Published on 8 Jun 2022 Time 6 min read Last update by 29 May 2024

The Joint Franchise Is Growing but Does It Make Money? (2024)

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The Joint was founded to “transform the traditional, often misunderstood concept of routine chiropractic care by making it more convenient, friendly and affordable”.  In March 2010, The Joint was re-founded with the acquisition of the original eight franchised clinics. Fred Gerretzen is the current CEO. The Joint current has 610 franchised and 96 company-owned locations.

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How Is The Joint Franchise Positioned in the Physical Therapy  Industry?

Physical therapy is a competitive industry with lots of small players and few large chains of clinics. Total industry receipts for offices of physical, occupational and speech therapists, and audiologists are estimated by Marketdata to be worth $34.5 billion as of 2018.

According to a Jacari Care Inc. report, there are an estimated 16,000 – 18,000 outpatient physical therapy clinics. The largest single clinic operator is Select Medical/Physio, having close to a 7% market share. The Joint competes in the Physical Therapy market against big brand companies such as Select Medical / Physiotherapy Associates,  ATI Physical Therapy and S. Physical Therapy among the top players.

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How Much Is a The Joint Franchise?

The initial The Joint Franchise Fee is $39,000. You have to pay this upfront fee when opening The Joint franchise.

The Joint Franchise Cost

Your Estimated Initial Investment

Type of Expenditure Amount To Whom Payment Is to Be Made
Low High
Initial Franchise Fee 39,900 39,900 Us
Security and Utility Deposits 3,700 5,800 Landlord and/or utility companies
Base Lease Rent -3 Months 9,000 27,000 Landlord
Clinic Design Fee 1,000 1,000 Us
Architectural 8,500 20,222 Architect
Leasehold Improvements 63,600 225,000 Landolord or construction contractors
Signane 5,600 9,000 Vendors
Office Equipment, Including furniture and fixtures 5,000 7,000 Vendors
Chiropractic or other Professional Equipment 7,000 22,500 Vendors
Computer Hardware, Tablets, Software, Supplies and Installation 5,000 10,000 Vendors and us for Office Management Software
Business Licenses and Permits 750 3,800 Governmental agencies
Professional Fees and Services 3,000 6,200 Attorneys, accountants, and other professionals
Insurance 4,000 8,000 Insurer
HIPPA Compliance 300 3,000 Vendors
Chiropractor Credentialing 400 2,000 Vendors
Initial Training Expenses, including travel 2,500 5,000 Vendors
Start-Up supplies – Uniforms, contracts, invoices, and other office supplies 1,250 2,000 Telephone company or other third party
Local Advertising Fees – 3 months 9,000 9,000 Vendors
Grand Opening 14,000 14,000 Vendors
Office Management Software Fee – 3 months 1,797 1,797 Us
Aditional Funds – 3 months 30,000 55,000 Landlords, Vendors, Employees
Total Estimated Initial Investment 215,297 476,997

The estimated total investment necessary to begin the operation of a The Joint Franchise ranges from $215,297 to $476,997. The following costs are part of the upfront costs included in the initial investment for a franchise. 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 The Joint franchise in 2022.


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The Joint Franchise Requirements

A net worth of at least $350,000 and have access to at least $100,000 in liquid capital, along with a good credit history and score.

Owning a The Joint Franchise Requires Ongoing Fees

 Royalty: 7% of weekly Gross Revenues with a monthly minimum of $700 

Marketing Fee: 2- 3 % of gross revenues

Minimum Local Marketing: $3,000 or 5% of monthly Gross Revenues whichever is greater

How Much Do The Joint Franchise Owners Make?

Quartile Number of Clinics Percent of Network (sample) Average Median Highest Lowest Number and Percentage that Attained or Exceeded Average
1 126 25% $945,368 $900,950 $1,664,785 $739,707 51 of 126 (40%)
2 126 25% $641,810 $634,834 $732,383 $563,863 59 of 126 (47%)
3 126 25% $490,039 $489,465 $563,694 $410,190 63 of 126 (50%)
4 126 25% $320,118 $338,571 $409,799 $139,212 71 of 126 (56%)
Total 504 100% $599,334 $563,778 $1,664,785 $139,212 217 of 504 (43%)

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2021 The Joint Median Franchise Sales: $563,778

Initial Investment (Midpoint) %Profit Margin of Average Franchise Sales Estimated Profits Time to Recoup Investment
$346,147 10% $56,377 8.6 years
$346,147 15% $84,566 6.5 years
$346,147 20% $112,755 5.5 years

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Quartile Number of Clinics Percent of Network (sample) Average Median Highest Lowest Number and Percentage that Attained or Exceeded Average
1 112 25% $777,608 $745,799 $1,511,654 $601,157 46 of 112 (41%)
2 112 25% $523,218 $524,177 $599,211 $461,487 57 of 112 (51%)
3 112 25% $398,723 $399,917 $461,484 $342,585 57 of 112 (51%)
4 112 25% $255,534 $265,999 $338,950 $72,88460  60 of 112 (54%)
Total 448 100% $488,771 $461,485 $1,511,654 $72,884 199 of 448 (44%)

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2020 The Joint Median Franchise Sales: $461,485

Initial Investment (Midpoint) %Profit Margin of Average Franchise Sales Estimated Profits Time to Recoup Investment
$346,147 10% $46,148 10 years
$346,147 15% $69,222 7.5 years
$346,147 20% $92,297 6.2 years

Based on the median sales provided by The Joint’s franchise locations, at an average of a 15% profit margin it will take around 6.6 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.

Is The Joint Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for The Joint 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 $1 Million Net Sales

  •     Estimated Selling Price = Net Sales – 0.48

$1 Million – $5 Million Net Sales

  •     Estimated Selling Price = Net Sales – 0.42

Over $5 Million Net Sales

  •     Estimated Selling Price = Net Sales – 2.64

When you go to sell a The Joint franchise based on the median multiple of .48 and net sales averaging between 2020 and 2021 of $512,631, it would sell for $246,063. This is lower than the midpoint investment of $346,147.


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The Joint (Franchisor) Income Statement Key Insights:

Statement of Income

(in thousands) Fiscal Years Ended
2020 2019
Revenues
Revenues from company-owned or managed clinics 31,771,288 25,807,584
Royalty fees 15,886,051 13,557,170
Franchise fees 2,100,800 1,791,545
Advertising fund revenue 4,506,413 3,884,055
Software fees 2,694,520 1,865,779
Regional developer fees 876,804 803,849
Other revenues 847,100 740,918
Total revenues 58,682,976 48,450,900
Cost of revenues
Franchise and regional developer cost of revenues 6,090,203 5,159,778
IT cost of revenues 417,265 406,,139
Total cost of revenues 6,507,468 5,565,917
Selling and marketing expenses 7,804,420 6,913,709
Depreciation and amortization 2,734,462 1,899,257
General and administrative expenses 36,195,817 30,543,030
Total selling, general and administrative expenses 46,734,699 39,355,996
Net (gain) loss on disposition or impaiment (51,321) 114,352
Income from operations 5,492,130 3,414,635
Other income (expense)
Bargain purchase gain 19,298
Other (expense), net (79,478) (61,515)
Total other (expense) (79,478) (42,217)
Income before income tax (benefit) expense 5,412,652 3,372,418
Income tax (benefit) expense (7,754,662) 48,706
Net income and comprehensive income 13,167,314 3,323,712
Less: income attributable to the non-controlling interest
Net income attributable to The Joint Corp. stockholders 13,167,314 3,323,712

The Joint is a very profitable business for the franchisor with retained earnings of $13.1 million in 2020. Compared to $3.3 million in 2019, they saw an increase of 300% from 2019 to 2020. This would have been a good indication of growth, except for the fact that The Joint has been plagued by scandal. From customers being billed more than initially advertised to recurring charges being levied when the customer only wanted to purchase a one-off service, the services provided by The Joint are nothing short of scandalous.

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How Many The Joint Units Have Opened and Closed?

Outlet Type Year Outlets at the Start of the Year Outlets at the End of the Year Net Change
Franchise
2019 394 453 +59
2020 453 515 +62
2021 515 610 +95
Company Owned
2019 48 60 +12
2020 60 64 +4
2021 64 96 +32
Total Outlets
2019 442 513 +71
2020 513 579 +66
2021 579 706 +127

Over the last three years, the company has seen an increase in self-operated as well as franchised units. The increase in self units had been from 48 in 2019 to 96 and in franchised units from 394 to 610. This shows that there is an increased interest in the business as well as partners interested in such a business.

Conclusion

The Joint offers prospective franchisees an opportunity to enter into the Physical Therapy industry that is only going to get bigger with the ageing population of America, but it is swarmed by lawsuits and holds almost no consumer confidence due to its unethical business practices.

While this may be the business for you, make sure also to check out other businesses offered on Vetted Biz and in Physical Therapy.

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