by third parties. Note that this immunity does not extend to claims made under intellectual property laws.

Question: Can my ISP or the host of a message board be held liable for defamatory statements I make on the grounds that they are a "publisher" or "republisher" of the information?

Answer: No. Federal law provides: "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." This has been interpreted to protect hosts of discussions between other people against defamation and libel claims as a "republisher" of the information. Note that this protection does not extend to claims under intellectual property laws.

Question: Must an ISP or message board host delete postings that someone tells him/her are defamatory? Can the ISP or message board delete postings in response to a request from a third party?

Answer: 47 U.S.C. sec. 230 gives most ISPs and message board hosts the discretion to keep postings or delete them, whichever they prefer, in response to claims by others that a posting is defamatory or libelous. Most ISPs and message board hosts also post terms of service that give them the right to delete or not delete messages as they see fit and such terms have generally been held to be enforceable under law.

Question: My ISP tells me it's been asked to turn over my name as part of a lawsuit against hundreds of "John Does" in a faraway state. What can I do?

Answer: You should probably contact a lawyer, and suggest that the lawyer take a look at arguments raised by the EFF, ACLU, and Public Citizen in one of these suits (e.g., http://www.eff.org/IP/P2P/RIAA_v_ThePeople/JohnDoe/20040202_UMG_Amicus_Memo.pdf)

Nu Image Medspa Franchise Opportunity: yeah.

Nu Image Medspas: Pay them $58,000 and  "Be Part of  the 10.7 Billion Bollar  Cosmetic Industry"

Via Franchise Works:

The Nu Image franchise business development program allows the investor to easily participate in one of the fastest growing and most lucrative sectors of the healthcare industry. Nu Image is committed to continually setting the highest levels of excellence and innovation for our clients.

Nu Image is committed to guiding and making possible the complete development of each MedSpa facility. We have assembled a world-class team of healthcare, spa and business professionals to provide clients with assistance in developing and operating their own MedSpa franchise.

Our Medspa Franchise Program is anchored on a framework of strict conformity with State and Federal legal and regulatory compliance requirements. No backdoor policies. No guesswork.

Our alliance with Candela, makers of GentleLase and GentleYag, as well as Lumenis, makers of Quantum and Lightsheer provides our Clients access to the latest in laser and light-based skin care technology.

Our program allows our Clients to offer the four most in-demand and highly profitable services within the medi-clinical spa industry. We make sure our Clients’ MedSpas are designed to maximize profitability without sacrificing efficacy or client care.

Our systems will generate considerable revenue from cosmeceuticals and other pre and post-treatment regimen. Skin care products with proven record for enhancing results were hand-picked for improving satisfaction levels and repeat visits among clients.

We work within established structures in the medical industry to develop a program that is mutually beneficial to medical and business professionals and ultimately, our MedSpa Franchise Clients.

Your initial fee of $58,500 will include the following services Business Development

Site Location / Design / Build out
Staffing & Training
Vendor Relationships
Licensing & Compliance Assistance
Custom Marketing Development

I read that as $58,500 for a book and 'vendor relationships'.

Are there any Nu Image Medspa franchisees out there? 

The Dermacare Thread: 221 comments & going strong.

Wow. That Dermacare Laser & Skin Care Clinics discussion thread's heating up again with fingerpointing comments that are growing increasingly raucous.

 
Here's an email I received from someone who looks as though they have ties to Dermacare Corporate. 

"I understand that people enjoy debating over the business model of the Dermacare franchise and even may have some valid points about the franchisor.  It is wrong and inappropriate for you to post untrue and malicious comments regarding people’s personal lives.  The employees that work for Dermacare take there job seriously and this is there livelihood.  Just because a bitter employee was fired, it doesn’t give them the right to put lies out there for everyone to read.  I would you appreciate you removing the comment from SOLD MY SOUL, which includes an employees name that is a hard working employee.  Isn’t this suppose to be a Medical Blog and not some tabloid?  FYI Double Dermacare Dare you and Sold My Soul are the same person."

I replied with the following:

Hello ____
Just so you know, I don't post the comments, people leave them there themselves. I will post your disclaimer you're welcome to comment as well if you have an opposing view. I'll also take a look and see if there's something that violates my terms. If there is, I'll modify or remove it. You'll understand that you're picking out a particular thread that has obviously created a stir with over 200 comments.

So first, I didn't post any "post untrue and malicious comments regarding people’s personal lives." The comments are generally open. (I did remove a specific name from that comment .)

I also looked in to the comment that SOLD MY SOUL and Double DermaDare You are the same person by looking at the IP address that the comments came from. The comments came from different computers with different IP addresses.

American Laser Clinics: Inside ALC?

A question about American Laser Clinics business model was posted in the tread: American Laser Clinics: Armed guards and threats.

 
BetterOffNow posted the following in reply:

They actually have two models, one for franchises"licensee clinics" and one for company stores.
When they purchased Advanced Laser Centers they absorbed their franchises and made them buy the rights to use ALC's name.

The licensee clinics have not done well for the company and they stopped licensing new clinics as far as I can tell. They really don't seem to offer them any support.

I'm not really sure on all of the specifics of their business plan, but the doctors are considered by the company to be their employees.

So ALC will go out and recruit or many many MD's and DO's contact them to become a "Medical Director". ALC will rent out a stand alone clinic or rent a space from the medical director.

They do check the licensing requirements of each state that's why you don't see any ALC clinics in NJ which has very tough rules about who can perform laser.

The rent they pay is pretty low,if you notice they don't seem to be in high rent buildings, maybe a few thousand per month.

They pay the MD $4K monthly and the biggest expense after that is equipment, but they have many agreements with Syneron so they aren't paying as much as everyone else does for their lasers. There was an attempt at legal action against them for creating a monopoly about 18 month sago but ALC won the anti trust suit.

If the clinic is a startup, it usually operates with a skeleton crew, 1 manager, 1 FT tech maybe one PT. they expect a new clinic to be producing 60K per month after 3 months,manager's get the axe if their clinic is not producing. No discussion, no negotiation.

They prefer the MD's not to get in the way, I think I talked to my medical director maybe once every 3 months or so.
ALC ia basically a very revenue driven company, and they pretty much try and steamroll over any opposition to their plans.

They operate their clinics in an atmosphere of fear, even my medical director was afraid of them.
Once about 3 years ago, a clinic manager in NY, wasn't feeling well. She was too intimidated to take time off to recover, and didn't want to ask to take an hour off to go see a doctor.

There was a strongly worded manager's conference call about slackers who called in sick because it was the end of the month and big numbers had to be achieved.

Well to make a long story short, that manager called her clinic in the morning and said she was still really sick but she would make it in later that morning. She never showed up and when her assistant manager was able to go to her building and get the key they found her dead. Literally worked to death.she was all of 28. RIP. Like I said - I'm Betteroffnow

For the physicians I've seen this work out extremely poorly. It's the doctors medical license that's at risk and they're always the ones sued first by unhappy patients since they're the ones providing medical oversight. For $3k a month for something you could do yourself it's just not a great deal. The pitch to the physicians is that they'll drive so much traffic into your other clinic that its a great deal. But what I've seen in practice mirrors what's stated above. American Laser tries to distance themselves as much as possible from physician involvement. 

I find it interesting that they couldn't make their license agreement work.  I guess it's just a lot easier to sell medspa licenses and franchises than it is to support the franchises.

Medspa Lisense or Medispa Franchise: Where's the difference?

JK posted this question about becoming a medical spa licensee rather than a franchisee:

"So what do you all think of a licence rather than a franchise? You pay money up front and then pay monthly into a marketing co-op? The Licensor doesn't tell you what to do or what to buy? This way you get the marketing benefits of the co-op?"

It's a good question. This could get interesting.

Part 1: What's the difference between a medpa franchise, and a licensing agreement for your medical spa? 

 
There are some fundamental differences.

Franchising is considerably more structured than business opportunities. However, just as with business opportunities there are variations in the definitions used by the Federal Trade Commission (FTC) and some states and there are even variations among the states. The most common definition cited though is the one promulgated by the FTC which makes the distinction between a simple license and a license that has crossed the barrier and become a franchise.

1. The licensee is given the right to distribute goods and services that bear the licensor trademark, service mark, trade name, advertising or other commercial symbols;
2. The licensor exercises significant control over, or provides the licensee with significant assistance and, the licensee's method of operations; and
3. The licensee is required to make a payment of $500.00 or more to the licensor or a person affiliated with the franchiser at any time before or within six months after the licensee commences business operations.
   

When these three elements are in place, the license is generally considered a franchise and the franchiser must abide by certain rules generally focused on how they offer their opportunity to the public.

Franchising describes the system of delivery, not the specific product or services associated with the delivery as in a business opportunity. The chief differences between Business Opportunities and Franchising is in the degree of the relationship:

So what should you look at with someone calling themselves a medical spa 'license'. 

First, if they fulfill the above criteria, no matter what they call themselves, they are a franchiser and must fallow franchise law with a UFOC and the whole deal. That's exactly why Solana chose that rout. (They sprang from a company called Health West that the State of California closed down for selling medical practices to not physicians.) 

Now I'm no big fan of the current crop of medical spa franchises (I say current because it's possible that could change.) but there's a reason that almost every business chooses franchising over licensing.

So franchisees are supposed to get ongoing support for their operations (The Dermacare guys can comment on this.). Licensees are pretty much S.O.L. in this regard.

Part 2: A deeper look at licensing for medspas.  

Sona MedSpa Guilty of Negligent Misrepresentation: Forced to cough up $400K

Sona Medspa Guilty of Negligent Misrepresentaion: Franchisee Awarded $400,000

Kempton and Rosita Coady had entered into a Boston-area Development Agreement and a Burlington Franchise Agreement in September 2003, to operate franchise laser hair removal centers. The Coadys had conducted an independent investigation of the business and had consulted with their financial and legal advisors before signing agreements. Kemp Coady testified that they had made their decision based on the information Sona representatives had given them regarding their hair removal technology. But approximately eighteen months into the system, the Coadys felt the "efficacy information" procedure, a much touted Sona method of hair removal, was flawed and constituted negligent misrepresentation under Tennessee law.

The Coadys were seeking damages worth approximately $9 million on eleven counts, namely for common law fraud and negligent misrepresentation (Counts 1 and 2). Although the arbitrator did not find the respondents liable for fraud, he did rule guilty on the charge of negligent misrepresentation. But he severely adjusted down the award to approximately $400,000, which only addressed the damages the Coady's claimed through October 2006. The arbitrator's decision of a lower compensation seemed to be influenced by the plaintiff's high education level, their income producing capabilities and an already existing new store that the husband and wife team started, Viva Skin Care Center. Compensation for loss of livelihood was minimized. The Coadys will be required to pay arbitration and legal fees.

Franchisee States, "We Were Very Much Deceived."

At the time of arbitration, Kemp Coady said Sona had a total of 45 franchises in the system, but by November 2006 sixteen franchisees had gone bankrupt or had been transferred to other people. He said, "Most franchisees got in trouble after one to two years of running their centers. Basically they come unwound. The business just stops working."

Coady and his wife are past executives with MBAs from Cornell University. He said that when they invested heavily in the Sona system and the Sona promise they felt they had been deceived, both in terms of its medical premise and, although it was not found in their favor in the decision, in terms of its business model as well. He said, "We were very much deceived."

Coady said, "They negligently misrepresented the medical facts because they did not hire the proper experts to prove what they were telling franchisees was true."

He feels the arbitrator made a good decision in vacating all of the Sona MedSpa and Carousel counter-claims against them. He said, "Now we are independent of Sona, but we still have to try to make our Viva Skin Care Center succeed. That's a tall order with all the baggage we were left with because of Sona.

Sona Replies, "Sona does indeed view the outcome as favorable..."

Read the entire article on Sona medspas from bluemaumau.com. 

The lawyer for the Sona franchisee adds this in the comments:

"Look at it in perspective:  We prevailed on negligent misrepresentation and recovered money.  Sona, which had counterclaims against the Coadys originally in the range of $7 million dollars, (later trimmed down to somewhere between $1 and $2 million dollars) recovered nothing.  On my scorecard, that’s a win for my team and a goose egg for the other side.  You don’t say that the team that wins the game by one run was the losing team.  It was the winner, and win we did.

Now to the meat of the holding:  The Claimants were originally induced to buy a Sona franchise in September 2003 on the basis of representations by the then-owner, Dennis Jones, that the Sona hair removal system was far superior to other systems; that it would remove 93 to 98 percent of a person’s unwanted hair in five treatments; that the removal was permanent; that the reason it worked was because of a unique, patent-pending “Sona Concept” that timed the laser treatments to hair growth cycles; and that it had a proprietary chemical, Meladine, that enabled the laser to work on all types of hair when, in fact, lasers typically cannot remove white, blonde, or gray hair.  The problem?  None of this was true or supported by any credible medical studies.  Jones, however, told prospects that he had a database of 50,000 clients verifying the claims.

Coady purchased his franchise on the basis of these representations in September 2003 and proceeded to build out his facility through the ensuing year.  In the interim, Carousel, Amos and Rose purchased Sona.  One might think that an investment capital firm buying a company engaged in laser hair removal might have retained a dermatologist to evaluate the efficacy of its procedures or that it might have taken note of the mountains of data that said, in substance, that laser hair removal was a hit or miss proposition, that any sort of guarantees were suspect and that overreaching in selling to the public was not unusual.  But Carousel, Amos and Rose did none of this.  A couple of months after they purchased the company, and while the Coadys were still building out their center, other franchisees, who had been in business for a few months or up to a year, came to Rose with the news that indeed the “Sona Concept” didn’t work:  Five treatments were insufficient to remove anywhere near 93 percent of the hair; it wasn’t permanent; and Meladine didn’t work to enable laser treatment of light-colored hair.  As a result, customers were complaining they had been misled and were demanding free treatments or refunds.  Rose, Amos and Carousel sat on this information through the Summer of 2004 without notifying existing franchisees that they were operating on the basis of bad information, telling their clients falsehoods, or correcting the bad information.  When the Coadys went to training at Sona headquarters, in September, they were trained to tell prospective clients all of the same “faulty” information.  The Coadys opened their center and repeated those statements to their customers.  It was only a year later, when franchisees discovered the full impact of Sona’s falsehoods, and the Coadys learned from a dermatologist that there was no substance to the “Sona Concept,” that they took steps to leave the system.

What is important about the Arbitrator’s ruling is that it found the buyers—Carousel, Amos, Rose and partners of Carousel Capital—guilty of negligent misrepresentation.  In short, they knew franchisees had been given bad information, and they sat on their hands and did nothing and allowed it to be repeated to the franchisees’ clients. 

An important point that everyone seems to have missed, or misinterpreted, is that it is the very finding of guilt on negligent misrepresentation that makes this an important case.  Negligent misrepresentation is a low threshold:  It is easy to breach if you are not careful.  Hence, the decision casts a very wide net:  Purchasers of and investors in franchisors have a duty not to be negligent; they owe a duty of reasonable care to the existing franchisees that they acquire.  I repeat:  This is a broad standard of care that can be met by reasonable due diligence but also can be very easily breached by a failure to use reasonable due diligence.

There are a number of other chapters of the Sona saga that are worth mentioning here, if only briefly.

In January 2006, the Washington franchisee, also disillusioned with the falsehoods he had been told, de-identified and went independent.  Sona sued him in Federal Court seeking a preliminary injunction against violation of his covenant not to compete.  Following a two-day hearing, the federal judge in Virginia denied Sona’s request for a preliminary