Five years ago, Ed Kaloust was ready to retire after 43 years in securities and investments and go sail his 60-foot cutter rig Second Wind through the blue waters of the Caribbean. • A trip to his doctor changed his mind. • Put on a program to alter his diet, Kaloust promptly shed 30 pounds. He embraced the physician-centered program, but thought he could do better turning it into a business model that could be replicated across the country. • Hence was born the Medi-Weightloss Clinics. • From a single location on Kennedy Boulevard in Tampa, Kaloust and longtime friend Jim Edlund have built "Medi" into a hot franchise concept, with 71 clinics in 18 states. Thirty of the clinics have opened this year alone. Next month the company debuts in Entrepreneur magazine's Franchise 500 list. • At 69, Kaloust is no longer talking imminent retirement. • "I had a very successful career and I could have sailed the Caribbean for the next 20 years," he said, "but I really feel like we're doing something important. … I feel my significant legacy is coming because I'm helping the public."
Weight-loss concepts are a dime a dozen. What makes your program stand out?
Ours is the one that works. We have a history of 150,000, maybe 200,000 people around the country that have gone through our program successfully. What makes us different is the physician. There's no question about that. Because you're seeing a physician, there's some sort of responsibility attached to this and you want to be there every week.
And what you're doing is very healthy. You're not in a situation where you're taking a chance with your liver or something else because you're taking the wrong thing.
Walk me through the program.
The patient needs to fill out all the medical consent forms. Then they would go into the exam. Blood pressure. An EKG. A full medical exam. The physician will determine if they can enter the program with medications or without medications. We call that the acute stage: a combination of exercise, medication and nutrition. The average patient spends about 11 weeks to reach their goal, coming back every week. They receive a shot, a combination of B12, chromium and some type of appetite suppressant. What we now have developed is a metabolic melt for those people nervous about taking a shot. Then comes the wellness program to help keep it off.
And the results?
If you follow it properly, you should lose between 7 and 10 pounds your first week and 20 pounds within a month. We're treating an average of 600 to 1,000 new patients in each clinic, so we're helping 50,000 to 60,000 people a year with this problem.
How much does it cost?
It's $268 for the initial visit and that includes your full examination, the blood panel and EKG. And we include the first month's supply of everything (such as supplements) that have a value over $125. It's $70 a week after that.
How much have you put into this personally?
We've invested so far in five years about $42 million. (After an initial investment of about $2 million) we put every dime back into the company. Jim (Edlund) and I have not taken any type of salary. We're just starting now, this year.
Most people make a mistake in starting a company of being undercapitalized and then drawing from the company instead of investing in the people. I wouldn't allow it here. We didn't need income for the business. And there is no debt in this company. If there is, they owe it to me.
What's the cost for a franchisee?
The franchise fee is $100,000. Then there's a license fee for $25,000. And we start the clinic so they have an initial package that runs $32,000 to $50,0000. To set up one of the clinics properly, you should have several hundred thousand dollars. But we go positive in almost all of the clinics in the third month. Isn't that incredible?
I just hired a pediatrician and I'm very, very keen in developing over the next 12 months in our R&D department a program to treat adolescents that will not involve drugs. It will be an interactive program where the kids can get on the computer. They'll meet with the doctor, of course, but there will be interaction with the computer.
Anything else coming down the pike?
Making nutritional bars. They're only 100 calories and only have four or five grams of carbohydrates and 10 (grams of) protein. There's no bar in the market we're aware of that's similar to that.
I want to go into a food line, but I want it to be very carefully organized. I want to have for the busy people a menu of salad dressings, for instance. We have a salad dressing with 30 calories, no carbohydrates and 7 or 8 (grams of) protein. Beside that are some meals that are packaged and you make with water. But it has to be real tasty for you to do that. We're meeting with a company in Montreal. … We're going to start designing a menu so we can have it in our clinics.
Have you personally used the Medi program?
I went to a physician and lost 30 pounds (before starting Medi). It was very similar at that time to this program. I've kept a lot of it off, but I'd like to take another 30 off. I used to play tennis every day … but I don't feel comfortable playing now because I'm heavy. So I started just last week on the diet again.
I'm 225. I'd like to be about 195. I'm overweight and I shouldn't be as CEO of this company. So I'm going to get that under control.
Jeff Harrington can be reached at firstname.lastname@example.org or (727) 893-8242. Follow him on Twitter at twitter.com/jeffmharrington.
This article has been revised to reflect the following clarification: Ed Kaloust and Jim Edlund initially invested about $2 million into Medi-Weightloss Clinics and then reinvested revenues. An article Monday was unclear on the initial investment.