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Day Spas: The Pros and Cons of Contract Management

Day Spas: The Pros and Cons of Contract Management

Don Jones, Ph.D., has worked in the hospital wellness and fitness industry for more than 20 years. He has also served as the director of rehab services for Sentara Hampton General Hospital. Don has worked for the YMCA and has extensive experience with parks and recreation departments. He has held such varied positions as athletic director, physical director, personal trainer, exercise physiologist and executive director. This extensive experience has enabled him to look at the club industry from a variety of perspectives. He currently serves as the executive director of The Fitness Centre & Day Spa at Florida Hospital Celebration Health and can be reached at [email protected]

By Don Jones, Ph.D.

I vividly recall the time when the term, “day spa,” didn’t exist in the fitness center lexicon. I also recall converting part of a meeting room into a massage room and later, due to the success of this endeavor, converting our child-care studio into two massage rooms and a waiting area.

It wasn’t until I arrived at my current job as executive director of The Fitness Centre & Day Spa at Florida Hospital Celebration Health that we began using the term. Actually, it was one year after my arrival that we convinced the hospital to add the words day spa to The Fitness Centre. That was five years ago.

Like Melinda Minton pointed out in her Sept. 10 Step By Step column, owners have to be careful about allowing their day spa to suffer from the stepchild syndrome. One way to avoid that pitfall is to hire a management company that has expertise in the day spa industry. This column will point out some of the pros and cons of such an arrangement.


Industry expertise. I hired a management company in 2001 after I concluded that, collectively, we simply did not have the expertise to continue managing this area ourselves and make a reasonable profit. I knew the reputation of the individuals involved with the management company and was aware of the other facilities they were managing at the time. Hence, it made sense to turn over the operation to the experts so that I could concentrate on our core business—memberships. In hiring the management company, I was confident that they could make the right hires, promote the service line and make intelligent choices on which retail products we should sell.

Although many fitness centers try to educate their front-desk staff on the different treatments and products, it has been my experience that it is best to have the industry experts talk with the clients. There are some questions we just cannot answer as well as they can.

Human resources. Besides not having to take the time to interview multiple candidates for day spa positions, we were also able to forego having to pay benefits and FICA for these individuals. That task was now the responsibility of the management company.

NOTE: Be aware of the IRS rules governing independent contractors. What I’m referring to above is a management company with whom we have a contract. Therefore their company is responsible for the hiring, paying benefits and the FICA expenses.

Guaranteed income. You can structure the contract in such a way that your club is guaranteed a set amount of income each month with the potential to share income over and above a certain amount. We have this in our contract, and it has helped our bottom line tremendously.

Marketing and promotions. It’s hard enough to figure out what to promote in the fitness center industry. To me at least, the day spa industry is a different animal and requires the expertise of those involved with it on a daily basis to know what the customer wants.

We have found our management company to be more than willing to share advertising expenses, and, in addition, they dedicate someone to attend luncheons and community functions to build awareness about the day spa and build a rapport with the community residents.


Lack of control/oversight. Without a doubt, you give up some control when you turn over your operation to a management company. Sometimes this can cause problems, especially if they are not well versed in your club’s philosophy regarding customer service and/or policies/procedures. So, make sure that you select a management company that you know fits your niche and treats customers the way your company likes for them to be treated.

They are not your employees. Since they are not your employees, it may be more difficult to get the day spa employees ingrained into your ways of doing things. However, we have been able to overcome those issues by making them part of our family. For example, they always come to our staff meetings, and I meet regularly with the day spa manager.

What if they leave?Yes, that is a real possibility. Fortunately for us, we have had the same management company for the past five years. They are happy and so are we. They could break the contract and leave, and, in reality, there would be very little we could do about it. However, the same thing could happen if you hired your own day spa manager and controlled the operations yourself. The manager could simply walk out.

Your club is bound by a contract. Just like the above, your club could also break the contract. However, it is more likely that your club would suffer more by doing this due to the negative press that could follow. Hence, the club is really held to a higher standard.

We have addressed the above by adding a 90-day no-fault kick-out clause to our contract. With this clause, either party may revoke the contract with a 90-day notice for any reason. That at least gives both parties some comfort level in case things go south for either party.

If you are like me, and many others, and you do not feel you have the expertise to run a day spa, consider a management company. But before you do, check the pros and cons of such an arrangement so that there will be no surprises.

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