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