More strategic. That’s how Greg Esgar, CFO of Massage Envy Spa, the nation’s largest therapeutic massage chain, sums up the evolving role of today’s CFO. Esgar joined the Scottsdale, Arizona-based business as financial chief in 2004, two years after it was founded. As part of the executive team, he helped spur the company’s growth from 17 locations to its present total of nearly 1,000 sites in 49 states. With its membership-based, monthly-fee business model, Massage Envy Spa eschews the luxury amenities and high prices of traditional day spas. Its hallmark is convenience, with shopping centers and busy street locations, accommodating hours and scheduling flexibility.
Chain Store Age contributing editor Michael Fickes spoke with Esgar about his role in the rapidly growing business.
How has the role of a CFO changed over the past decade?
The role of CFO has definitely expanded to be more strategic. More and more CFOs operate as business advisers to CEOs and COOs. Traditionally, a CFO had a background in accounting and managed strictly financial matters. Today, it’s much more than this and much more than this in franchising.
As Massage Envy Spa has grown, for example, my role here has grown to include profit coaching for the three levels of our model: regional developers, franchisees and clinics.
I play a key role in reviewing and approving franchise applicants. I am involved in helping franchisees and regional developers find and obtain the financing they need to open new locations and grow their current locations. I also need to establish and maintain good working relationships with financial institutions that can affect the finances of new and developing franchises.
Do you expect the CFO’s role to continue to evolve? How?
It’s constantly evolving as business changes, particularly as a company turns in a new direction. The CFO role must align closely with the current needs of the business.
This is especially true in franchising. My work in helping franchisees and regional developers find and obtain financing is an evolutionary change that occurred in recent years, as our industry has encountered financing challenges like never before. It has become necessary for CFOs of franchised companies to become heavily involved in helping franchisees navigate these challenges. In addition, governmental mandates affect the role of the CFO. A CFO must remain flexible and able to adapt to both external and internal influences.
Of all the areas of a CFO’s responsibilities — including real estate, technology, operations, inventory, finance and so on — what area changed the most? In what ways?
Without a doubt, technology is the area that has changed the most. Technology has given us tremendous amounts of new information and countless new capabilities. And we can access this new information and apply these new capabilities using mobile tablets and smartphones.
Technology is helping us to become more efficient and effective in our jobs. Technology has its challenges, too. It changes so often that it can be challenging to stay current — and that is essential.
Technology has enabled us to provide precise metric reporting, allowing our franchisees to focus on relevant and accurate data. We provide multi-level comparisons based on year opened, region to region, clinic to clinic and so on. Technology not only offers incredible forecasting tools but also the ability to evaluate where the strengths and weaknesses are in a business. This helps create a healthy competitive environment.
What challenges does this evolving role create for current and new CFOs?
CFOs must be increasingly well-rounded individuals. The days of just understanding accounting are over. You have to understand so many different facets of the business and serve as an adviser in so many areas that affect the bottom line. It can be daunting at times.
You really have to be current in every aspect of the business, provide a clear vision for the future and provide encouragement for the executive team, as well as the franchise support center staff and the franchisees. Finally, of course, you have to communicate the C-level visions and strategies effectively.
What are the most important initiatives that you will implement this year and next year?
I will continue to work hand-in-hand with our executive team and franchisees to grow the Massage Envy Spa business throughout the U.S. We are also exploring the potential growth of Massage Envy Spa into other countries.
So far this year, Massage Envy Spa has signed 26 new franchise agreements, which brings our total franchise agreements to 1,237.
”CFOs must be increasingly well-rounded individuals. The days of just understanding accounting are over.”