Pearle Vision

‘Ignite’ Offers Franchising Option for Independents Under Pearle Vision Banner

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For independent optometrists who own their practice, Pearle Vision recently added a new option for these ECPs to consider as they plan for future growth and success. In June, at the American Optometric Association event in Denver, Pearle officially launched the “Pearle Vision Ignite” program as a “strategic independent optometrist conversion program.”

“Ignite” comes under the umbrella of Pearle’s commitment to grow the brand in new communities across the nation, according to an announcement at the time. (Pearle Vision is a division of Luxottica Retail.)

“We launched Ignite with the intention of providing additional alternatives to optometrists who may be thinking about private equity as an exit,” Pearle Vision senior vice president and general manager Alex Wilkes said in an interview. “Ultimately, as the market is consolidating and the pressures on independents continue to grow, we have a huge amount of capability at Pearle Vision, and within Luxottica, to allow optometrists and opticians to remain independent while strengthening their business.”

There are currently 527 Pearle Vision locations in North America, which includes 413 franchise offices and 114 corporate-owned locations.

Under the Ignite program, practice owners convert their existing location to a Pearle Vision. This is unlike the traditional Pearle franchise model, where new owners buy and/or build a de novo start-up location. The Ignite franchisee pays a royalty and marketing contribution (similar to traditional franchisees), but the royalties don’t begin until the practice owner has eclipsed the pre-franchise baseline revenue number. Also, Pearle Vision’s royalties are charged solely on dispensing fees, and do not take into account any professional fees, according to Wilkes.

“We think it is a pretty strong value proposition,” he said. The Ignite royalty fee is “in line with our traditional royalty percentage,” he added.

At the outset, franchisees in the Ignite program are required to have some Pearle Vision branding on the inside of the store and Pearle Vision signage on the outside. They also are required to move to Pearle’s POS solution (AcuityLogic by Eyefinity) and Pearle will assist in transitioning to the “product assortment that we supply as Pearle Vision” and buy back existing inventory from the new franchisee, Wilkes said.

“In year five, there is a requirement to do a full refresh according to the then-brand standards. So we are making it easy for them to ease into the Pearle Vision model even from a capital perspective,” he said.

On the managed care side of the business, Pearle Vision is “in network” nationally with EyeMed and UnitedHealthcare, and in network with VSP across a “large majority of our stores in the U.S.,” Wilkes said.

To date, Wilkes said the prospective Ignite franchisees appear to be practice owners who already are in good real estate locations, such as power strip centers with strong co-tenancy, and who are facing increased pressure from some of the other national retail brands that might be coming into their current space. “They view their affiliation with Pearle as a way to strengthen their position. And their patient base probably skews a bit more to the premium and higher-end frame brands and lens choices,” he said.

Wilkes added, “It might be a little early to call that a trend, but anecdotally those are the shared characteristics of the first individuals that … we are in conversations with.”

Wilkes said the first two Ignite franchises will open either in late August or early September in Orange County, California.

“The one area that we certainly know we need to focus on is educating optometrists and opticians on the franchise model and the benefits that come with that,” Wilkes said. “It’s not something that is very well known in the market. … And really it’s still your practice and you still control it. You can practice how you see fit, but now you have the advantage of a national brand behind your practice.”

Separately, for newly licensed ODs and ophthalmologists, Pearle Vision has created a financing program that enables them to take out a loan for up to 100 percent of the start-up costs of a new Pearle Vision franchise, Wilkes said. The loan can be used to cover inventory, equipment, tenant improvements, pre-paid rents and opening marketing expenses, among other items. “We had a number of younger optometrists [meeting us at AOA in Denver] who were really interested in being part of this national brand and they see this as a way to get out of the gate potentially stronger than they could on their own,” Wilkes said.

He added, “What we’re trying to do, in its simplest form, is to have options for every life stage of optometry. We’re trying to have financing options for when you are five years out of school, we’re building the Ignite option ideally for the practitioner in the middle of their career but looking to simplify and/or expand their business, and we also are thinking about Ignite in terms of … pairing doctors with investors, be it smaller investors or potentially a private equity investor. Ironically, we believe not only is [Ignite] an alternative to private equity, but we believe that it can be leveraged for private equity, as well.”