"The Business of Selling Mistakes"
This article continues where my last article left off. I hope to explain why The Joint Corp is a compelling business.

What is The Joint Corp?
The Joint Corp is a franchisor (~85% of clinics) and operator (~15%) of a cash-pay (no insurance) retail chiropractic concept focused on convenience (walk-in only; located in popular strip malls) and affordability ($29 first visit, $89 monthly membership).

The concept’s playbook is relatively simple:
  • Open a small (~800—1,200 sq. ft.) clinic in a busy strip mall.
  • (Locate clinic within a regional cluster to maximize brand awareness.)
  • Offer consumers affordable, convenient access to chiropractic care.
  • Follow a proven local and digital marketing strategy to attract patients.
  • Upsell the patient to a monthly membership after the first visit.
  • Retain the patient as long as possible.

With over 800 locations, the concept has proven to be simple and repeatable, with The Joint now among the top 2% of all franchisors by size. Its model suits chiropractic because adjustments are brief (5-7 minutes) — there’s no need for an appointment. For consumers, this is convenient; it’s easy to stop in as they often visit the strip mall during the week anyway. For clinics, it’s efficient; each doctor can handle more patients per day.

What are the economics?
From the Lens of a Franchisee
From a franchisee perspective, the total investment comes out to ~$300-350k (typically 1/3 cash, 2/3 financed by SBA or other lender):
  • $39,990 franchise license fee ($10k less for each additional)
  • ~$200-250k clinic build-out (leasehold improvements, equipment purchases, security deposit, business licenses, recruiting, etc.)
  • ~$76k Year 1 losses

This compares to Sport Clips at ~$300-400k, Massage Envy at ~$600-900k, and generally over $1 million for Planet Fitness.

After ~6-9 months, the average clinic breaks even, and the franchisee begins to recoup their investment with profits. After ~3.5 years, the franchisee is fully paid back, at which point they tend to be earning a 50% cash on cash return annually. The average clinic progresses as follows (after Year 1 losses):
  • Year 2: $78k EBITDA on $432k sales (~18% margin) // ~25% cash-on-cash return for franchisee
  • Year 3: $141k EBITDA on $531k sales (~26% margin) // ~45% cash-on-cash return
  • Year 4: $161k EBITDA on $565k sales (~28% margin) // ~50% cash-on-cash return; full investment recouped mid-way through year

These clinics also continue to grow after Year 4, leading to EBITDA margins of ~30% at maturity. And with no working capital and minimal maintenance capex (clinics get paid upfront and only need a few chiropractic tables, chairs, and computers), EBITDA can be a useful proxy for cash flow.

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If you're interested in the business, keep reading at the link below:
Joey Hirendernath's avatar
A really interesting write up on the Chiro business. You mention that -

"But lump in a stark lack of awareness (50% of Americans don’t know what ‘chiropractic’ means) and a healthy dose of fear (30% know what it means but are scared to try), and it’s easy to understand why just 16% of adults visit a chiropractor each year (2017) while over 60% visit a dentist and over 80% visit a physician."

One follow up question I had was - How would you say $JYNT marketing strategy seeks to educate the wider majority to the benefits and combat the reservations that skeptics may have in relation to treatment.
Investor's Perspective's avatar
@joeyhirendernath I think it comes down to the volume of content and the brand presence. The Joint is the biggest producer of chiropractic-related content in the world, and with a convenient and affordable concept, they've removed most of the barriers to trying it. The average patient is 36, so they didn't grow up when chiropractic had a bad name; they just might not be fully aware of its benefits. Consistently putting out chiropractic content alongside a presence in local community sports leagues and newspaper and targeted online ads builds a presence that just makes people more comfortable giving it a try.



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