How Much does QC Kinetix Cost to Franchise in 2024? Customer Reviews
QC Kinetix provides “non-surgical regenerative medicine services.” They provide services like Joint Pain Treatment, Hair Restoration, and Men’s Health Services. Justin Crowell launched QC Kinetix franchise in Charleston, South Carolina, in 2017 with Tyler Vail and Dr. Richard Schaffer as a regenerative medicine concept, providing treatments for various musculoskeletal and joint pain issues as an alternative to pain medications and surgery.
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Over the course of 26 years, the current CEO, Scott Hoots, worked his way up from a Domino’s pizza delivery driver to Regional Vice President of the chain, overseeing 1,500 franchise stores. Hoots was also the VP of Franchising for American Family Care and most recently served as President of Pet Wants, a boutique pet food franchise system based in Cincinnati, before coming to QC Kinetix.
They began franchising in 2020 and quickly grew. With the help of Hoots, QC Kinetix franchise’s systemwide sales hit $8 million in 2020 from nine corporate clinics and grew to $27 million in 2021 with the addition of franchise locations, Crowell told Franchise Times earlier this year
Is Stem Cell Treatment Proven?
Unfortunately, the excitement about stem cells has outpaced the science in many areas of health care. In addition, due to ethical issues associated with the use of fetal tissue, the U.S. Food and Drug Administration (FDA) has severely restricted its use. Adult stem cells have fewer regulatory issues, but the FDA has prohibited “manipulation,” which includes the processing and culturing of these cells. Therefore, obtaining an abundant source of concentrated stem cells can be difficult.
The FDA suggests patients who decide to get stem cells for any purpose should speak to their doctor about the potential risks and benefits, and ask whether they are part of an FDA-approved clinical trial. Most often, doctors who offer stem cell treatments are orthopedists, plastic surgeons, or physical medicine and rehabilitation doctors.
Twelve patients were earlier hospitalized after having received Stem Cell injections, a New York Times article reported.
How Does QC Kinetix Back Up the Science?
QC Kinetix states that:
When used locally for musculoskeletal injections (both in and around joints and soft tissues), we have found regenerative treatments to be both safe and effective. This has also been shown to be true in multiple medical studies. What we do not condone is the use of any of these regenerative therapies for any systemic disease or for administration intravenously (by IV)
QC Kinetix franchise should add sources to the multiple medical studies to provide evidence their services work as intended.
QC Kinetix and NFL Football Legend Emmitt Smith Partnered Together
QC Kinetix has announced a partnership with Dallas Cowboys legend Emmitt Smith, a three-time Super Bowl champion and the NFL’s all-time leading rusher. “During my 15 seasons in the NFL and then transitioning to my very active life after football, taking care of my body and joints has always been a primary focus for me,” said Smith. “When I think about the longevity of my joints, it all starts with what I do today. QC Kinetix provides several different therapies that are state-of-the-art, cutting-edge treatments, which complement and promote the body’s natural healing process so well. It’s always exciting to partner with a company when you’ve experienced first-hand the quality and effectiveness of their products.”
“Having Emmitt Smith on our team is a big win!” said Justin Crowell, CEO of QC Kinetix franchise. “No one understands joint pain better than he does. But as a winner, he also knows staying on top of his game means staying away from steroids and the operating room and utilizing all the technology and treatments available to stay active and keep enjoying life. He is the perfect spokesperson to introduce our cutting-edge therapies to the public, and we are thrilled to be working with him.”
How Much Is a QC Kinetix Franchise?
The initial QC Kinetix Franchise Fee is $55,000. You have to pay this upfront fee when opening a QC Kinetix franchise.
Franchise Fees Can Be Significantly Higher
| Number of QC Kinetix Business Units | Initial Franchise Fee for Each Location | Development Fee |
|---|---|---|
| 2 units | $50,000 each | $100,000 |
| 3 units | $45,000 each | $135,000 |
| 4 units | $41,250 each | $165,000 |
| 5 units | $37,000 each | $185,000 |
| Each unit after 5 | $20,000 each |
As you can see in the chart above, QC Kinetix frannchise is growing their business through an Area Development Model. This is when you enter into a contract to develop more than one location in exchange for lower fees. However, since QC Kinetix is still a smaller franchise, it is going to be unsustainable to open 10+ locations in most metropolitan areas. Franchises can run into the same problem that Subway does, which is that since there are too many locations, there is a significant amount of customer cannibalization
QC Kinetix Franchise Cost
The estimated total investment necessary to begin the operation of a QC Kinetix Franchise ranges from $220,130 to $328,830. The following costs are part of the upfront costs included in the initial investment for a QC Kinetix. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a QC Kinetix franchise in 2022.
Estimated Initial Investment
| Type of expediture | Amount | To Whom Payment Is To Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee | $55,000 | $55,000 | Franchisor |
| Leasehold Improvements | $10,000 | $60,000 | Landlord or General Contractor |
| Utilities and Security Deposit | $5,000 | $10,000 | Landlord |
| 3-months’ Rent | $8,500 | $25,000 | Landlord |
| Signage | $1,500 | $2,500 | Approved Vendors |
| Furniture and Fixtures | $9,000 | $12,000 | Payable to us, our affilliates, or approved vendors |
| Computers, Office Equipment, and Supplies | $5,000 | $8,000 | Payable to us, our affilliates, or approved vendors |
| Medical Related Equipment | $8,000 | $10,000 | Approved Vendors |
| Medical Related Training | $1,800 | $3,600 | Your medical providers must attend training with Experience Anatomy, which is currently $900 per person payable to that third party |
| Business Licenses, Permits | $500 | $1,500 | Appropiate licensing authorities and Third Parties |
| Professional Fees | $2,000 | $7,500 | Appropiate Third Party Professionals |
| Initial Inventory (Retail Items) | $2,000 | $3,000 | Payable to us, our affilliates, or approved vendors |
| Business Insurance | $5,600 | $22,500 | Payable to third parties |
| Training Expenses | $3,000 | $5,000 | |
| Salesforce Setup Fee | $1,500 | $1,500 | Payable to third parties |
| Webpage Setup Fee | $1,250 | $1,250 | Payable to third parties |
| Forms Setup Fee | $480 | $480 | Payable to third parties |
| Additional Funds (3 months) | $100,000 | $100,000 | Third Parties |
| Total | $220,130 | $328,830 | |
The Initial Franchise Fee is $55,000 for a defined territory, which includes certain training. The Initial Franchise Fee is payable in full when you sign the Franchise Agreement.
QC Kinetix Franchise Requirements
You need a minimum net worth of $500,000 of which $100,000 needs to be liquid assets.
Owning a QC Kinetix Franchise Requires Ongoing Fees
Royalty: This is 8% of weekly Gross Revenues, with a $1,000 minimum royalty in months 3-5 after opening, and $1,500 minimum royalty starting in month 6 after opening through the end of the term.
Marketing Fee: In the first month, $20,000, provided that by the sixth month and then after it can be raised to $40,000 monthly.
Brand Development Fee: Currently of weekly Gross Revenues.
Call Center Fee: Between $1,500 and $3,500 per Franchise unit per month, depending on the number of clinics in your territory.
As you can see, these fees are already pretty high. On top of the above fees, QC Kinetix franchise made $2.6 million by selling equipment and products to its franchisees in 2021.
QC Kinetix (Franchisor) Income Statement Key Insights:
Statement of Operations
| (in thousands) | Years ended in December 31, 2021 | ||
|---|---|---|---|
| 2021 | 2020 | ||
| Revenues | |||
| Equipment and Supply Sales | $2,624,318 | $13,100 | |
| Brand Development Fees | 136,604 | ||
| Call Center Fees | 619,941 | ||
| Franchise Fees | 72,327 | ||
| Royalty Fees | 1,146,969 | ||
| Technology Services Fees | 97,300 | 99,600 | |
| Medical Fees | 2,422 | ||
| Total Revenues | $4,799,481 | $13,100 | |
| Operating Expenses: | |||
| Healthcare Products | $1,696,677 | $6,765 | |
| Adveritsing and Promotion | 417,784 | 17,273 | |
| Technology | 163,784 | ||
| Training and Support | 177,480 | ||
| Auto Expenses | 14,437 | ||
| Bank and Credit Card Service Charges | 6,507 | 400 | |
| Consulting | 59,653 | 81,018 | |
| Contractors | 28,000 | ||
| Depreciation | 14,531 | 1,632 | |
| Amortization | 46,273 | ||
| Insurance | 9,131 | 2,065 | |
| Meals and Entertainment | 10,723 | ||
| Miscellaneous | 20,753 | 9,583 | |
| Office | 97,636 | 2,355 | |
| Professional Fees | 261,942 | 2,355 | |
| Salaries and Payroll Taxes | 1,531,817 | 39,189 | |
| Rent | 65,072 | 30,875 | |
| Travel | 392,782 | 20,467 | |
| Total Operating Expenses | $5,014,946 | $265,978 | |
| (Net Loss) | $(215,465) | $(252,878) | |
QC Kinetix is a loss-making business for the franchisor with a net loss of $215,465 in 2021. Also, note how the Equipment Supply and Sales are the main source of revenue for the franchisor, coming in at more than 2x what the franchisor makes from royalty. This is not a good sign because the franchisor’s revenue model does not depend on actual customer flow to the end customer but its franchisees keeping it in business
QC Kinetix Customer Reviews
The following are reviews from different QC Kinetix franchise locations:
I'm so tired of hearing their ads on the radio about how much they can help. The only thing they help is their pockets (...) $10k for no results when they tell you it's a better option than surgery. It was the biggest waste of time...
The results were a flop. They don't even do X-Rays or MRI's to assess the problem (...) I feel played on my distress and desperation to fix my shoulder problems
There were also many positive reviews by customers including at their Coral Gables, Florida location:
The shoulder I had bore for years has improved since I started treatment (...) The entire crew is excellent and highly knowledgeable
I chose to get Stem-Cell therapy from QC Kinetix. After 3 months of regular sessions, my right shoulder hasn't hurt anymore. The doctors are very friendly and supportive. This clinic is the best if you need Stem-Cell therapy!
How Much Do QC Kinetix Franchise Owners Make?
The figures below are for 9 QC Kinetix locations, some of which are affiliate-owned and were opened in or before 2020.
2021 QC Kinetix Median Franchise Sales: $1,166,405
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $274,480 | 12.5% | $145,800 | 4.5 years |
| 157.5% | $204,120 | 3.5 years | |
| 22.5% | $262,441 | 3 years |
Based on the median sales provided by QC Kinetix’s franchise locations, at an average of a 17.5% profit margin it will take around 3.5 years to recoup your investment. This is in the same range as other franchise opportunities. You may not get a 17.5% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store, such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other stores; and the extent of market penetration and brand awareness that QC Kinetix stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors
Is the QC Kinetix Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for QC Kinetix franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.94
When you go to sell a QC Kinetix franchise based on the median multiple of .94 and average sales in 2021 of $1,166,405, it would sell for $1,096,420. This is significantly higher than the midpoint investment of $274,880. However, we estimate that this valuation is too high as the goodwill associated with the QC Kinetix Brand is currently lower than other franchises.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
As you can see, many customers are not satisfied with the quality of service provided to them. This is a huge reason why the industry multiple of 0.94 should be revised to calculate the resale value of a QC Kinetix Franchise. Let’s review the multiple QC Kinetix clinics for sale on BizBuySell.
QC Kinetix Franchise Resales on BizBuySell
On BizBuySell, there are 9 listings for QC Kinetix franchise resales and a few of the listing have multiple locations included. We estimate of the 100+ centers open, at least 15 are currently for sale. It is not common for so many franchisees wanting to sell their business, especially in the first year of operations.
Strange numbers…
Some of the financials do not add up for the resales including for two existing locations in Wisconsin. The asking price is $200,000 and the revenue is $1,600,000 with $300,000 of cash flow. It appears to be the deal of the century. Proceed with caution when the asking price is less than cash flow. Generally you can expect the asking price to be 2-5X the cash flow for this type of business.
Established QC Kinetix Medical healthcare franchise
| Green Bay, WI |
|---|
| Asking Price: | $200,000 | Cash Flow: | $300,000 |
| Gross Revenue: | $1,600,000 | Inventory: | $20,000 |
| EBITDA: | N/A | Rent: | $4,000 per Month |
| FF&E: | $50,000 | Established: | 2022 |
Conclusion
QC Kinetix is trying to break into the Physical and Alternative Therapy market. However, there is controversy surrounding the franchise. While there are many positive reviews, the negative reviews of QC Kinetix franchise by medical doctors and patients draws into question the effectiveness of their services.
Furthermore, the franchisor’s business model is based on selling products and equipment to franchisees as well as new franchise licenses. Franchises with sustaining success generally derive the majority of their revenue from royalties.
