Okay. Can you hear me now? Excellent. All right. Sorry about that. We welcome all of you for attending. This is the first time we've done this event. We're really excited about it. The video you just saw was actually a piece that we used to launch our national conference, and we just completed our national conference a couple of weeks ago, brought all of our franchisees together to do exactly what the narrator was telling you. We had almost 90-- Well, we had 92% attendance of the representation in our network. In franchising, I've actually never had that high of attendance at a national conference, so that gives you a sense of the engagement, the excitement, the energy of where this organization is going. We're going to talk about that today. I want to talk about a couple of housekeeping rules.
Number one, that we do have Wi-Fi access available, go to Marriott Conference, and then the code is capital IN 2019. For any of you who want to get on Wi-Fi, that's there. The second thing I want to talk about is we have a very dense day today, and you're going to hear from a lot of speakers with very compact presentations, and we're going to keep on time, and I need your help to do that because you may have a lot of questions, and that if it's like any other investor conference I've been to, it's like, "Okay, well, take me through the whole deck." I'm like, "Okay." I get on slide one, and we boom, we go off that. Which is okay, but here, we really want the presenters to get through their presentation.
They've set them up, so they've left themselves time at the end of their presentation. We'll take questions through that period and then move on to the next presenter. If we're not getting all the questions answered, then later on this afternoon, when we're in the cocktail hour, that we can certainly make sure they're addressed. I'm going to ask all of you to help us stay on time. This is not a day to lay out a brand-new strategy. Our strategy is the same, and we've been talking about it for the last three years, that we believe in this concept. We believe there's room for 1,700 units out there. This is a strategy of combined corporate and franchise growth, it's predominantly driven by franchising.
What you're going to see today, more than anything else, is the people, the executives that are going to execute to that strategy. They're the ones that are really going to be sharing their story with their discipline of how we're going to get there. I just want to cover a couple of points in my time here. I want to talk about our mission, vision, values, because I think that's exactly the core of how an organization aligns itself and goes forward. People have to have a shared mission. They have to understand the vision. Where are we trying to go with this? We need to have shared values.
As we go through creating that vision, it's those values that help us get there or guide us in the process of decision-making so that we continually stay on track to our mission and to our vision. Then I'm going to talk a little bit about the market itself. Certainly, what you're experiencing is that you're going to see a very strong franchise team in place, an executive team in place that is executing on the line level. At the same time, our market is expanding. I'm going to talk a little bit about that. What's happening is all the improvements and the things that we're doing better and better are being amplified by a market that's growing. That's a really great place to be when you look at where we go as an organization to achieve that vision that we set for ourselves.
I'm just going to go through quickly. I'd like you all to memorize our safe harbor statement. When you're done, we'll go on to the next slide, if you all got that memorized. These are the things I'm going to be talking about, is we've talked about that 1,700 path. How are we going to get there? You're going to see today what that's going to look like. Who are the people driving us to that ability to achieve that 1,700 plus units? We have a really simple mission, and it's a very powerful mission, to improve quality of life through routine and affordable chiropractic care. I can't emphasize how profound that is for our franchisees, for our doctors, for the staff. It gets a level of engagement and commitment. Can you imagine your job is to improve quality of life?
That's a very powerful place to be, and that we really utilize this as a true mission. You'll see this mission on the wall of every single clinic that we have out there. What's our vision? Where do we want to grow when we grow up? What do we want to be when we grow up? It's pretty straightforward, is we want to be the premier provider of chiropractic care in wellness and health plans. We want to double our footprint. We want to be the career path of choice for chiropractors. We want to create a world-class culture. We want a robust regional community, regional developer community. We know that the regional developer community is the key to accelerating growth, and we're going to spend a fair amount of time talking about that today. Finally, we want to build and maintain that world-class IT structure.
I recently was at the International Franchise Association Convention. This is a gathering of all franchisors in the country and some from around the world, virtually the entire conference was dedicated to this whole issue of consumers are gathering information in a fundamentally different way with technology, which is influencing how they are choosing the products and services that they are offering, that the franchisor is offering. How are you going to take advantage of that? How are you going to make sure that you don't get left behind? We spent a lot of time talking about the importance of that IT platform that absolutely runs our business and where we're going with our new program with SugarCRM. Values. Values are aspirational. These are what we put on the wall every day.
From my experience of building and managing franchise systems for 30-plus years, that core value of trust defines everything. Franchising is like marriage. In some states, it's easier to get a divorce than to break a franchise agreement or terminate a franchise agreement. This isn't just a one-off deal. We're entering into this 10-year relationship that can go on and go on, and go on. In any kind of relationship, I've been married now for 36 years, and what's one of the things you can talk about being married for 36 years? You're going to have conflict. That it's part of the process. What's important is that as long as you hold that value of trust, there's not a single conflict that you can't overcome, because what you find very often is you're just trying to get to the same place from a different perspective.
This is even more true in franchising. This is how franchisors are kept really current and able to go forward with that business model because the franchisees aren't paid employees who just say, "Okay, do it or I fire you." They're people who have a vested interest in the outcome. They're focused on what we're trying to do, and together we're able to find the best solution in the various issues that we face as we grow this business. Integrity is a simple word, but all it really means is, to me, the best definition of integrity is the words I use and the actions I take are in alignment, and that's really important. Excellence, continually striving. There's no franchise system that's done. We are continually changing, evolving, taking place, taking advantage of the changes taking in the marketplace.
If you don't have that striving, you get out of market. You become not current. You're left behind, whether it's technology driven or otherwise. Respect. This is the core to how we talk to each other, is, if you respect somebody, you can disagree, but you can talk and you can share information. That's fundamental in the franchise community. Finally, accountability. It's really important that we share an understanding of roles and responsibilities and hold each other accountable to it. Franchising is a really interesting way to run a business. There's nothing intuitive about it. It's really critical that both parties understand the roles and responsibilities to most effectively utilize the time that we have to build that business. The opioid epidemic continues.
I'm not going to spend a lot of time on this, but this is just ripping this country apart and we're all looking for non-invasive ways to get out of pain that are non-opioid based, non-knife based. This is certainly one of the drivers of why chiropractic care is becoming more and more relevant as this country deals with this pain epidemic. The growth. What's going on with this chiropractic market? 50% of the American people don't even know what the word chiropractic means. 30% are scared, but they'd be interested if they had somebody who could help them cross that bridge. "Oh, I know it's bone cracking. Oh, I don't want you to touch my neck." That's part of that fear of those 30% who are in pain and looking for ways to address it.
Finally, 16% of the American people are using chiropractic at least in the last 12 months. What happens when that 16% goes up to 17, 18, 19, 20%, you get that critical mass? We're right at the forefront where that's happening in that retail center. Our target audience is relief seekers. Predominantly Millennials. 39% of our patients today are Millennials. 34% are Gen X. These are the people who are looking for that non-invasive way to get out of pain. What moves them forward? They need a relief. They need a story. They need to understand how chiropractic can help them. Being in that strip mall or that daily-use center where they get their hair cut, buy a frozen yogurt, now get chiropractic care, is what's driving this business.
Many of you have heard me say that 26% of our patients, we had 434,000 patients who opened that door for the first time in 2018, 26% of them had never seen a chiropractor before. Those are amazing numbers in a retail where 26% of the people who open the door for the first time have never used your product or service before. That's pretty indicative of the future in front of us. What I love about this slide, this is a Google Trends map or slide. What it's looking at is just how many times the word chiropractor and chiropractic have been searched. I was told 80% of all searches take place on Google, this is going from 2004 to present. What you see there is that steady increase in the search. People are looking.
If you can see the point at 2010, it starts jogging up. Why? My theory is The Joint Corp. was formed in 2010. We went retail. People had more and more exposure to the concept of chiropractic in that professional setting. You can see that trend line, which any business would love to see. Our path to 1,700. This is what today is going to be about. Today, we're at 454 clinics, 404 franchised, 50 corporate. This is the end of Q1. We have one of the lowest closure rates I've dealt with in franchising. We have a very small transfer rate. Our franchisees love this concept and continue to grow with us. Today, these are the people who are going to tell you how we're going to get there. I'm really excited.
I've been involved in franchising for a long time, I could not be more proud of this team up there that profoundly understands our business model, is executing at the highest level, I think really going to allow us to achieve this vision that we've set out for ourselves. That's the end of my formal remarks. Questions for me, you can hold on because you've had a lot of time to talk to me, we may this eve in the afternoon and the break's going to come to me. With that, I'm going to turn it over to Jake Singleton, our CFO.
I'm going to use the podium if that works. Can everybody hear me? Great. Sounds good. Again, I'm going to echo a lot of what Peter said. A lot of what I'm going to do today is table set. You guys have heard our speech, you've heard the pitch. We've gone through the investor decks together. I'm going to table set some things, and then I'm going to get out of the way. We are really proud of the management team and the executive team we have in place. We're going to let them give you that, really the heart and the details behind it. But I'll just do a little table setting for you today. Here we go. Another quick footprint. As of March 31st, 454 clinics open across 33 states. Two shades there. The lighter blue, that's our Regional Developer territory that's covered.
Again, we're doing this at the state level, not all of each of those states are covered by an RD, but if it's in that lighter blue, that is Regional Developers covering some portion of that state. The darker blue is where we're still doing direct franchising. We've talked a lot in the past. Currently, we've got about a little over 50% of the MSAs in the country are currently covered by a Regional Developer. Of our franchise units, a little over three-quarters are under the purview of RD oversight right now. Where are we going? This is that same 1,700 that we've shown time and time again, this is our heat map. Again, if you drill down in there, we've talked a lot about it in the past.
There's 1,700 circles out there as to where we think we can place these clinics and have a high likelihood of success. Richard Matthews, the gentleman that does the heart of this analysis, is going to present today. I won't butcher it up here right now. I will let him walk you through all the details. It's an amazingly deep dive into how we come up with this potential. We believe very strongly in this assumes no growth in the chiropractic market that Peter alluded to. Growth strategy, same thing. It's our same dual strategy. This predominantly will always be a franchise concept that will be the majority of the units in this system. We're going to complement that with our own corporate portfolio. When you talk about the franchising side, that is going to be led through the Regional Developer strategy.
They are the key accelerant of what we're doing here. We're going to leverage them. We're going to continue to leverage them. You talk about our corporate portfolio. Again, that's a mix. It's either going to be greenfield units, that de novo development that we're going to do from the ground up, or the acquisition of greenfield units. We're going to talk about those two tactics a little bit more here in a second. Really in 2019, you can see that the momentum that we're on right now. Q1 2018, we sold 16 licenses. Q1 2019, we sold 30. You guys heard on our first quarter call, they sold 30 licenses in April alone. Again, some of that is driven by the timing of our Franchise Disclosure Document to kind of front-loaded some of the quarter there.
To have 30 license sales in a month is incredibly impressive, and that's the momentum that we're on right now. Clinic openings, again, doubling Q1 2018 to Q1 2019. We're back into corporate development. When Peter came on board, we really shut down the expansion of our corporate portfolio, and we're back into that. In Q1, we opened up those two greenfields. We also acquired a unit back. We also announced that in early April, we opened a third greenfield unit. Going back to that first pillar, that franchise expansion strategy, again, the RD model, we believe very firmly that that is going to be a key accelerant of our growth. We talk a lot about getting to that national scale of recognition.
That 1,000 units is that tipping point we want to get to, and the fastest way we're going to get there is to open as many storefronts as we can. We think the regional developer strategy is going to take us there. We've got 21 regional developer teams in the field right now. For us, that's 21 people out there looking at real estate, 21 teams selling those licenses, 21 teams helping us with training, helping us with ongoing support. We're seeing that momentum. We talked about it, 22 licenses in 2016, 37 in 2017, 99 in 2018, and we've got 60 through April. We are seeing them accelerant. We talk a lot that if we're not seeing that acceleration, the strategy isn't as robust. They are absolutely performing to a high level. We're really excited about their progress.
Just a quick refresh on the economics there. For every license that they sell in their territory, they receive a 50% split of that license fee. For their ongoing support, training, and all the other obligations, they do receive a 3% cut of that 7% royalty that we charge. We go to the second piece of our strategy, our corporate clinics. Those that have done a model or done some modeling on the company, it's a high cash generative business. The unit economics are strong. We believe in our corporate clinics. We're going to talk a little bit more about how we are going to redeploy that capital and kind of continue to expand our corporate portfolio. Three real ways that we can deploy that capital. The first is really reacquiring those existing units from franchisees.
The second, that de novo corporate greenfield development. The third is we can reacquire those regional developer territories kind of as they reach maturity, and we can recapture that full economics. The first one we'll touch on is just the franchise unit acquisition. The objective here, it was the premise of the IPO. We know the unit economics of this business are exceptionally strong. To go out and target some units that are out there. Franchisees sell for a variety of reasons. We have the right of first refusal on any deal that is proposed to change hands in our system. Right now we're focusing that in our current geography. We have Southern California, Arizona, and New Mexico as our current footprint. Our current strategy is to continue to cluster where we have overhead.
We're going to talk a little bit in a second, what is the potential, where we could go for those additional unit acquisitions. Again, this was part of the premise of the IPO. Let's raise some capital. Let's go out there and start our own portfolio. I tried to kind of give some historical background as to. We've done a number of these. We've done I think 19 transactions now, 17 on the heels of the IPO funds. We did one reacquisition in 2018 and another one in 2019. I wish we could get them all for $30,000. We're not going to see that. Again, these are very unique circumstances with franchisees. You can see the average price of the early cohort there was about $230,000 per clinic. We have developed a buyback analysis tool that we use.
We go through eight different fields of criteria, and we grade each of those to give us an idea as to what we feel is economically viable in terms of the valuation of that unit. Ultimately, it's a negotiation with that franchisee that results in the end purchase price, and we'll continue to focus on those opportunistically. The second is that greenfield development. We've opened 3 units so far this year: Azusa, Carlsbad, Flagstaff, Arizona. Again, part of the IPO, we went out and built 29 of these from the ground up across 4 states. We've talked a lot about, that's really where we got into an issue with some of the early performance of our portfolio with those greenfield clinics, specifically in Illinois. We turned a lot of those over to the regional developer there in Illinois.
We ended up closing a few clinics. We still very much believe in the economics, and we'll talk a little bit later today how those new clinics are starting out and the continued increase in that time to break-even that we're seeing across the portfolio. The other key stat I wanted to put out there is that we continue to evaluate the territory that we have. We believe that there's ample runway for us to continue this strategy. Peter's talked a lot about, in the past, between 10%-25% of the portfolio could come from corporate clinics. What we've looked at is that our current overhead structure is what we call an area sales manager and a clinical director. That's our outside the four-wall overhead that we put in a clustering of about 8 to 10 units as their level of oversight.
What we did here is we just went out, that same 1,700 circles that we looked at, we looked at all those territories and said, "Where is there at least 8? Where could we build out that level of overhead?" You can see there's still 250+ clinics that could come in that purview of a market that holds at least 8 units. If we step back and look at a market that just has 4 or more units, there's over 400 clinic potential if we look at something like that. Plenty of runway for us to develop our corporate portfolio in conjunction with our franchise strategy. The last is the regional developer acquisitions. Again, not something that's new to us. A lot of the IPO funds were again dedicated to recapturing space for us to move into corporate clinic expansion.
You can see the timeline there. In 2019, we repurchased South Carolina. Very mature market for us. Made a lot of sense for us to go in there and recapture that full economic potential. There are continued runway. We have 21 of them out there. The key there is that we believe in the strategy. We are not going to go out and bring these people on to develop territory and then come back and buy out their territory. We brought them in to accelerate that growth. We will look at it when they mature. It's kind of a natural evolution of a franchise system that we would go back in if they're looking to monetize their asset or allow us to kind of continue our expansion footprint. That'll kind of happen over time as we move into those opportunities.
Really, like I said, a high level table setting. I'm going to turn it over in just a minute here to our VP of Sales and Development that's kind of going to go to a different layer for you there. I might ask also that we hold my questions until the end, because I think a lot of them are probably going to be addressed by the team that's coming up. Really excited to introduce VP of Franchise Sales and Development, Mr. Eric Simon.
Thank you. Thanks, Jake. Great job. The official baton. All right. Got my security blanket up here, my notes, as I fly through. Are we done? Okay, here we go. It's the other way. All right. Thank you everyone for letting me come up here and talk to you for a few minutes today. Again, I'm Eric Simon, the Vice President of Franchise Sales and Development. I've been with The Joint since November 2016, and I can tell you, it's been an absolutely amazing journey so far, and I am extremely excited and optimistic about what the future holds for this company. I'll answer the question, who am I and what am I doing here, right? I have about 22 years of franchising experience on just about all different levels in the franchise model. From the franchisor perspective, I worked with big brands like Mail Boxes Etc.
The UPS Store, where I did domestic or international development. I worked for AAMCO, A-A-M-C-O, for a while, as the Director of Franchise Development. I was a franchisee and a regional developer for a period of time with a brand you probably never heard of before called Extreme Pita. It is actually a small-box QSR type concept. Subway with the grill is really the best way I can explain it. I did that for about five years in Southern California between 2007 and 2012, if you remember that was a real interesting time to get into business for a personal aspect there. We were regional developers of that concept as well. For a while, I worked for FRANdata out of the D.C. area, which is a research and consulting firm that specialized in the franchise model.
We worked with a ton of brands, legacy brands, big brands, small, emerging startups, all helping them with whatever challenges they might have specific to how they're getting to the next level. We did a lot of comparative analysis, a lot of benchmarking, worked with a lot of private equity groups who were looking to acquire franchisors based on whatever criteria they had, EBITDA, category. A lot of big-time vendors who were trying to tap into the franchise space, we helped them navigate through the sea of brands that are out there, because as you know, and I think somebody said that franchisees are contractually obligated to do a lot of things, vendors are always looking to get their services in front of franchisees and vendors, we help them with that.
Being a part of all these different levels, I feel gives me a little bit of a unique perspective on things. I feel I have a good understanding of the impact that our decisions have on the company, on our franchisee base. Because to me, franchisees, they're putting real money into this. They're putting their life savings into this, into a brand that they trust, into a management team that they trust, and to help them and support them reach their personal financial goals and coming from that world, at one point, I take that responsibility and role pretty seriously. That being said, this is what I'd like to walk through with you today. If you were to ask me one question, like what do I want to accomplish in my role? What's the number one goal that I have?
I know we talk about 1,700 units as our long-term goal. My short-term goal is the one I think about every day, is how do we get The Joint to 1,000 open and operating clinics as quickly and as smartly as possible? Right? The reason being is because, there's probably about 3,800 franchise brands out there domestically. Okay? 3,400 I would say, are active, have done some sort of franchising within the last three years. There's only a handful, maybe about 150 of those brands that have hit that 1,000-unit mark. Those brands are looked up on a pedestal. Every other 3,200 brands that say, "You know what? I want to be like them. I want to get to 1,000 units.
How'd you do it?" I think about that every day, that is my goal, is to get there, for The Joint, to get there as quickly and as smartly as possible. With that being said, I want to review with you how our regional development strategy is leading us to that goal.
I want to talk about what our current market share is and our current state of development and what we're doing to get to that goal in terms of the future, then ultimately, not just the 1,700-unit mark that we talk about sometimes as our maximum build-out, but some of the new programs, some of the new tests that we're doing, that as chiropractic care becomes more mainstream and more and more people use it, that we're going to have to start thinking beyond that 1,700 mark and what are we doing with new things to capture more and more of that market. The first thing that goes through my head is that 1,000-unit mark an obtainable short-term goal? That's the first thing I think of.
One of the first things that I wanted to do when I was thinking about that is what have other brands done that are on that pedestal? How long have they actually, from where we are today in terms of our open and operating units, 450 clinics at the end of Q1, how fast have they got to that 1,000-unit mark when they were our size? Does that make sense? All right. I took brands that are in our industry, that I admire over the last 22 years, that some of our franchisees are actually in addition to our concept, which is Massage Envy, Orangetheory, Planet Fitness, Anytime Fitness, Sport Clips, Jimmy John's. These are brands that I think are good to look up to. It is clear that all these brands have reached that 1,000-unit mark in a four to seven-year timeframe.
The two brands that actually hit that seven years, if you remember that 2007 or 2012 mark, it was a lot harder for franchise brands, in my view, to grow their unit count during that time. Franchisees were growing their unit counts because they were picking up maybe clinics or restaurants or whatever the model was, that were maybe underperforming, and they were able to grow their unit portfolio, but franchisors were having a little bit of difficult time to grow their entire unit. This slide tells me that it's very realistic for the short term to grow to 1,000 units from where we are today. The next question I have is our strategy currently right now working to get us or enabling us to get us to that short-term goal of 1,000 units between, let's say, five years or six years?
This is a slide that shows our RD growth versus non-RD growth. The light blue category here, this is from 2010 to last year. When we really started aggressively franchising. The light blue is all the clinics that were open and operating under an RD, regional development area, past and present. All right. The darker blue is for clinics that were sold and open and operated under a corporate area, and the dark blue is our corporate clinic portfolio. What you see here is that, if you go down to that axis, is that the regional developers are responsible for 77%, approximately 77% of our unit growth or unit count. That's a big number. How that relates to the overall system-wide sales is that at the end of 2018, we had $165 million in system-wide sales.
Those clinics that were under an RD model or under an RD territory accounted for $104 million of that. That's big numbers. In addition, not just from a unit count number and a system-wide sales number, they also are responsible for a big part of our national marketing fund, which includes more brand awareness, becoming a household name. The regional developers have made a huge impact, in my view, in terms of where we are today and continuing to use them for the future. Okay. The next question I have is, where do we go from here, right. First, I want to know where do we fit in the chiropractic industry. There's 327 million people that live in America today. According to the Gallup-Palmer Study, 16% of Americans have used chiropractic care in the last 12 months. That's 52.3 million people.
Last year in 2018, we had approximately 560,000 active unique patients. If you do the math, we only have 1% of the actual business that's out there. We have a massive opportunity in front of us. In fact, we have to get these clinics open fast enough so the people who want to use our services can. All right. The next step is, how do we get there and what are we doing? This is our current footprint now. Red triangles are our franchise clinics. Yellow triangles are our corporate clinics. 64% of our clinics are under RD territory as it sits today. This is where we're going. The next 1,265 units to get to 1,700, this is where we're going. What I love about these circle maps, that we don't have this in any other brand that I went to.
If I went to Subway and paid $5 for a sandwich, you really don't have any idea who I am or where I came from. I probably worked in the neighborhood, I probably live in the neighborhood, I have a 15-minute drive time, right. Guessing. Every single one of our patients, and I don't want to take Richard's thunder, but I'm just going to give you the gist of it, and he'll just going to go into more detail about these circles and who our patient count, all that kind of stuff. Every single one of our patients has to fill out an intake form. We almost have a complete demographic of who our patient is. We plot all these 560,000 people on a big map. All right.
We understand their demographics and psychographics, then we purchase other information based on our customer of today, who our customer of tomorrow is, we draw a circle around it. You count up all those circles, you get to 1,719 clinics. These are the areas where our core customers are. This is where we're going in the future, this is what our maximum build-out will look like when we get to 1,719 units. Almost 1,000 of them are going to be in the RD areas as it sits today. Okay. To make sure that we get to that point, one of the things that we make sure is, our franchisees are our number one asset, but very close to that, in my side of the world, is our regional developers.
We have to make sure our regional developers are prepared, have the tools, have the support, all the processes, and everything at their hand so they can reach their goals so that we can reach our goals. All right? We develop all sorts of real estate manuals, franchise sales process, construction manuals, as you can imagine. In addition to that, something that Jorge Armenteros brought up, about a year and a half ago, our quarterly business reviews that we do every quarter, with our regional developers. Every single one, at the end of the quarter, gives us a complete review of what's happening within their region. For me, what that allows me to do is make sure that these regional developers are proactive in identifying spots in those circles, because that's where we are going, even if they don't have franchisees ready to go.
We know that, and you've seen a little bit here, real estate is our largest, or takes the most time in our opening process. Find a site, negotiate a lease if there's a third party involved. That takes the longest time. If we can get proactive about that, because we know the areas we want to go into, we just got to find the shopping centers and the right space within those shopping centers. If we can have 3 deals approved by corporate and letter of intent signed that we can show a prospect right when they come in or a candidate who would become a franchisee and sign an agreement, we knocked off months at a time in terms of opening these clinics. That's something that we try to push in that QBR.
If we don't have a franchisee for that circle, then what are we doing to get there? All right? The regional developers are contractually obligated to generate leads for their area, right? There's an economic piece to this, a resource piece to that. This is the organizational structure for the franchise development department, real estate, construction. Our national regional developer director's sole purpose is to support our regional developers on the franchise sales side all the way to lease execution. Once we have an executed lease, we plan on opening that store, right? That's the major part right there. There's about 8 people who are in our department, including ourselves. 6 out of the 8 are really focused on the regional developers and supporting them in everything that they do.
Now we get to, we talked about this a little bit earlier, but now we get to talk about how well are we doing with all the resources and the regional developers. You can see on your side, left side, franchise sales, we have seen a huge spike in that in the last year, right? In 2016 and 2017, we totaled 59 franchise sales. Last year alone, we had 99. What would you call that? 82.9% of that is from regional developer areas. What's great about that 99 is that 60% of that is coming from current franchisees who are reinvesting back into the brand. They feel good about their support. They like the economics that are happening. The break-even numbers are going great. The morale is up.
The other 40% are buying because, in a lot of cases, the positive validation that they're getting in the field, right. We have, again, 40% of new people, new blood coming into the system, which is extremely valuable. This year, almost all the sales have come from our regional developers. We already have 60, which is more than 2016 and 2017 combined. One thing I wanted to mention here is, I know franchise sales dollars doesn't necessarily hit the bottom line, because they have to amortize over 10 years with the franchise fees and stuff like that. This is cash that we can use to do other things with, like corporate greenfields, like acquisitions, like build the infrastructure so we can get to 1,000 units and beyond.
Very important that we keep filling this pipeline for a variety of reasons, most notably to get them open, right. Out of 2016, we have 56. We need to get these open faster. There's no question about it, right. The real estate portion takes the longest time. We got to figure out ways to get proactive, and part of that is to get our regional developers with a drawer full of sites ready to go, so when they have a prospect ready to sign. That knocks out again months at a time. The good thing is that we're on the upswing about this. At the end of Q1, we have 12 that have opened. That's five more than we had Q1 of last year. We feel very strong that we're going to hit our guidance number, 70-80.
A bunch of that reason is because we have 172 franchise agreements and letter of intent signed, but not open yet, in various stages of development. If I came up here and said we had 50 or 40 of those, I'd probably have a different conversation with you guys. We already have the sales in place to get these open. We're not looking for sales right now to get them open. We're looking for future years. We have the sales ready to go. They're just in various stages of development. 172 are not going to open in an 8-month timeframe because franchisees buy more than one, and their development schedules are stacked. They might open a couple one year, a couple next year. We have the numbers to get to where we want to go, and 85% of these deals are from regional developer territories.
Okay. All right. We have to continue to feed the pipeline. If I do the math in my head, we have 454 open and operating clinics, we have 172 franchise agreements and letter of intent signed, but that doesn't equal 1,000. We have to keep feeding the pipeline to get to where we want to go in the short term. I just wanted to give you guys a quick idea of how our tools and processes and sales are working, or protocols are working, because that'll tell you based on a lead-to-deal percentage, all the support tools that we're giving our regional developers, are they working or not? Then also where we get our deals. What I mean by that is we have really three buckets of franchisees. I can put our franchisees into three buckets.
One is doctors who are open and operating clinics. I would say that's anywhere from 26% to a third of our network. Which is a great bucket because these doctors who are opening clinics are not looking at any other franchise to open. They're not looking at QSR, gyms, business services. They're only looking to open a clinic. That's their passion, is doctors. We have a whole lead database that nobody else has, and we'll talk about more of what we're going to do with that in a second. The second bucket is our biggest bucket, and they're what I would call typical franchisees. They own between two and seven clinics. They might be transitioning out of the corporate workplace. They might be serial franchisees, which means they own a couple of brands, same industry, but maybe have jumped brands.
In my personal experience, there's very few people that jump industries, like QSR to health and wellness or something like that. Maybe a few, but usually, they stay in the industry and jump brands. Everybody's fighting for those franchisees. We have to cast a wide net in terms of marketing to get those. The third bucket, and we have a few of these, are I would always say family, mini private equity groups that have 40 or more clinics. They have strong financial resources, they have strong organizational structures. We have a few that are coming up that'll probably also be in that 20 to 30 category. Each bucket has different messaging, and each bucket has different places where to find these people. We have to really get creative, make sure we're zeroed in on our message to attract these people.
From a franchise sales perspective, we have all the same challenges as a typical franchise company has. All right? To extend on that, we actually have three additional ones that very few franchise companies have. One is when you think about owning a franchise, do you think about chiropractic? When people think about a franchise, it's food or a gym or something like that. The second, if they do realize that they can be a chiropractic franchise owner, they think you have to be a doctor. Again, that's not the case. Three, when we get past those two things, we have the PC model, which I think I finally understand. It was a little bit difficult when you first are exposed to that. All speed bumps.
Everything that we've actually accomplished in overcoming, actually, our regional developer director has done a great job in having our candidates and franchisees comfortable with the PC model. All of Yes, sir.
What percentage of the chain is the mega franchisee?
Very few. I don't know the percentage, but we have two franchisees that are over the 40 clinic mark. We have a couple that, though, are going to, let's say, dip their toe in the water by opening 2 to 5 clinics and then grow to that 20, 30. All right. We'll just go to this slide right here. One of the things I wanted to show you is our overall lead-- This is the most important KPI, is this one over here on the left. The lead-to-sale conversion rate. That's the one that will tell you just about everything. Overall, the franchise industry is at 1.6%, lead-to-sale close ratio. I like that number. It might seem high because for years in franchising, it's been 1-1.2.
A company called FranConnect, who is very well-known in the franchise industry, they have a contact management system, which a lot of franchise companies use. Right? In end of 2017, they had 462 brands that used their franchise sales module that accounted for 11,500 actual sales. It goes into the cloud, and they aggregate all this information. To me, this is gold. The people who put in their reporting want to have a report that comes out that shows fact of what they're doing and validating everything that they're doing. I feel very comfortable that 1.6% is what we need to benchmark ourselves against. Oops. You can see that last year and this year that we are at least doubling that number. Our region developers are doing even more than that last year in terms of lead to sale.
From our processes, our marketing, where we're getting leads, everything right now I feel comfortable is working. Where are we getting these leads? The majority of them is through the internet. We get referrals. Chiropractic Economics is like a trade publication. And obviously patients are our big deals by source. Website's not necessarily a bucket. You got to break that down. We do a lot of blogging, a lot of fresh content so that we're on top of the Google page. Facebook has done great for us. You can see where we get our leads. Just some other notes is that, obviously we got to track our cost per lead and cost per deal. We're right in line with everybody, except for our cost per deal, we're much lower.
We believe in clustering, we get a lot of franchisees that buy more than one unit, more than one license, that would be why this is much lower. I'm very proud of that number. From a timing perspective, that lead to sale, we're at that 152-day mark. In my experience with other brands, they're really more in the 90-120 day. Because we have those three extra challenges, sometimes our franchise sales process takes a little bit longer, I don't think we're going to really get out of that. We might be able to shave off 20 days and stick to the 120-ish timeframe mark for a sale, but I'm pretty comfortable in knowing that we're going to be a little bit longer than a typical franchise.
Once we get a deal to open in the eight-month timeframe, we got to shorten that, right? Part of that is getting proactive on the real estate side, because that, in some cases, takes months. Okay? That's what we're doing now. Finally, some of the things that we're doing, I should say as chiropractic care becomes more mainstream, as we go from that 16% of Americans that have used chiropractic care in the last 12 months to 18, 19, 20, 25, we need to start thinking, where else we're going to go beyond that 1,700 unit mark. Here are some of the things that we've been either testing, talking about, and actually executed on. The first thing is the rural and the super urban model.
When we talked about that first category of doctors who are franchisees, the unit economics change in the model because if they're owner-operators, they're not paying for a doctor, they're actually paying themselves. The question now is how many more circles are out there if we can lower the population density, but we have a doctor who's the owner-operator? What are the profitability and unit economics of that store? Because there's a lot of those in Texas, Oklahoma, Alabama, California, and upstate New York where there are no circles. We can immediately take a look at that now and see, where should we go in terms of population if we have an owner-operator. Okay? The super urban model locations.
We have circles already in Manhattan and the Bay Area peninsula, for instance, or Boston, we really need to take a look at the economics. Rent's more expensive, personnel is more expensive. We need to start to think about getting creative in terms of entering these markets, because there's a lot of population there's a lot of density there. People need chiropractic care there. What is the best way for us to enter that market? Those are some of the things we're talking about in that. Then this one, I think, this is kind of near and dear to my heart, the DC Path to Ownership Program. We again have this pool of leads where they're not opening up any other business besides a clinic, right? Whether it's us or an independent, to be quite honest. That's the two things you can do.
At a very early stage, doctors are taught to open a clinic, right? To be successful. I think a program like this moves the industry instead of just The Joint, right? We want to help the industry get these DCs or doctors to reach their dream of owning their own clinic. A lot of them can't because of financial issues with just student debt. A lot of them don't necessarily have the business experience to do it. Some of the DCs fail. If we can team up our doctors with some of the most successful chiropractic business owners in the world, which are franchisees, I think we got a program that we can really market and grow. The way we would do that is through apprenticeship, through mentorship, then obviously through partnership with our franchisees.
We have a doctor that comes in, works for a franchisee for a couple of years, hits certain KPIs. Next stage is to mentor him on just running a business in terms of a marketing plan, managing people, how to read a P&L, then together open up a new clinic at, if the franchisee is putting a bigger initial investment into it, at maybe an 80%/20% ownership stake and things like that. From a transition period, if the franchisee feels comfortable, is that that DC will actually backfill his position, train that position, because he's going to have to do that stuff in the new store anyway. Then, build a business plan for the new clinic.
I could probably spend an hour talking about this slide, but I think this thing, as we go forward in the future, is something that we really need to dive into and sink our teeth in. Then, as we continue to grow and as we understand more about who wants and needs our services, you begin to realize that in order to bring more brand awareness and expand, we have to start thinking about out-of-the-box, non-traditional type locations. Okay? By teaming up with other concepts, we're able to reach a customer base and people who need our services that we might not have been able to get before. One of the things that we've already done is teamed up with a concept called Relax The Back.
If you haven't heard about this, Relax The Back became our franchisee in 2018, they opened up the first location, February 2019. Okay? They are a franchise concept. They have over 100 units. Two are corporate. One of those are in Burlington, Massachusetts, which is a brand new state for us to get into. They are a retail concept that caters to people who are in pain. They have a similar patient that we do. Right? They sell massage chairs. They sell ergonomically correct furniture. They sell pillows and all sorts of stuff that helps people get out of pain. What we did was, we carved out 268 sq ft in a 2,400 sq ft footprint and put The Joint inside the Relax The Back location. Okay? In an area where Well, I shouldn't say that. It's a great model.
You walk in, you go to the desk, the wellness coordinator gives you the intake form that you need to fill out in an $8,000 massage chair. Okay. The person's in the massage chair, assuming the wellness coordinator can drag them out, and not sleeping. They walk 10 steps in front of all the merchandise, they go to the clinic, which is right there. The doctor does his assessment, his adjustment, the treatment, walks back across all the merchandise, gives it back to the wellness coordinator, he or she converts the sale, and they have a new member. Right. This bolt-on project that they're doing is already above historical ramp-up clinics that are out in the street in a typical concept. We're really excited about it. Relax The Back is a great franchisee. They're a franchisor. They understand what it means to be a franchisee.
They haven't changed the model, we're excited to see where this can expand in the future. All right. I know people, this is, as we continue to go to cities that are more on a maximum build-out level, right, we still have to figure out ways to continue to gain market share. I've been talking about airports for a while. Millions of people, some of you guys just came from them, go through the airports every year. They sit in a small chair. There's a lot of tall people here. They get uncomfortable. They get back pain. They get migraines from trying to rush through the gate, take their kids. I know you packed about 75 pounds of stuff in your carry-on that you're pressing over your head into the storage bin. These are our patients times 10 in terms of dealing with pain.
All right. AviationPros in 2017, which is a trade publication, said that in the major hubs, once people go through security, they spend 137 minutes at the airport. In Austin, Texas, where one of our franchisees is going to break ground this week. The dwell time is 90 minutes. Okay. That doesn't even include the people that work at the airport. In some cases, tens of thousands of people work at the airport or are throwing around your heavy luggage, standing on their feet all day, getting yelled at. Same pain, same stress, same migraines. That's a perfect patient for us. Our franchisee has teamed up with XpresSpa, which is the leading spa massage service in airports. According to their deck, they have about a 50% market share in that.
We'll be opening up the first Austin, Texas XpresSpa, Relax The Back. By the end of Q3, it should open. Okay. It should be breaking ground soon. That's really it. Our regional developer strategy is working, okay? We got to continue to feed them, support them, and give them the tools that they need to succeed so we can hit our goals. We're outperforming the franchise industry in terms of the most important KPI, which is lead to sale, that's what I look at a lot. We are setting the groundwork for new initiatives and new programs, so that way we can not only hit our 1,000 units as quickly as possible and our current maximum build-out schedule of 1,700, but beyond that. That's it. Any questions? Yes, sir.
Sir, can you talk a little bit about the relationship between franchise sales and franchise openings? If you look at the year over numbers in 2015, 2016-
2016, 2017, and 2018, they don't quite match up. Can you just talk about the flow?
Yes.
One point.
Sure.
Please repeat the question because it was kind of quiet, so I don't know if everybody here can hear the question, but could you please?
Okay. Let me make sure I understand it too. How does the flow work in terms of franchise sales to openings? Because we have 99 sales, let's say, last year. Is that going to equate to 99 sales
We could start with 2016.
Yeah. This is my theory behind it, okay? I'll tell you. In 2016, the morale and everything opposite of what was happening right now in the franchise community happened in 2016 in that timeframe, which means people weren't excited to expand. Right? Validation wasn't out there or wasn't positive to other candidates to sell more stores. Feeding the pipeline in terms of franchise sales was very low in that timeframe, which means you're going to have a lull in the opening process because you just don't have that pipeline filled.
One of the things that we did have that kind of helped us, we didn't take as big of a dip, maybe is kind of what you're insinuating, is that we had a bunch of franchise agreements sold but not opened, that franchisees were waiting to see how the unit economics were going, how the new break-even numbers were going, what new patient counts were doing. Obviously last year in particular, we're seeing a lot higher morale, more franchisees excited about the brand, and that usually equates to more openings. Did I answer?
Yes.
Yeah? Okay. Anybody want to add to that? Yeah.
For the franchisees that are not DCs, do you help them find offices, contract it, or how do they go about it?
Yeah, I know these guys are probably going to talk about.
Can you repeat the question?
Oh, sorry. Do we help our franchisees who are not DCs with finding a doctor for their own clinic? We have a toolkit that we provide our franchisees, and a process and a procedure for them to go out and find it. I don't know what's going to be in your presentation in terms of where, but we do help our franchisees, support them in helping them find DCs for their clinic. Yeah, we help them out there.
It involves the contracting too?
That's what he's going to talk about in a little bit. Yeah, absolutely. Yeah. Which is a big part of not just DC recruitment, but reputation and all that kind of stuff. Yeah. Okay, I'll remember this.
I'm just following on Mike's question, but do you see a fallout from franchise sales to clinic openings? Are there people who sign up and then decide, "I'm not going to open a clinic for whatever reason?
Good question. Yeah. Do we see a fallout in franchise agreements signed, but they never open, right? Essentially.
Yeah.
I guess it depends what the fallout is. There's always going to be franchise agreements that don't open, right? For whatever reason, personal lives get in the way and all sorts of stuff. We have very few in our system that we had to, let's just say, terminate without opening. I probably can count on two hands over the last three years, how many that has been. A lot of it had to do with people on pause. Well, a lot of people who were delaying opening was on pause because of the unit economics, because of the break-even timeframe. Now, with everything on the up and up, we've been seeing more of these guys not only just fulfill their requirements from the previous agreements they signed, but buy new licenses. It's been actually kind of a 180.
There are franchise agreements that signed but not opened, but for us, the termination process is very few. Very few.
Thank you.
Yes, sir.
You mentioned the super urban model, I'm just wondering, how do you get creative? What are your-
Thoughts on how you approach those markets?
Yes. It's going to take a team effort to come up with a lot of these answers, but some of the things that we've been thinking of before is Oh, sorry. How are we thinking about getting into the super urban markets? All right? Real estate's one thing, right? We have an 800 to 1,200 sq ft model right now. It's kind of our sweet spot, which is what everybody looks for in the small box retail, to be quite honest. How small can we go to make sure that a real estate rent is in line with our unit economics? Can we do a 500 sq ft? The Relax The Back model says we can go pretty small because we only have a 260 sq ft model inside their clinic.
I hesitate to say this without talking to the team back there, you know what? If we're on the street level, which is where they're most expensive, can we maybe go on the second floor? Right. Can we team up with some of these other concepts to have a, like Relax The Back, to go into more of these urban locations where they're in already. Those are kind of the things. Do we have to raise our prices? All that kind of stuff I think is on the table in terms of super urban. The other thing is the hub and spoke model, which is always in my head, right? Maybe you have one on Main Street, but that same franchisee has four or five. I grew up on Long Island.
You could have one in the Chrysler Building on floor 8, as long as they have their main base on the floor level. I think we can get creative on that, as I think there's some good ideas in terms of that. We just have to get together as a team and test it out and make sure it's the right way to do it. Oh, I keep pressing. Sorry. Yes, sir.
I'm just wondering, just on the financing end, are there longer-term opportunities to play with the economics with future RDs or with franchisees?
There-
Like instead of taking 3% back, take 2.5%.
Changing the unit economics on an RD? I haven't any. No.
It's really hard to do.
A franchise system can from time to time change its royalty structure. It can change the RD structure. Once you establish kind of your framework, because if you're buying into this as uniform experience, it's very difficult to make a change to those numbers. It's very difficult. It can be done. There's no law that requires you not to, but it's not an easy thing to do, and you'd have to have a compelling reason to make that kind of change.
Yes, sir.
In one of the slides, I think you showed that future growth is going to be about evenly split between the RD structure and the non-RD structure.
As it sits today.
Can you talk a little bit about that? You're seeing tremendous growth in the RD units today. Why is it you think you're going to get more balance between the two models as you go down the road?
Well, that's a good question, and I'm not sure. Okay, let me repeat the question.
RD units tend to be.
Yes. Do we have more in the future? Let me go back to that slide. That might help me do the question here. This one. Right? Why are we going to be more evened out.
Yeah
from an RD territory and a non-RD territory? Well, I can tell you right now, this is as it sits today with the RDs that we have today, and there are some major markets that do not have a regional developer. I'll tell you, the whole North, well, just about the Northeast, I'll say from New York North is no RD, and we can have 400 units up there. My plan is to have an RD up there because they're going to help us on the ground. You got somebody local who understands brokers, understands the way to do business in New York because it's different doing business.
You know.
I do, right. I know how it is. It's different. I do plan on, I think it would be wise for us to continue to look for a redeveloper in that location, which means this will actually go into that side. Yeah.
Okay.
Yeah. Thank you. Yes, sir.
Would the concept ever make sense in a retail pharmacy? CVS and Walgreens combined have almost 20,000 units. If there's a mini clinic with digital medical services, that's something that could ever be an option for at least a pilot?
I can tell you from a franchise development standpoint, everything's on the table. It depends on everybody else, operations and stuff like that.
Okay.
Oh, sorry. It might be New York in me. Five minutes. Okay. Would we go into one of these big companies like Walgreens or CVS and do some sort of model where we'd be in one of their type of venues? They have so many stores across the country, especially Walgreens, has great real estate, right? They're known for their real estate. Again, I don't see why we wouldn't entertain that idea. We're in daily-use centers. The biggest thing for us, I think, is being in daily-use centers where the convenience factor is there. I think affordability would be there. As long as it's where people go that they would want to do that on a weekly basis, I would say absolutely, we should look at that. I don't see why we wouldn't. I think the rent would be good.
On a franchisee base, we had to see if the unit economics makes sense, because I don't know what the number of patients we would get through there. We just have to see and do a test, but I think it's a great idea. There's a lot of locations.
20,000 in New York County.
That's much more than 1,700.
That does not count the corporate.
Thank you guys very much. Now I'll bring up the brains in terms of all the real estate side. He's going to get into a lot more details with the demographics and how we created these circles, which I'm sure you guys are going to love. Richard Matthews, please come on up. Our Director of Real Estate Research.
Hey, take my keys back?
Yeah, you got it.
My name is Richard Matthews. I'm the Director of Real Estate Research at The Joint. I've been here for four years. My background is in academics. I was a geography professor at the University of South Carolina. My specialty in geography is economic geography, which is the science of the location of business. They always say, those who can, do, those who can't, teach. I moved from teaching to doing, and I worked at PetSmart for 10 years and helped open 700 clinics and develop their models. I've been at The Joint for four years, and we've built 220 clinics in the time that I've been here.
Today, I'm going to talk about what we do in the real estate team, what our goals are, what our models are that we built, and the tools that we use, what our deployment strategy is, where we look for clinics, what our location criteria is, what the kind of centers and sites we look for, how we go about getting a site accepted into our portfolio, an expansion of new potential markets that Eric touched on briefly. What do we do in the real estate team? The first thing I do is organize and describe real estate data. I have hundreds of thousands of patient information, patient points, patient data. I have 400 demographic criteria for every clinic. The first thing I do is organize all that data into a big database. What does average look like for us?
What does a standard deviation above and below look like for us? What does good look like? What does a challenge look like on all those data points? That answers the question of what. What do we have? What kind of information do we have? That doesn't tell us anything about how or why. The next step is to build explanatory models to help develop strategy. When I build an explanatory model, that's usually regression based, and that helps us answer the question of why things happen. What is the relationship between certain demographics, certain site characteristics, and our clinic performance? By building explanatory models, we can understand why things happen. Once we understand the why of the data, we can develop a strategy and replicate that criteria across different parts of the country.
After we build those explanatory models, we communicate the results and best practices to our RD and franchisee community. We work with franchisees on opening clinics. I evaluate the sites using those tools and models that we built the explanatory tools on. We use those tools to build the strategy and then to build our actual day-to-day operations. In short, we want to understand the importance of location and apply those learnings to new centers. The first thing we do every January, I get very excited on January 1st to get new data. I go and ask our IT department to give me a list of all the patients and how much money they spent in any clinic that we visited. Last year, I had 557,000 patients from 430 units in 31 states.
We had a lot more than that, some of them didn't spend any money. Some didn't have usable addresses. Some aren't in the U.S. In the U.S., this is a map of our 557,000 patients that came into our clinics last year that gave us usable addresses and spent some money. We had clinics in 31 states. We have patients from all 50 states, including Washington, D.C., Puerto Rico, all Canadian provinces and territories. The Northwest Territories and Yukon, they're coming now. We have patients from 24 countries and on six continents. This is a map of just the U.S., and I get very excited when I see all this stuff. It's only 557,000. As Eric said, that's only 1% of the chiropractic universe. We've got a huge runway, even in places where we have a lot of patients currently.
It's a huge runway potential for us right now. After I mapped the patients, I assign each patient to a zip plus four location. The zip plus four, as you know your zip code, every zip code has about 7,000 to 10,000 people in it. The four digits that are added on that no one really knows their nine-digit zip code, but every once in a while you see it on a piece of mail. A zip plus four has 10 households. That's essentially the number of houses on one side of one street for one block. That's the kind of granularity we can apply our demographics to. A lot of retailers use zip codes. You go to The Home Depot, they ask you what your zip code is. They're trying to get the same information that we get from our patient intake form.
The lowest level of geography that's in the census is the census block group, which is usually 1,000 to 3,000 people. We get really granular information about our patients. I divide that up by every clinic we have in the country. This is a map of our patients, in an area of North Phoenix, probably about 8 miles from where we are right now. We're right about here. This is a map of various clinic locations in North Phoenix and where their patients are. The different color dots are assigned to different clinics. By doing this every year, evaluating 400, 450 clinics, we really understand how our patients behave, how they react to things like interstate highway systems, how they react to natural barriers such as mountain ranges, which you see these green splotches right down here show where there's mountains. How do people interact?
How do they interact to other clinics? We see one clinic, which has the dark blue dots, have patients that bypass other clinics. Why does that happen? In this case, it might be that that shopping center is a much more regional draw, located on a highway system rather than a neighborhood location. Also it shows the loyalty that our patients have. By getting in-depth at every clinic level, we're able to understand how that trade area operates, how our patients behave in various geographic settings, how far they're willing to travel, how likely they are to come to a clinic based on the types of centers they're in. I have 400 demographic and psychographic and site characteristics for every clinic that we have. Demographics are measurable attributes of the population, things like age, income, education, number of people in a household, languages that people speak.
All that information, that's measurable attributes of the population. We get that from census information. Then we have psychographic information. Psychoanalytics came about 30 years ago. That shows behavioral or aspirational attributes of the population. Things like how people spend their money, not just how much money they make, but what their lifestyles are, what their priorities are. There's several different versions of it out there, but usually they have about 60-80 different clusters. Psychographic clusters are the term. The one we use has about 70. How they're divided, the companies that create these tools are marketing firms merged with credit bureaus to really evaluate how people spend their money. One example of a cluster number 1, is the wealthiest people in the United States. They account for about 1% of the population. They have graduate degrees.
They're between the ages of 48 and 64. They're empty nesters. They drive German sports cars. They belong to country clubs. We know how many of that cluster goes to our clinics, and we know what their spending behavior is in our clinics. Another cluster is cluster number 49, American Classics. These are downscale retirees, age 65 and above. Money's tight. They drive Chevy Malibus. They subscribe to Reader's Digest, and they go on gambling junkets to Atlantic City. We know how many of them are our patients and how they have spending habits for us. We regress the demographics and psychographics against our sales, and our goal is to put a dollar value on every household in the United States as a potential customer for us. There are 70 clusters in the United States.
I've sorted all our clusters on our over-indexed customers, which is our most important cluster. Then I compared that to the U.S. population as a whole. The lower line, that orange colored line, is the U.S. population as a whole, based on sorting our best customers. About 25 clusters, where our most important customers come from, those 25 clusters account for about 45% of the U.S. population. Those same 25 clusters account for 70% of our patients. These are what we call our core customers. The famous map where there's dark blue colors, they say this is where our core customers are.
Those 25 psychographic clusters who have told us that they're our best patients and how they react to us and how they spend money and how far they're willing to travel and what their lifestyles are like, we know who they are, and we know where they live across the United States. We look for those people, those 25 clusters who account for 70% of our patients. We actively look to see where they live. Who are they? They make up a wide age range. We've heard that Millennials are 39% of our customers or of our patients. Gen X is 34% of our patients, but we have Baby Boomers as well. That's a wide age range. We're not a niche market. We're really a wide mass market. We have a wide economic spectrum, both white collar and blue collar.
White-collar. Our good patients, they say sitting is the new smoking, you've got to get up and be active. The video that we showed is people coming into the clinics because they sat at a computer all day. White-collar people are good patients for us. Blue-collar patients are great patients for us because they're out working their body hard every day and need relief from us. We have a median household income range. Median is a better predictor for us than average, because average tends to be skewed by some very high incomes. Our median household income range is between $50,000 and $100,000. Again, a very wide spectrum of the population. We're not a really niche provider, we're a very mass provider. We have urbanicity of a wide urbanicity too. Smaller towns, suburbs, cities.
Most of our clinics, though, right now are in shopping centers in suburban locations of major cities. We have that large trade area database. Every time we open a new clinic, we add new information to our database, which is 400 different variables across 450 clinics and 500,000 patients. We really know who our patient is, and our patients tell us who they are. All we have to do is listen to them and find more people like them. Here's our national build-out potential. This is a county map. We've seen this twice, I think, already today. Where you see the darker blue colors, those are where those counties have a very high incidence of our core customers, those 25 psychographic groups. We know where they live.
We know every household in the U.S., what their psychographic component is, and we just look for where our best customers live. In those, we've found where shopping centers are, the circles that Eric described. We found there's a shopping center in every one of those circles, and in a radius about a distance of how far people are willing to travel, because they've shown us how far they're willing to travel. We see a certain number of core customers, and if you have that number, in that distance of traveling, we can put a clinic there that has enough core customers to support a clinic. That's how we come up with the 1,700 right now. That's based on current usage and our current business model. Where do we put clinics? What are we looking for? We want to be where the people are.
We call this the Little Mermaid philosophy of site selection. The Little Mermaid sings a song, "I want to be where the people are," and that's what I want to be. I want to be where the people are too. That's really where we want. We want to be where there's lots and lots of people, because that's where it makes it convenient for them. Our three real estate pillars, when we evaluate a site, there's three components that we look for. First, the trade area demographics. Does that trade area have the components of the population that we're looking for? Does it have a group of those core customers? Does it have that mix of white-collar and blue-collar population? Does it have an age dynamic that we like? Does it have an income level that we like?
If that trade area is possible, we look for the centers. We want to be in the centers that most people appear the most often, those busy centers. Within the location of that center, we want to be in visible, accessible locations. Those three things are what we consider when we evaluate a location. When a franchisee says, "Can we be into this center?" Those are the three components that we're looking for. The first thing we really look for is the population. Do we have enough people that can support a clinic? Because, as we've seen, we are only getting 1% of the population to come into our cities. We want to avoid thinly populated areas. Clustering clinics help build the brand. Clustering, we've talked about this phrase before, is really locating clinics in adjacent trade areas.
We find it beneficial to locate in contiguous trade areas, one, two, three, four, as opposed to putting one far away from the second, far away from the third. That helps us build our brand awareness. It helps us operationally, leveraging in market. Putting clinics in adjacent trade areas is really fundamentally important for us. That income range matters. We talked about being between $50,000 and $100,000. We'll go above and beyond that or below that. We'll go into $40,000 income ranges or $125,000 income ranges if other characteristics apply. If there's enough density to support a clinic or the kinds of centers that can draw enough people to us, we'll consider them. The income range is not static. We can be very fluid in that income range. Still, that's most of the people in the U.S.
These are our location-specific learnings for our site selection. A daytime workforce population helps. Our intake form, people indicate where they live, it's more of a residential approach to real estate. We don't really know the impact of an all-workforce clinic. Where we have a lot of daytime work population, we do see in those cluster maps, the dot maps for our patients, a much more far-flung trade area because people are coming during the day to go to us, to visit us during the workday. We don't know what it's all about in just an all-workforce and no residential population. Convenience is the most important thing for us, really. We want to be a part of the patient's daily activity space. Our mission says routine and affordable chiropractic care.
The routine part of it is part of the real estate function. We want to be in the routine you're already on. We want to be in the places you're going to already. In the grocery centers, where you get your hair cut, where the nail salon is, where you go for lunch. We want to be in those centers where you're already at. We don't want to make it a different trip. We want to be just five minutes of your daily trip which you're already taking. That's the kind of center we want to be in. We want to be in those centers where the people appear the most often. Sometimes you see a center that has a lot of people in it, but they're only going once a quarter, once a month.
We want to be in those centers that people are going to twice a week, three times a week, every day for your coffee, for your lunch. Those are the centers we want to be in. It's part of your daily routine. We want to be in your routine space. We want to be best-in-class site characteristics. We want to be visible and accessible. Our clinic storefronts are 15 to 20 feet. We don't have a lot of space, and our clinic storefront is our most important marketing tool, most important brand-building tool that we have. We want to be in a place that's visible and accessible.
A lot of franchisees tell me, "What's the magic formula?" I say, "Being visible and accessible to lots of your customers." There's not a scientific formula that can really get that really easily, but that's what we need, being visible and accessible to our patients. We want to be in those centers that have daily drivers, things like top-tier grocers, multiple restaurant options, healthcare, beauty tenants. We can be in If a center has some kind of regional mini mid-box tenants, things like a Ross or a Marshalls, those home goods that people like to go to more than once a week, more than once a month, we can be in those kind of centers as well, but still visible and accessible. We want to have smart growth as well.
We just don't want to put 1,700 clinics or 1,000 clinics just for the sake of having 1,000 clinics or 1,700. We want all of them to be profitable. Our franchisees sometimes get nervous if one is located kind of close to where they are. They feel very protective of their space. Since I joined The Joint, I've been tracking all our clinics that locate within five miles of an existing clinic. Right now, we have 62 openings since the beginning of January 15. What I'm trying to calculate and capture is the behavior of how patients move from one clinic to another. It's far less in The Joint than other forms of retail. The patients that we have become emotionally attached to their doctors, and they're loyal to that doctor, as opposed to, say, buying lumber or dog food.
People don't have the same attachment to that provider. People are willing to drive past one clinic to go to that doctor that they trust. We see far less patient interaction, patient movement than other traditional retail. I tracked 62 cases, and I'll keep track. Every month, I'll keep adding to that. Our average revenue increase in the existing clinic has been 13% over the previous six months. That's because the clustering helps build brand awareness and because if the franchisee, if they open both, can leverage marketing and leverage operations as well. The new clinics that open are 50% above historical ramps because they're entering a market that already has some existing brand awareness. We want to have smart growth, and this is how we capture that with our encroachment policy to ensure that franchisees maintain their existing patient base.
We have a site acceptance committee, sometimes called a real estate committee. We try to meet weekly to review and evaluate new sites for clinic development. A lot of retailers meet once a month for real estate committee. We try to meet once a week, and that is so that we can get that engine moving faster and get clinics open faster. More clinics open faster by meeting more often. The site committee is made up of senior team members. We provide due diligence from multiple frameworks. We get input from marketing and operations and their experience. The purpose is to accelerate that clinic opening process.
That regional developer and their territory really plays a crucial role because I can't get out to look at every site, that regional developer has to be our eyes and ears on the ground because they want to open strong, successful clinics as well. I train them in what to look for, and they're out looking for us. The results since we established our site acceptance committee, 88% of the clinics we've evaluated are above average. We've had great strides in marketing and in operations. The real estate, the due diligence that we apply through the site committee has helped build the brand as well. The new clinics that we open are 104% above historical ramps. That 88 means of the universe of clinics that we've opened, 88 are above historical ramp, and what they average is 104% better than historical averages.
We're beginning to get into new markets. We've seen our universe kind of expand. Our typical suburban shopping center is moving in both directions on the urban hierarchy into small markets. We've seen some recent openings in small markets that are in the orbit of larger cities, but sort of at a distance, we've seen some successful small markets opening, that gives us great encouragement as to where we can go in the future. We're also looking at a more urban focus. What we're seeing in every city in the U.S. is that people are moving back to cities. The move to suburbs that began 60 years ago is now according back, particularly among younger generations. Millennials love to live in cities. They're great patients of ours. They're living in cities, and we're going to have to move back into them.
We're going to have to find those cities. Those cities don't have a lot of traditional daily use automobile-focused shopping centers. As time develops, we're going to have to move into those markets as well, we're looking at non-traditional airports, dual concepts, and university locations as well. We have another growth source, that's infill. We've seen recently, beginning in the fall, 2 clinics that were doing really well, 2 of our top 10 clinics really, said, "We're doing so well, we can't handle how great we're being right now." They opened in not adjacent trade areas. They weren't clustering by moving into the next trade area over. They opened a second clinic in the same trade area, where we already had the strength. These 2 clinics, both of them opened around September or October of last year.
Six months later, they're doing 38% better in the market. They've gone from two clinics to four clinics, and in six months, we've added 38% to the overall market gain. We think this can happen in many, many more of our best markets. For instance, our top 50 clinics are now 87% above the chain average, and they're comping at 24%. At some point, we should think about what our strategy might be into developing an infill characteristic for development. Our takeaways for today are that our core customers come from a broad spectrum of the U.S. population, and that gives us the ability to go into a wide variety of markets. Our sales forecasting tool and our build-out potential is based on reliable and proprietary analytics. Our current database has 400 predictive variables. Our model and data is used throughout the business.
Our operators and our marketing team and our finance team uses that same data structure that we've created. We want to optimize our growth based on expanding brand and industry awareness. Our patients tell us who they are. They do a great job of telling us who they are, and we just want to find more people exactly like them because they've told us who they are. All right. Any questions?
Yeah. What do you think is some of the factors for success?
I was prepared to repeat the question.
What are the common things that the top 50 clinics share that you think might be driving that big outperformance versus the average unit volume?
That's a good question. I think it's dense population and maybe a skewing towards a younger population. Most of our clinics are in Sun Belt cities. We started. They're older for us, so we've had time to build that brand awareness. Density and a shift towards that younger population.
Thank you.
Hi. How are you seeing the owners or property owners give you either more incentives or fulfill you into tier 1 to tier 3 kind of locations? How's that changed over the past few years from your perspective?
Well, commercial real estate is really competitive now. There's a theme that's out there that we're overretailed. I'm in a group that advises the International Council of Shopping Centers. I'm on the North American Research Task Force and the ICSC, the International Council of Shopping Centers, sort of the shopping center lobbying group, is constantly worried about that message. That we're overbuilt. Not a lot of retail new centers are being built now. We're competitive for the small box space in good centers. We're not the only one looking for them. We are desirable for owners of space, for landlords and developers, because we have a very easy build-out. We don't take up a lot of space. We turn over parking very quickly. Landlords like us now. Five years ago, we weren't all that.
The service sector, which has a different tax for a lot of municipalities, is different than retail. We have shifted from being sort of a questionable tenant to really a desirable tenant now.
Do you find that your store footprint, while I know it's attractive from a small size perspective, but do you think it is big enough and attractive enough to really drive patient traffic over time in that key variable of sort of awareness and visibility?
Yeah. If you take an idea that you should get larger and larger, this is some of the big box retail stuff. If you get larger, then let's build a 100,000-foot box somewhere because we could put more items on the shelf as opposed to 3,000-foot items. You see some retailers like Target, like Target for instance got bigger and bigger and bigger, 100,000 feet, 125,000 feet, and now the Targets are opening 10,000-foot stores. The rent structure for us then going from 1,000 feet to 2,000 feet, we prefer that 1,000-foot box. We have some clinics that are 1,800 feet, 2,000 feet, but the size of the box isn't a variable that is a good predictor of sales, unlike the number of a retailer that can put more product on the shelf. It just becomes we're getting less return on that investment.
We really have to have good visibility and accessibility of that 15 feet. That 15-20 feet has to be in the line of sight when you come in that center. We don't like being around the corner or in the elbow of places. While 15 feet doesn't give us a lot of flexibility, we really want to be in those. We really have to maximize that visibility and accessibility.
It's terrific that you have embraced the clustering strategy. Just wondering what it looks like, I guess, what the metrics look like when you go into a more virgin market. Also, if you could just touch on the traffic stats for the type of centers that you typically go into.
Yeah. The second question first. If we get average daily traffic counts, our sort of divider between weak and strong is 20,000. If you're below 20,000, we're going to need some extra incentive, but 20,000 is the sort of key that we're looking for there. We've seen some good openings, some strong openings in newer territories, in the past year and a half or so. I have every confidence that the clustering is going to just add onto that. Our marketing team has helped get that initial sales up in those new territories. When we cluster, it's going to be an exponential effect. Yeah, our ramp in new territories is really strong as well now.
I was curious, just maybe a history lesson on the initial corporate build-out in Illinois and New York that was unsuccessful.
What were some of the characteristics of that lack of success, and what are some of the learnings on that front?
You want to handle that, or?
Sure. The short answer is I think Chicago is an amazing market. We opened up those 11 clinics in a relatively short period of time, That was just a time when we got over our skis. That was a time when our break-even was running between 18 and 24 months. That wasn't what was expected. As those clinics were underperforming and putting financial pressure on the company, that's when I was coming on board and looking at, okay, it's underperforming. That's why I was brought in the first place, and so what's the most effective way to deal with this? The sites were all okay. Yes, some could be better than others, but there was reasonable sites. It's an amazing market. Illinois is absolutely a chiropractic market.
I would say the issue with Chicago, more than anything else, was our former management did a great job of opening up, very quickly, that 61 corporate clinics, half built, half bought, and that we weren't putting enough time on the operations side of it, which was putting that financial pressure on. We now have our RD in the Chicago market. They took six of those 11 clinics. They have been turning around and been successful. There's still room to improve, of course, but it's not a Chicago market. I really think it was more than anything else, it wasn't a site issue. It's far more than anything else. It was the oversight that we had put in place to support those brand-new clinics in a brand-new market, where we opened them up in the middle of the winter without a marketing campaign behind it.
You're going to hear from Jorge Armenteros, our Vice President of Operations, who really came in, completely restructured our oversight in support of the clinics, and you're seeing the results every quarter about the impact that's had on overseeing the clinics.
Anything else? Okay, I think we're at time for a break and then lunch.
Since we had a little bit of a sound issue this morning on the video, and it's such a great video, we're going to play it for you one more time with real sound. If you guys want to go ahead and tee it up, that'd be great.
I'm a Doctor of Chiropractic and a franchisee.
I do fundraising.
I'm a chiropractor.
I'm a massage therapist.
Part-time student, trying to be a firefighter.
I'm a franchisee.
I'm an active dad.
I work on the road. I'm a former football player.
I'm a chiropractor and a franchise owner.
I am a professional dog groomer.
I love to ride and work on cars and motorcycles. I'm a marketer.
I used to be a rock climber and mountaineer.
I'm a former Navy and Army veteran.
I got four kids at home.
I'm a makeup artist. I stay lot, drive a lot. I'm an engineering project engineer.
I'm a middle school teacher and a coach.
I'm a wellness coordinator, and I also do have psoriasis and scleroderma, and thanks to The Joint, I can have more function.
Thanks to The Joint.
Thanks to The Joint.
Thanks to The Joint.
Thanks to The Joint, I can carry victims while carrying the exercise that we do with no pain.
Now I'm able to play with my kids without being in pain every day.
I love The Joint because it allows me to continue my family tradition and own my own small business. I'm able to work part-time and provide for my family and raise my two kids. I can go with my kids, play with them in soccer, basketball.
I can now paint without living in pain.
I use The Joint Chiropractic so I can jump on the trampoline with my kids.
I can go back into the races. I can now help my clients as well.
I depend on The Joint to keep me healthy, to keep up with my kids, keep up with my running and my exercise and my fitness over the weekend.
Thanks to The Joint, I've been able to graduate from college.
I can run my own business and help my community.
The Joint has helped relieve pain in my neck and my back and improved my posture from sitting at a computer a very regular basis.
The Joint helps me keep pain-free so I can keep up with my two-year-old daughter.
When I'm on vacation, I'm always looking for a walk-in clinic.
The Joint upholds now actually its own and operates as well.
I'm able to keep people safe and do my job without any pain every single day.
I'm able to start a degree by helping my patients.
The Joint helps me keep up with those kids a little bit easier.
I was able to leave my job at General Motors, partner with my husband, and open up three franchises in Arizona.
Thanks to The Joint, my family enjoys a comfortable income, and we take care of our staff, their families, and tens of thousands of patients in our community.
The Joint Chiropractic, one of the nation's fastest-growing concepts, a rising force in retail, a thunder from the marketplace demanding more in health and wellness. With each passing day, we somehow get stronger. Where did it all come from? How is this happening? You already know the answer. Real people, real results. Franchisees, patients, doctors, and the staff who support them, each pursuing their passions, their aspirations, trying to carve out a better life for themselves. With The Joint Chiropractic, that's what it's all about. That's what it's always been about. Over the next two days, we'll bridge the gap between your business and the people who walk through your doors. We'll strip it all down to its core, accessibility, credibility, and empathy. We'll talk about growth, the business, the brand.
We're not going to keep you here for two days. We condensed it into just this one afternoon. That I would like to introduce David Glover. David Glover is a very sophisticated franchisee before he came into The Joint. David Glover, our Regional Developer, who's going to speak in the next few minutes, is actually the very first regional developer that this company ever had. He's continued to outperform all of our other regional developers. You'll see it in his presentation. He and his team were our Regional Developer of the Year in 2018. They were Regional Developer of the Year in 2016. They've done an amazing job utilizing this model as a regional developer to really accelerate the growth in the territories that he's a part of. I'm going to ask David to come join us. Let's give him a great round of applause.
Does he have all of Texas?
No.
No?
He has four areas of Texas. He has Austin, San Antonio, Dallas, and Houston. There's another regional developer that's going to speak.
Can you all hear me?
We can.
Awesome. All right. This one on the right? All right. Hang on. Somebody moved my speech around just to confuse me. All right. Thank you, Peter, for having me here today. Greatly appreciate it. This is very exciting to talk to this group of people. This will be the first time I've ever spent 30 minutes with you in a meeting. I do all the talking.
Wow.
Hope I don't get in trouble for that. As Peter said, my wife, Anne, and I are the regional developers for Houston, Dallas, Fort Worth, Austin, and San Antonio, Texas. We were the first regional developers into the system back 8 years ago. A little background on myself just to start. I got started with an accounting degree from The University of Texas at Austin. I then went into public accounting for 3 years at Arthur Andersen, and at that point, I said, "I don't want to be an accountant for the rest of my life." Sorry, Jake. A family friend introduced me to a guy who was a young real estate developer starting out, and I said, "What the heck?" I went with him, and I started out first building an office building. Overseeing and constructing an office building, project manager, and leasing.
That was where it was started. Ultimately, I became president of the firm and partner with him. 20 years later, our company thrived despite the oil downturn in Houston. After 20 years, in late 2003, I sold out to my partner. I was 46 years old, and I was too young to retire. Anne and I only knew real estate well. That had been our background. By the time I was done selling the company, it was 2004, and I saw that there was a real estate crisis coming a few years from then. I did not want to go load up on real estate right then. What do we do? Well, we talked to some franchise brokers because we did not know what else to do.
One of them told us about a concept that had just started, this very little-known concept called Massage Envy, and there was only 15 or 20 of them in the nation at the time. Our family told us we were nuts. Don't worry, Peter, I'm not here today to talk about Massage Envy. I'm here to talk about The Joint, but I'm going to tell you a little bit about my experiences there because it formed our basis for us going forward. After our families told us we're crazy, we bought 3 licenses to open 3 clinics in Houston. Well, they wanted to do these little 1-mile circles, and I drew them on a map, and I see Richard back there going, "Oh, that drawing a map.
I like that." We had circle cleavage and stuff, and I was like, "Oh, I'm not controlling that whole area." I said, "Why don't we do this rectangle?" It's less square miles, but it's more efficient and gives me control of that area. We did a clustered rectangle, put 3 clinics in that rectangle in the heart of Houston, Texas, in the River Oaks, Galleria, and Memorial areas of Houston, if any of y'all are familiar. Clustering is really powerful. It provides shared local print advertising. Back when we started, the internet was just getting going. We didn't have a lot of digital marketing. Also, we're able to easily share employees between our clinics. "Okay, you work today at River Oaks. Oh, we need you over tomorrow at the Galleria." Well, it's only 10 or 15 minutes apart. No big deal.
Also, our customers were migrating back and forth in that area, we were sharing the same customers in our clinics, which was nice. They were getting our level of service, which they're all the same, but ours was special. We opened our first three clinics in 10 months. We hit it hard. We subsequently bought two more licenses. We ended up with five licenses after four years in Houston. We had this powerful rectangle. Our River Oaks clinic, which was our first one to open, was the number one Massage Envy in the United States out of 800 clinics. It was cranking. What did we learn from this? Well, Massage Envy taught us the incredible power of the regional developer model.
Do you remember I said when we got into Massage Envy, it had 20 units, four years later we were number one out of 800? Regional developer model. That's explosive growth. That's incredible. It also taught us about the advertising co-op system. An advertising co-op is where all the franchisees in a region or city get together and they pool their money and they buy advertising they can't afford to buy individually. For example, radio, TV. They do a lot of big events together. Co-ops are incredibly powerful. The other thing we learned from Massage Envy was brand building. It's important to build the brand so people know, "Oh, that's Massage Envy. That's The Joint." Not, "That's Joe's chiropractic place." That's incredible. We learned about clustering of the real estate.
From the shortfalls we saw at Massage Envy were, we were the only one that was really clustered. Everybody else was one here, one there. I remember there was a Massage Envy in North Phoenix and one in South Phoenix, and they're like, "Oh, God, it takes me an hour to go between the clinics." That was bad design. The other problem was they were selling licenses on a to be determined basis. People would buy a license but didn't have real estate attached. I saw that, I thought people were going to kill each other. I was like, "Okay, I'm going to make sure people know where they're going from the get-go." I did not want to have to-be-determined licenses floating around.
After four years, we sold all five of our clinics, due to the strength of the recurring cash flow model and the memberships, we sold on a six times multiple. We sold for $6.25 million cash, that was pretty nice. I'll tell you the best part. We already had this scheduled trip that was two days after our closing to go for two weeks to Tuscany. We closed, we went to Tuscany for two weeks. That was the best part. All the time we were there, we were like, "Oh, we're not getting our daily reports. Why not?" We don't own them anymore. Okay, let's talk about The Joint now. No more mention of Massage Envy. Now we can check being a franchisee off our list, it's time to be a regional developer.
Well, that other concept I won't mention again, was founded by a guy named John Leonesio here in Phoenix. When an investor group came in and bought The Joint that had been founded by a chiropractor long ago, and was kind of semi-dormant, they were bringing John in as a CEO. I used to talk to John, and we'd talk about what's going on, what do we see out there, and he told me about this. Anne and I immediately flew out to Scottsdale and sat down with John. We said we want Houston, Dallas, Austin, San Antonio, and we ended up buying 58 licenses that time. Okay. What does that mean, we bought 58 licenses? I thought franchisees buy licenses. Well, the regional developer pre-buys them for inventory, if you will. We would pay $0.25 on the dollar.
If a license costs $30,000 to the franchisee, as the regional developer, we would pay $7,500 in advance. We bought 58 licenses, 7,500, 75, 108. It was about $400,000, $425,000 back then. That was our buy-in to the poker game. You're going to say, what is a regional developer? What do they do? Well, we develop regions. That's real simple, right? I wasn't totally sure. I had these 58 licenses, but I wasn't quite sure what we did or how to do it. Being the CPA nerd I am, I went out and bought a book. I bought this book, "Grow to Greatness: How to Build a World-Class Franchise System Faster." I said, "Boy, what a great game plan." I bought this book brand new, and you can see I actually used it quite a bit. I learned a lot from it.
That was embarrassing. I hate to say I learned a lot of this from a book. What a regional developer does is we award franchises. Now, awards is a fancy word for sell franchises. We generally prefer people that live in that town, even near their clinic location, so we can leverage off their relationships that they have, whether it's with the chamber or other groups. Other thing a regional developer does is we support our franchisees, and it's not just selling licenses. I think one of the most important things that we do is help them find good real estate. I remember Richard flew out to Houston one time and was like, "Hey, why do your clinics do so good?" Let's go look. I said, "Well, they're good real estate.
It's real simple." What we did in each region, we'd find a really good broker. We teamed up with CBRE in all four of our regions and had a different broker for each city. They were good. They were hungry, had a lot of energy. I would call that broker and I'd say, "Okay, John Smith is buying River Oaks and Galleria and clinics, and we need to do a tour." They'd take a couple of weeks, they would call all the landlords in that area, and they'd find potential one to 2,000-foot spaces that we're going to show them, that were currently available, or the most important part, I think, could be available.
By having a good broker, having a proven franchise brand, early on, we weren't a proven franchise brand, but these landlords would have a tenant that was slow paying on their rent, and they'd go, "I'd sure like to get rid of them, and you guys seem pretty good, and you guys have several open that are doing well, and I like this, and I like y'all's background." They would move that tenant along to greener pastures. They'd choose not to renew a tenant who didn't have a renewal option. Failure to have a renewal option in your lease is a big mistake that most people don't even catch.
All of a sudden, they've been there five years, and the landlord says, "Sorry, or I'm raising your rent $10 a foot and, because I want to put these other guys in." That's how the could be availables became available, and we got a lot of spaces that way. I'd call that broker, and I would say, "Okay, Joe's buying these trade areas," etc. They'd find all that real estate. They would put together.
Yeah.
They put together a tour book. This one is for actually one trade area, but it's got tabs, and each tab at the front it would have a map of it all, but then it would have the pretty landlord brochures for each center. We'd hop in a Suburban, myself, the broker, and me, and the franchisee, and we would hop in a Suburban and spend half a day to a full day, depending on how many licenses they bought, and we'd just drive around. When they got in that car, a lot of them were like, "Well, I don't know about real estate." By the end of the day, they had a pretty good working knowledge because we'd schooled them. They'd find a lease, they'd work an LOI, and get that going.
Now, most of these people don't have a real estate background or legal background. They get this big old thick lease and go, "Oh, my gosh. What do all these words mean?" I said, "Well, you need to hire a real estate attorney or a lease reviewer." There's people out there that are like real estate attorneys that are called lease reviewers, and I haven't ever figured out the difference. They review the document for them and help them negotiate it. I was very involved in every lease, helping them strategize and like, "Well, that's probably not that important," or, "You really need this," or whatever. We'd spend a lot of time working with them on their lease negotiations. I did not review the lease for them because I wasn't an attorney.
Once they got a space, we'd help them with their space plan, their layout, their design. "Oh, this is good. That's bad. That's inefficient." "You'll hate that," whatever, just so they'd have an efficient clinic. We'd refer some general contractors we knew to them. They would hire the general contractor themselves to build it out. We knew some. Typically, as a regional developer, we preferred a general contractor who's built one of these before, just to make our life a little easier and so we didn't have to train somebody every time. We'd help them with their opening. They were getting ready to open. Well, how do you market? How do you advertise? This is the old days. This was before digital marketing was big. Anne and I were big into postcard mail-outs. It's what we did in that other brand.
We were big in mailing out 10,000 postcards a month, every other month, all around. People get them, and most people just pitch them in the trash can. They saw them, and that was an impression. Jason, don't impressions count?
Yeah.
Once they get open, we help them with their opening, and we'd usually have a tent that said The Joint, and they could put it at their opening with balloons on it and make a splash. After they open, we help them with their future business planning and operations, disseminate information that comes down from corporate. In order to maintain a good brand continuity, we did a lot of the periodic inspections, and we'd inspect several times a year. We'd go out and look at their clinic, and occasionally you'd find someone who decided, "Hey, I need a fish tank on my front counter." Well, that's not how we look. You counsel them. Okay. Back to Let me back up. We purchased 58 licenses. Okay? Okay, I do need this. Now I've got 58 licenses to sell. Where are they going?
What am I going to do? This is Houston, for example. You see all these little squiggly, weird shapes. They're not circles. I don't even know the name of them. Those were defined by streets, major roads, rivers, lakes, whatever. Those are trade areas. These were projected Houston trade areas, and there's a lot of them. They were pretty good sized because when we first started doing this, people were like, "Well, I want protection around. I don't want anybody near me." We've subsequently learned, well, it's better off if you have them closer together. The typical franchisee's reaction is, "I don't want anyone near me stealing my customers." That's just basically franchising. We built these maps. I think I have a couple of them. I did that. That's Dallas, and there's Austin.
Some of them are crossed out. I don't always get these updated as much as possible. There's San Antonio. I've got my maps. I know my inventory. New franchisees. My next job is to sell a lot of license. I said, "Okay, I got 58 license to sell. That's a lot, but I like clustering. What's going to do it faster?" Faster, keyword on the book. In Dallas and Houston, I required every franchisee to buy 3 contiguous trade areas. In Austin, San Antonio, 2. Being the CPA I was, that'll be faster to sell 58 if I divide by 3. That's what we did. We required them to buy 3 contiguous ones in Houston and Dallas and 2 in Austin and San Antonio. That upped the ante.
It meant we got, I think, an even higher caliber of people that had some money to play with. They were definitely more engaged. We sell these units. We sign a bunch of agreements, paperwork. The name of this game is opening the units. Up until then, it doesn't do any good till they're open. We pushed to get them open quickly, and sometimes that takes a little longer than you want. Landlords will sometimes make you pull your hair out. Once they started getting open and we had four, five, six in a market, we would start to establish advertising co-ops. Everybody would come in and we'd say, "You guys are getting ready to do something big and powerful here in Houston or Dallas or wherever." They're like, "What?
I don't know." A co-op, again, can leverage the power of, say, 10 clinics to buy radio or Austin likes TV, and different markets are priced differently. Austin's a cheaper TV market, they do that there some. Houston and Dallas were expensive for TV, we went with radio. We used to do radio at that other brand I'd been involved in before, it got the word out and made impressions. We really got those going early on. Our Houston co-op, who actually won an award at the last conference, is, I think they're the top of the food chain for co-ops. We've got some really good franchisees there, very powerful, strong, motivated people. Just recently, let's see if my slides are in order.
The Houston co-op became the official chiropractor for University of Houston Athletics for the entire school, every one of their sports. You see that in the lower-left corner down there. The co-op paid the University of Houston $150,000 to be their official chiropractor, That was very different. It's going over well. Once this happened, who do we hear from next? Dallas Cowboys call us. We've heard from, I think, SMU, we've heard from other teams. They're like, "Oh, we want you to come be our official chiropractor." Obviously, they're seeing the money potential, but it's still a great relationship. Anyway, our strategies appear to be working. Why is original developer so powerful? Because we're getting accelerated growth of the concept before copycats come in, That's huge. We don't want to go open 20, Somebody else goes open 20.
We want to have world domination. I set the bar kind of high. When you're in early, you control the best real estate. Four minutes?
Yeah.
You control the best real estate. You get in early, you find the best real estate, that's how you dominate. Where do we stand today? We have 109 licenses total that we've awarded, sold. 80 units open in Houston, Dallas, Austin, and San Antonio. Houston has 31, Dallas has 30, Austin 14, and San Antonio five. We got two more units under construction. We've got eight more leases that are already signed, and we have nine units that are in negotiations with landlords and 10 other licenses that are out looking for real estate. One of the things that I was telling Peter last night, franchising is such an unknown opportunity for people. There's so many people stuck in jobs that they hate that have a lot of talent, and no one knows about franchising. I barely knew about franchising.
We kind of stumbled across it, what does it take to open a clinic? Well, our FDD, our franchise disclosure document, says it's like $180,000-$340,000. Let's just say, for talking purposes, let's say that number's 250, because that's a minimum and maximum. Let's just use 250 for talking. The SBA will loan somebody 80% of that. When you come in with a proven concept, and we have an SBA registry number, Those are just slam dunk loans. They look at the borrower. Can't just be somebody with zero. Well, they can be pretty close to zero with this concept, it's so good and strong. They come in and borrow 80%. $250,000 franchise, they need 20% down equity. That's $50 grand.
Well, I think most people could go pull together $50 grand from family, friends, create a partnership, somehow syndicate it out, and you can get a clinic. That's really it. One thing I want to say as I wrap up is I want to compliment Peter Holt on the incredible job he's done turning this company around, building a culture here, a culture of trust, a culture of honesty, and a team that's an incredible strong team that a 4,000-unit franchise would be proud to have this team that we have at corporate. That's pretty incredible. Good job, Peter. Anyway, I want to say thank you, and any questions and all that. Manjula, you were giving me time or was that my time to start questions, or time to be done?
Time to be done.
Okay.
Apologize. We'll take one question. How do the economics compare between your prior brand and The Joint for franchising?
That's a good question. That first franchise was pretty strong, and it flew off the launchpad. I have a lot of friends that are still in it, and they're all kind of wanting to get out of it, and it's morphed and changed and The Joint is Okay, we had five clinics. We had 180 employees. That's a lot of employees. 140 of them were massage therapists and 40 front desk. That'll wear you out. Our concept has a much lower headcount. When you open a clinic, you'll have one at the front desk and one chiropractor in back. Obviously, they can't work all the hours of the week and all that, so you'll have multiple of those. Then as you get busier, I've got clinics in Houston that are running three chiropractors full time because they're that busy. That's still much easier to manage.
On a multiple basis, you make darn good money with this. I had one of our franchisees speak at the conference here recently, and he's clearing $1 million a year with six or seven clinics. If someone wants to scale up, it works.
Thank you very much.
Thanks, David. That was awesome. Do I have my clicker up here?
I've got it right here for you.
Okay, good. All right, I'm going to start my countdown here so I make sure I stay on time. Let's see. How come this is not working?
That is not.
Oh, that's at the wrong one.
the quarter.
Okay, got it. All right, there we go. My name is Jason Greenwood. I'm the Vice President of Marketing here at The Joint. We've heard a lot about real estate, talked to some brilliant people, heard from some brilliant people this morning, that comprise our development and real estate machine, and it's really impressive. We're going to shift gears a little bit now and talk about consumer, because after all, we are a consumer brand, and that's where my head is all the time is building a consumer brand. A little bit about my background. I have had a 20-plus-year career, and that's what I do. I build brands. When I say we build brands, I don't just mean advertising or working on positioning statements, but I mean build a company that resonates with consumers in an emotional way.
Where it resonates with our identity, and it resonates with the consumer need, and it's a fulfilling and rewarding and emotional and an enriching entity. It becomes a strong relationship. Those are the situations where the whole is greater than the sum of the parts. That's what I do. It's what I specialize in. That's not an overnight thing. That's a brick-by-brick kind of a thing. That's what I told Peter when I interviewed, and I've been with The Joint since January 2018, and I said, "Peter, I'm a builder. I only know how to build things brick by brick," and that's a sustaining thing. Those are the types of things that are enduring, the brands that can go on for decades, and that's what I'm interested in building.
Like Eric, I have been a franchisee myself, so that's always interesting because sometimes when you work for franchise businesses and you're a marketer, they don't think that you understand what it means to be a franchisee, or they think you're disconnected from profitability or the operation, and that's not the case with me. I've actually run my own franchise business for five years. I know what it's like. I know what it's like to take somebody else's model and run with it and execute it, and I was a darn good franchisee. Things just changed in my life, and I decided to go back into the corporate world. I know what that's like, and I think it makes me a well-rounded marketer.
I've also been in advertising, so heavily steeped in automotive, which is a huge industry and very sophisticated and very much in the strategy end of things, working for Y&R Advertising, consumer trends, consumer research, brand positioning, portfolio positioning, that kind of a thing. I was just that guy. Then most recently, headquartered in Phoenix as a company called Peter Piper Pizza. It has restaurants. It's a food and entertainment chain with restaurants in the U.S. and Mexico. I was there for 10 years, and we pretty much rebuilt every part of that company. I have long stints. Now I'm at The Joint, and it's my first bite at health and wellness. I absolutely love it. I will never go back to restaurants because the skies are blue in this category.
It's nothing but growth and opportunity, whereas restaurants are cutthroat, and you scratch and crawl for a tenth of a percent of traffic growth, and I'm just not interested in doing that anymore. I love The Joint. Every marketing team is built differently. I'm not going to get into the details, but functionally, what you need to take away from this slide is what does marketing do for The Joint? Really, it's four things. Obviously, I just talked about. Do I have that little arrow? I don't know if I have that here. Oh, I do. We talked about strategy. That drives everything.
You have to have a vision, and that's one of the ways that I can contribute to the leadership team and to serve Peter and my fellow senior executives is I should be one of those people that are really plotting and making sure that we're on course. We know where we're going from a vision standpoint, that we're calibrating, that everything's in alignment. I'm a big believer in alignment, and that's what I do. Underneath me, you have three basic disciplines. Some are core competencies, some are growing competencies for The Joint. For example, we're a really good digital marketer, and we'll talk a little bit about that in a minute, particularly what we call lower funnel digital marketing. If you don't know what a funnel is, I'll talk about that in a minute. It's a very good competency for us. We're also really good at promotions.
Peter has spoken multiple times on his calls about our holiday promotions. We actually just started one over the weekend. It's our summer sale where we target lapsed patients. We're really good and really dialed in terms of promotions in this category. Yes, they do exist. We don't discount heavily, but every promotion doesn't have to be a discount. In this case, our summer sale, we're targeting lapsed patients. That's one of the things that we can do with the data that we have. We know everybody who's come in. We know how long they've been in. We can do mass market promotions. Then we can do highly targeted promotions towards our own patient base. I would say those are competencies for us that are established, and we have some growing competencies. One of them is content.
We are a good blogger. We produce more chiropractic content than any entity in the entire world in the public domain. The Joint has produced, I think, in the last 7 or 8 years, 40,000 articles about chiropractic. We are a prolific blogger, but there's more to content than blogging. That's something that we're learning how to be better at. It helps you. It gives you stuff to promote that doesn't have to be an advertisement or a sale or a discount. Creative and communications, we're learning how to position our brand better. That's going to be very important because we want to build a great consumer brand. We don't want to just be a referral machine. We want to lead. Creative and communications, I would say an ongoing competency.
David Glover just set me up really nicely because he talked about co-ops. He talked about the clustering and the benefits of clustering. That allows us to play in the traditional marketing space. Just because digital's hip and cool doesn't mean there isn't a room for traditional marketing channels in your marketing plan. It's the exact opposite. There's great opportunity there. TV's still the number 1 brand-building entity in the world. We would love to be on TV all over the country. We just can't afford to do it yet, not in every market. We can in some of them. These are all things that would be a growing competency. We're going to talk about all this stuff.
Let me start off by saying, when we talk to franchise prospects and marketing, everybody gets a slot. We go in there, and we get our 45 minutes. How do we sell them on The Joint? I don't really feel like I have to sell them that much. There's really just two things that I talk about, and I won't read all these, maybe three. One is just, it's just beautiful. It's the right brand at the right time. That's what I think of The Joint. When you think about all the juicy things that are happening in the marketplace right now is self-care and what Amazon's done to brick-and-mortar retail for products, but services have taken their place.
More and more people are investing more of their personal dollars in the brands that help them live better, feel better, look better. That's the space that The Joint plays in. We're in this, not only is chiropractic growing, but wellness is growing and health is growing, and this is just an emerging part of the market, and we're right in the middle of that, and we're a category leader. You have the category of chiropractic, $15 billion. It's not as big as other industries, but we're in a leadership position. It's the first time in my career that I've ever been able to help launch or grow a brand in a leadership position. Peter mentioned this statistic before. It's huge. 26% of people new to chiropractic that walk through our doors, 25% comp growth. That's crazy. I've never experienced that in my career.
Obviously, there's just a lot of great stuff here, and I talk about that all the time. What's great about in terms of timing, you're not coming in, you're not going to be a guinea pig. We've kind of worked out a lot of the kinks, so that's huge. Something that someone mentioned earlier is franchising. There's a lot of franchising experience. That's what Peter prioritizes on his senior team is you have to understand franchising. It's not intuitive. It's a skill. He always prioritizes people in leadership positions who have that experience. I think you put all this together, and it makes The Joint an enticing opportunity. I want to talk about three things.
I want to talk about brand identity, I want to talk about marketing methodology, I'll talk a little bit about grand openings, I want to talk about the future, I'll take your questions. The first thing is brand identity. Being a consumer guy, being a brand builder, this is really important to me. One of the things that we did in 2018, one of the first things that we did is we conducted the largest consumer research initiative that this company has ever seen. I don't think any chiropractic entity has ever done what we've done. We mapped the patient journey to chiropractic. What does it look like? How does it start? What are the considerations? What's the behavior? What are the key points along the way, and how do we win at that patient journey?
After we did that, we presented it last year to our franchisees. The next thing we did is we built a brand architecture. I know I probably have a lot of financial type folks in here. Maybe you're interested in this kind of stuff, but this will give you a little bit of an identity, a consumer identity to go along with the mission statement that you heard Peter talk about earlier. When you talk about brand identity, you start with your target consumer. Who comes to The Joint? Richard just told you it's a very broad demographic. I can't necessarily define it cleanly by standard demographics. Richard said to get to scale, you need 26 of those clusters, right? One of the things that we talk about is, okay, what about mindset?
Certainly, that is something that all of our new patients have in common. These are open-minded people that have a problem. Their problem is pain. It's messing up their life. It's debilitating them. They're searching in the marketplace for solutions to that pain. There are not a lot of answers. They really get to a breaking point. They've tried different things. They've tried popping Advil. God forbid, they've tried opioids. They've tried massage. They've tried stretching, acupuncture, you name it. They go through all the stuff. They're open to chiropractic, but up until now, at least for them, it's been really hard to understand. The market's super fragmented. It's weird. They don't get it. I'll tell you what, people know they've got to go to the doctor when they've got a broken leg.
When you've got strep throat, you know you got to go get your antibiotics. When people have just random pain, they just deal with it. Because at the end of the day, who wants to spend the time and money to go on a wild goose chase when you have no confidence that you're going to be any better off at the end of the rabbit hole? People just blow it off. That's why we are where we are, where we have a serious pain epidemic in our country. In comes The Joint. Peter talked about it early, our mission to improve quality of life through routine and affordable chiropractic care. We do it differently. We've taken something that's complex and confusing. We've simplified it. We've broken it down to its most fundamental parts. We've made it sociable. It's approachable.
It's something that's easy to understand and access. I think we could do a lot better there. We've come a long way. We're knowledgeable. We produce more chiropractic content than any brand in the world. We're aspirational. We just don't want to help you. We want to change the world through chiropractic, legitimately. That's what we wake up every morning looking to do that. Then we're vested because if you're a chiropractor and you're putting your hands on people's bodies every day, that is an intimate relationship. You have to be vested in your patients' goals to be a great chiropractor. The three legs of the stool, we showed them in the video. Peter talked them about earlier. This is what we came up with then: accessibility, credibility, and empathy.
The core delivery, the three legs of the stool for the perfect The Joint Chiropractic experience that helps patients live a better life. What I told Peter when I got here, I said, "We have a great mission statement, but we still need to answer the why from the consumer standpoint. Why improve quality of life? What does it mean?" What it means is that when you have a better quality of life, you get to live a best version of you, and that's really what it means to the consumer. That's our brand identity in a nutshell. We have a lot of metrics that we march to in the marketing department. One of the key ones is new patients, and that's unique for me in my career. I've never been judged on that, but that's obviously important in a model like ours.
It's a significant area of focus, and Peter's mentioned this a lot. There are three general sources if our wellness coordinators ask new patients, which they do, "How did you hear about The Joint? Who can we thank for your visit today?" They tend to say one of these three things. First and foremost, it's usually a referral because we're a medical service, and that's definitely tied to a strong patient experience. A lot of them cite digital marketing, one in three, and the rest of them attribute it to some kind of a laundry basket of signage or community engagement, or they saw an ad. That's basically the three areas.
Another thing that we did with the research that we conducted last year is we used it to refine our marketing methodology because at the end of the day, small box retail is about providing tools and a blueprint that franchisees can run with. The whole point of them coming into The Joint is they don't have to be marketing experts. We do that for them. All they have to do is execute and run with our blueprint, and that's what we encourage them to do. Don't overthink it. Just do what we say because we figured it out. In order to do that, to have credibility with people that are successful, somebody mentioned David suggested they hate their jobs, they're successful people, maybe had great corporate careers, they're just tired of it.
It's not like you're dealing with people that are necessarily wet behind the ears. They just want to know that you know what you're talking about. One of the things that we do is we spend a lot of time talking about marketing methodology, and what we do is we call it a purchase funnel. This is important, and I could talk about this for an hour, and it's a little bit of secret sauce stuff when it comes to The Joint. The big picture is we know how to market a clinic successfully, period. We're really dialed in, and it gets better and better every year. It's because we understand the patient journey to chiropractic. We've got 450 plus test kitchens, and we've tried, we've improved it every single year. The Joint is dialed in, and we know how to grow a clinic.
We know how to open it, we know how to grow it involves three phases. You've got this prospect, you know it's coming into the funnel, every industry has its own funnel, they all look different depending on what the category is. There are three layers to this funnel, they're all important. They all have to be present in a well-balanced marketing plan in our industry. The first one is your awareness layer, this is the largest audience who may or may not have ever heard of chiropractic, or maybe they just don't understand it. They don't even know they're looking for a chiropractor. This is more your mass market. You get to a lead generation layer, this is a refined audience. This is when Richard spoke earlier of him loading his real estate stuff into the marketing database.
We can use Richard's information. We update it every quarter, we can find those people in our platforms. Digital marketing drives this almost exclusively. This is where we get really dialed in with what some industries call hand raisers. They're people that have flags online, or they look like somebody who might be a relief seeker. We talk about our smallest audience, these are the most important. We would call it foundational. We don't even call it conversion because for us, it's the foundation. They're the easiest and cheapest to convert. Many of them are actively seeking a chiropractor and can be closed with the right information. This is very important. We teach this is how you build a successful local clinic marketing strategy. Not like this, like other brands I've worked on, but like this. This is really important.
On a high level, when we're talking about foundational marketing, these are tactics that help establish the visibility, trust, and credibility of clinics and staff. Effort here makes all of your other advertising more efficient. We do most of this for our franchisees, we do it through search engine optimization. Most of you have heard of SEO. It refers to unpaid results from user queries on search engines. There's no voodoo with SEO. It's pretty well-defined, the best practices. You just have to commit to them. You have to do them, you have to do them consistently, it has to be seamless between the local outlet and what we do nationally.
If you do it, you commit to it's powerful because what it allows us to do is open up a clinic and crush somebody almost instantly, at least in terms of online visibility from a chiropractor, a local mom and pop who might have been working in that trade area for 20 years. It doesn't matter because he or she is not following SEO best practices, we are, we know how to do it, we're way ahead of the game. When our franchisee signs his or her lease, their franchise deal, we're already working on that SEO plan, it becomes really powerful for us. It's something that we funded of the national marketing fund that requires some activity on behalf of the franchisee, but this is foundational for The Joint.
I've never worked for a brand where it's been so important. The other thing is community marketing. Some things will never change, you cannot launch a retail concept from behind a computer screen. Digital marketing will make great strides in the future, but at the end of the day, people are still human beings living and breathing, you've got to get out in your trade area, you've got to meet them, you've got to network. These are really foundational tactics for marketing, it's what we build on. It's what we teach. If you've got a problem and you're not satisfied with your local clinic performance, this is where we start. We layer on top of that lead generation. Peter had this chart earlier. This is something that any of you, by the way, can look up if you don't know.
Google Trends and just type in a keyword, it'll tell you how fast it's growing. This refers to the amount of the rising interest in chiropractic search, and this is something that we can target primarily through search engine marketing. This is the tool that competitive chiropractors actually use the most. Chiropractors are not big advertisers, they've learned about search engine marketing, so we train our franchisees to maximize their leads. It's very important. We also use the Facebook and YouTube platforms as well. They have traffic-driving ads and units that we use as well. This becomes our lead generation layer. Like I said, for most franchisees, they're going to spend more on this layer than anything else. One of the things that we're running into in some markets is we're running out of leads. There are only so many.
They come, they're there, they're gone, you've got to buy them all up. What do you do when the leads are dried up? This is when you get to awareness marketing. This is something that is a growing competency for The Joint, particularly in markets where we have clustering. We can take advantage of media that allow us to get out into the marketplace and create our own demand, like a real consumer brand, not just a referral or a lead generation machine. This is where we have a growing competency. We're investing more and more. We're teaching our franchisees how to play here. Sure is easier when you've got 30 clinics in a market like David referenced earlier. He talked about the University of Houston sponsorship. That would certainly qualify in retail marketing.
Outdoor, broadcast, print, these are all tools that we can use that are all about they're measured differently. It's all about impressions. Paid digital. Digital also plays in the awareness game. We have national buys with YouTube and the Facebook platform to do awareness advertising. What's also important is public relations. If we're going to start a national conversation about chiropractic as the leader of this category, then PR becomes an important tool for that, increasingly, that's a growing competency for The Joint. We want to be a national player in the PR scene, that's something that we're working towards. These are all channels that support this top layer. Really, a well-balanced clinic marketing plan should include all three of these elements, that's what we teach. In addition to ongoing marketing methodology, there are our grand openings, and we're really proud of this.
It gets a lot of attention. We have reduced the time to break-even or cashflow positive from roughly 18 months down to six months. We're pretty proud of that. It didn't just happen automatically. It's just like anything else. You roll out a plan, then you make it better, then you make it better. Sometimes our franchisees even contribute to that. It just gets more and more dialed in. We have a pretty strong grand opening plan. It's heavily driven by grassroots tactics. We give franchisees specific benchmarks that they need to hit, and they know if they hit those benchmarks, that they're almost guaranteed to have a successful opening. We feel proud of what we've been able to do.
It's a step-by-step pre- and post-opening plan, heavily driven by grassroots tactics, also supported by PR and digital and social media. We certainly support them at headquarters, and also your RD or your FBC, whichever the case may be, also supports them. We're very proud of the work that we've done. This is definitely a huge upside and a strength for The Joint. I want to talk about the future because while we're really dialed in and we're proud of what we have accomplished today, there's so much work. That's what's beautiful about this business. There's so much to do, and it's just a question of where you're going to focus. These are the two areas that, as the head of marketing, that I'm really dialed in on. One is in the area of brand advertising.
I talked about those consumer research insights earlier, and I shared the brand identity with you. I want to activate it. I want to actually launch an ad campaign in the fall of this year that brings all that together into a consumer presentation that is consistent, that establishes not only the authority of The Joint, but it helps establish the relevancy of chiropractic as a whole. If you're going to be a leader, I think we have to take a leadership role in our advertising and not just preach to the faithful, but talk to the wider audience of relief seekers and make chiropractic more familiar and relevant to them, and then position The Joint as the trusted source. It certainly can't be all of our advertising, but there's got to be a portion of our advertising dedicated to that. This is really exciting.
One of the things you'll see in the fall is a national, although we're not a national brand yet, but a national ad campaign really focused on bringing that brand to life from the consumer standpoint. That's the first thing. Then the second thing is marketing automation. Manjula will be up here later to talk about Access, which is our new CRM platform. Peter's mentioned it in multiple investor presentations. It's huge. Huge doesn't even probably begin to cover it. It's really harnessing the power of all of our data in new ways, and obviously, there are huge marketing implications to that as well. Today, we have an email drip campaign in place. We do SMS marketing, but to be honest, it's like you're on the Autobahn and you're driving, I don't know, your dad's old Chevy. It could be so much better.
What we're talking about is the right message to the right time to the right consumer that happen automatically, that aren't so manual. Things that are just reacting to behavior naturally and matching a message that meets their needs where they are in their purchase behavior. That's really the goal of The Joint. We'll do that through email and SMS, but we'll also do that through the patient portal and a mobile app. This is a whole new territory. We've hired somebody on our marketing team to lead this, but I think it has the potential to be enormously powerful, as you can imagine. Not only improving our lead conversion, but also extending lifetime patient value, improving patient satisfaction, all those types of things that are so important in a model like ours.
I would say for the future that these are the two things, at least for me in 2019, that big picture that I'm focused on as much as anything, because I do think it'll just give us that engine for growth in the future. In terms of takeaways, really just three to recap. Number one, if you don't remember anything else about my presentation today, I want you to remember that The Joint has a really refined model when it comes to attracting new patients, whether it's ongoing marketing or it's grand openings. That we are very dialed in and we have a very robust and refined marketing methodology that's working. That's one of the reasons that you're seeing the good results that you are, is because we've got a pretty good handle on how to grow a clinic.
Number two, that we are going to be taking further steps very soon to enhance our brand identity, to activate all of the research that we uncovered last year. It's going to be an insights-driven advertising campaign that will really help make that top of the purchase funnel more robust, to create a true consumer identity in chiropractic, regardless if you're a chiropractic user or not. Then lastly, focus more on the bottom of the funnel. Really robust one-to-one marketing machine that's just cranking and reacting to the data that we already have that we're tracking to enhance lead conversion and lifetime patient value. That is really it. I'm sure I talk fast, but does anybody have any questions for me?
Can you just remind us, the grand openings, what those include, and are you actually giving away freebies for an adjustment?
First of all, we can't tell a franchisee what to do, but that's part of our model. We have a text-in campaign. It's like our strongest call to action, we typically will give away I don't think I'm giving away anything secret. Anybody can see that when you go online. You can get a free adjustment, we usually have a grand opening weekend, a two or three-day period where they can come and get an adjustment. I can't emphasize enough how it really just comes down to hitting those metrics. We know the exact amount of phone numbers that we need to collect to make a successful grand opening, and that's our primary carrot. Yes, sir?
Do you think the six to nine-month break-even is kind of the wall, or can you get better?
I'm going to defer to my boss because I'd just be speculating. The question was six to nine months. Is that the end of the road, or can it get any better?
I'm going to help you answer that.
I can do that, too.
In small box retail, that six to nine months' time to break-even is golden. How far we can push it, we're focusing on meeting the six to nine months is our minimum.
There you go. Thank you.
Anyone else? All right. Oh, one more.
What does the national advertising campaign look like during the summer?
The question was, what does a national advertising campaign look like? What does it look like for The Joint?
Yeah, you were just saying a bit about it.
We're doing a national promotion. That is a direct marketing campaign. What we do is we utilize our own data. We identify a group of lapsed patients, and we target them with an incentive to return to The Joint and purchase a membership. We did it for the first time last year. It was the first time The Joint ever did a promotion like that. It was very successful. Anytime we do a promotion a second time around, typically we get better at it. It's just human nature. That actually started in June. Okay. Thank you very much. Appreciate it, everybody.
I think you're supposed to introduce us.
No, I am?
That's okay.
That was me.
Hi, I'm Amy Karroum, and this is my friend, Dr. Steve. I'll tell you a little bit about my background. I joined The Joint four years ago. My background is in start-up, high-growth human resources. I spent five years in home building when home building was the hot market. I spent three years in oil and gas when oil and gas was the hot market. I joined The Joint four years ago because I believe that health and wellness is really where the future is going. Go ahead, Dr. Steve.
I'm Dr. Steve Knauf. I'm the chiropractor on the leadership group. I got my doctorate in chiropractic from Northwestern Health Sciences University in Minnesota. I've been with The Joint since 2011, started in the clinics working full-time for about four years. Went to management level and have now been in this position going on my third year here. I also am part of the state licensing board here in Arizona. I was appointed by the governor in 2017, I also serve on a couple of other boards for associations within chiropractic as well.
We're really going to focus today on talking to you about our chiropractor DC recruitment. What's our vision? Who do we have on our team? What's the professional overview? Why chiropractors choose to work for The Joint and in The Joint model. What the clinical experience that they have working for us is, what we're currently working on, and then a little bit about compliance. Peter mentioned this in the opening. A big part of our vision is to be the career path of choice for chiropractors. We say it that way because we're happy to have them work for us or be an owner, and this is all-encompassing. However you want to join our team, we want to be the place that chiropractors want to go. Just a little bit about our team.
On my team, I have human resources, corporate support for our corporate clinics. We have 50 corporate clinics now, I have a team that supports the corporate clinics. I also have a recruiting team, I have our director of risk and compliance services. Dr. Steve also has a new member joining our team to focus on DC relations with the colleges and training. This question came up earlier today, I think. Where are the chiropractic schools? I think it's a helpful visual to get an idea of where those schools are nationwide. There's 19 campuses. They're definitely in little clusters, not evenly spread across the country as we would like. They graduate about 2,500 students per year, and there's approximately 70,000 licensed chiropractors in the country.
If you lay this map across our map, you can get an idea of where we might have a little more challenge convincing the doctors to move further away from those schools where they graduated. You get an idea of where markets that might be a little bit easier to graduate students into and where we may have to help them decide to move when they graduate. About 1,200 chiropractors currently in The Joint as employees. Then about 40% of our chiropractors have 15 or more years of professional experience post-graduation. We get about 23% that are Palmer grads, which is one of the biggest chiropractic schools, and then 16% came from Life University. Okay. Jason mentioned some patient research that he did recently, and we piggybacked off his patient research and did research with our chiropractic team.
We wanted to find out perception of our brand as an employer, what they're looking for when they're looking for a career path when they graduate, what they're looking for 15 years later. How do those interests change? Really, it's an engagement survey, but bigger because we looked at more than just the current doctors working for us. We talked to the schools, we talked to the associations, we talked to doctors that have left us, just to get an all-encompassing view of how our brand is perceived. It was the first time that anything like that's ever been done, and it was a really exciting initiative that we did.
We're going to use that information to really refine our recruiting messaging and make sure that the things that they're looking for in a company when they graduate or when they're looking for a career path, that our messaging is clear that we're addressing those issues. We're also working on relationships with the schools constantly. You can see here it's a little bit light, but this is our lobby at Sherman College. You can see it's branded The Joint Chiropractic. These are huge steps for us in building those relationships with the colleges, and we continue to focus on that and continue to support the education process that the doctors go through, so they see us as supporting their career path. Okay, why do chiropractors choose The Joint? This is out of that research study that I talked about.
There's definitely some reasons why they like this model. The doctors mention not having to do marketing. If they were to start their own independent practice, they would have to deal with insurance. They would have to do marketing. They would have to find patients. Here, what they really enjoy is that they can just be a chiropractor. They can just come to work and just do what they wanted to go to school for. That's really what makes this model attractive to those professional chiropractors that might have 15 or more years of experience. They might have had an independent practice in the past. They may have struggled and been like, "Gosh, I don't want to run my own company anymore.
I want to do what I want to do, which is just be a chiropractor." We find that students are interested in our model because they can get a lot of experience quickly. They don't get a ton of adjustment experience in college. They get more adjustment experience working one week at The Joint than they probably got in their entire student experience, just with the amount of volume that we push through the clinics. Oh, and of course, the DC Path to Ownership program that Eric mentioned during his presentation is a great opportunity for chiropractors to join our team, get the experience, get to know the model, and then potentially have that ownership piece down the road.
We talked about the simple model, I just want to walk you through maybe a day in the life of in one of the clinics. You actually heard David talk to this earlier, starting with just what does staff look like in our clinics? It's really very simple. We have a front office worker, and we start off with one chiropractor working in the back office. As patient visits continue to grow and we see patient volumes increase or the number of new patients increase, we need to start adding doctor staff into the clinic. But even running at three or four, running very high-capacity clinics, managing only four staff is a much different world than when you had to manage about 20 or 30, as David was talking about. How many of you have been in a Joint clinic?
Have any of you visited? I see a lot of poor posture out there, so you could definitely benefit. You should definitely go and check it out. I think a lot of you could benefit. What our doctors typically see in a day is somewhere around 60 patients. That's what they should be able to see in our clinics. If you think about your traditional medical practice, and you think about all the time that you spend either with your primary care and urgent care, like how do doctors see 60 people in a day? I spend an hour and a half just waiting to see the doctor by myself. How do they get through 60? We have a really very focused model. All we do are consultation, exams, and adjustments. It allows our doctors to focus on the chiropractic adjustment.
If many of you have visited other chiropractors or other models, traditional ones might add exercises, rehabilitation, stretching. They might hook you up to electric stim and shock you a little bit. Those are all things that we just don't spend time doing with our patients, and we're getting really incredible results, in affecting the lives of the people that we do see and treat by focusing on the adjustment. I think one of the questions that we get asked probably most often, I know Peter has gotten it on some of the calls, is, well, when is it that you're going to do something other than the adjustment, or are you ever going to? The answer that's been given is, it's just a matter of timing.
There's not a week that goes by where we don't get some proposition for weight loss or stem cell injections or orthotics, mattresses, pillows. There's a lot of other things out there that chiropractors can do and get involved in. We're just not there yet. This is a really successful model. It's really very easy for our doctors. It's really very easy for our franchisees. We're focused on this right now. One of the other things that we typically get questions about is, how do we know that we have good doctors on staff in our clinics? We've got a lot of non-doctor owners owning these clinics that may not know much about chiropractic. How do we know that we have good doctors? This is how we determine that. First of all, our doctors have to be licensed in the state in which they're practicing.
It's similar with other providers. There's the licensing board, it's the one that I sit on here, that looks at any issues with chiropractors, makes sure that they either have their license to practice if they're doing it well, or makes sure that they don't have it if they're not doing it well. That's kind of our first layer of protection for chiropractors in our system. Our chiropractors also have to be able to be covered by malpractice insurance. We work with three required vendors right now that understand what our limits are with the requirements for the malpractice coverage. They understand who needs to be covered so that all the parties are covered appropriately. We're making sure that we're covering ourselves from a liability standpoint. In that malpractice process, there is also some checking into, have there been previous claims with these chiropractors?
That starts to affect the insurance premium as well. They have to be able to be covered by our policy and our limits as a second layer of protection. Thirdly, doctors at The Joint have to complete our training. We need to have certification of that. We track that as a system, full-time, part-time doctors. I think it's funny. People say, "Well, why do you have to be trained to be a chiropractor? That's what you go to school for. What else is there?" Actually, it's really very different when you practice as a chiropractor in an all-cash model versus an insurance model. In an insurance model, patients are coming to you out of need, out of necessity. Often they don't have a lot of options in who their provider are.
You're either in network or you're out of network. A lot of these determinations are already made for them. It's different in a cash practice. Patients are electing your care. They're really voting for you with their dollar. They don't necessarily have to see you. They can take that money and go somewhere else. That's not necessarily the flexibility that you have in insurance kind of payment system. Our doctors receive training, not necessarily in the clinical side of things, but what they receive training in is how do you interact with patients? How do you just provide a really great patient experience? How do you connect with your patients? That's what really starts to not only set us apart from other chiropractors, but it's also what starts to set us apart from other just providers in general.
I don't think a lot of providers are worried about this doctor-patient relationship. Often it's, "I'm here to diagnose you, I'm here to treat you, and then you're on your way." That can't be the mindset or the mentality in our model. One of our things that we talk about is having routine care with our patients. We're going to be around our patients a lot in this model, and if we're not continuously providing value or they don't like coming to us, they're going to stop really very quickly. A lot of our chiropractic training, a lot of our doctor training, focuses on how to build these relationships with patients, how to communicate effectively so that they understand the value and the benefits of ongoing chiropractic care. That's really where our focus is. Of course, there's also some medical training on top of that.
We like to make sure that our doctors are up to date on current best practices, really that's more what school and continuing ed is for. Switching gears a little bit in compliance, we're going to talk a little bit about the professional corporation structure. You heard Eric Simon up here earlier talking about some of the hurdles that franchisees have in this system versus maybe other concepts, and he mentioned the PC model. I just want to briefly cover what that is, why it's here, and how we comply with that in all of our states. The PC model stands for a professional corporation model. There are states that limit the practice of medicine in varying degrees. By that, I mean some states set it up so that only licensed professionals can own the clinic or the practice. In other states, that's not an issue.
You can be a non-licensed individual, and you can own a chiropractic clinic. For example, California is a PC state where you have to be a licensed provider to own and operate a chiropractic clinic. What does that look like for our franchisees? How do we comply? How do we manage that? Really what we do is we manage that through a system of contracts that really set up the responsibilities for each role that participate in the clinic. It's really broken down by three parties. You have your PC. This is the doctor. This is the licensed individual who owns the practice in PC states. Next up, you have your franchisee. Your franchisee acts as a management organization, they can do all the onsite management of the clinic. This is making sure that the equipment is in the clinic.
It's maybe hiring the wellness coordinators, training the front office staff. They can do payroll for the PC in some states. It just depends on what the state allows or does not allow. You have the third leg here is the chiropractors in the clinic who obviously practice and provide care to the patients. Really the PC model, you have contracts between all the parties that lay out all the responsibilities and roles and clarifies it. What this does is it ensures that licensed individuals are properly overseeing the clinical side, and franchisees or unlicensed individuals are participating in the clinic in the capacity that they can. Again, it varies by state. It's really important that as we go into these states, our franchisees work with local healthcare attorneys to understand those little nuances in each state rule or regulation.
I tend to spin this a little bit in franchisee training and Discovery Day because a lot of franchisees are not interested in this complication. They think this is a lot of extra paperwork for them. They don't want to do it. It's more legal work, potentially. For me, what this actually does is it sets the franchisee up with a chiropractic partner. Amy spoke to the DC survey that we did earlier this year. What we found out is that DCs who work under a doctor or who work under a PC are much more likely to be satisfied with their job at The Joint than they are working with a non-doctor. There's this built-in chiropractic partner in the PC model that kind of serves as the bridge between the business side and the clinical side. They know how to speak to the chiropractor.
They can engage about chiropractic, and they can help the franchisee or the management organization really understand the chiropractic side of the business. Even in non-PC states, I still encourage franchisees to find this chiropractic partner who they can work with in this capacity. This just really formalizes the relationship. The other thing is this is really the first big brand in chiropractic, which is interesting. Typically, the chiropractic profession is defined by a lot of independent owners and practitioners, and a lot of doctors operate in that model one way or another. What's interesting is that when we bring on other chiropractors into our system, we really have to define what it is we do in our clinics because there has to be a level of consistency between all of our clinics.
One of the things that's in scope of practice for some chiropractors, and they actually do this, is they'll use crystals to work on the energy of patients. That's not anything we do at The Joint currently or maybe future. Who knows? We'll see where this goes. We don't do it now. We need to define what is our scope of practice at The Joint and make sure that our doctors understand what it is we do and what we don't do. We enforce that through our standards enforcement protocol. This is a protocol really for the total operations of the clinic in which we say, "Look, here's what we do, here's what we don't do.
If you're not following the rules, here's the process for how we get you back on our team and within guidelines." This includes everything, including clinical services, products, if we ever get to that point. Like I said, this is definitely something that we can control. I think there's maybe a misperception that there's too much oversight on the clinical practice of chiropractic, it's really very similar to what trauma centers do. If you look at trauma center levels, you have levels 1 through 5, and trauma center levels of 1 offer way more services than a level 5 does. Really what we're doing is just we're defining what it is we do within chiropractic, and our provider's responsibility is making sure that they provide the services safely to their patients. Key takeaways. Recruiting and retaining DCs is critical in achieving The Joint's growth goals.
1,000 clinics, 1,700 clinics requires a lot of doctors. Right now, we have about 1,200 in our system working under The Joint Chiropractic model. What does 1,700 look like? We know that we need to add doctor staff as clinic volumes grow. Not only are we opening new clinics, but we're growing our existing clinics. What does staffing look like for that? That's really where our partnerships with the schools and other professional associations comes into play. We also have to have effective compliance programs that protects the patients, doctors, and investors while adding to our reputation as a leader. It's interesting being really the first big brand in chiropractic. A lot of people tend to look at you differently because you're doing something that hasn't been done before.
Us to be buttoned down on compliance is really very important for us, and it's a key to our success in building that culture of quality and trust that I'm going to talk about later in a second here about. Any questions? Do you have the microphone?
Sure. Do you find that there's pretty robust acceptance among the chiropractic community for The Joint's concept, or do you find there's a lot of resistance out there in terms of corporatization and
Yeah
what you're doing?
That's a great question. I started in 2011, under the CEO, John Leonesio, the CEO. I've watched a lot of this progression and maturity of The Joint Chiropractic over the last few years. It certainly started out that we're competition. We're undercutting the profession. We're something new, different. We're the McDonald's, we're the Walmart of chiropractic, and that's just completely not the case. We heard some presentations on the usage of chiropractic. There's so much available out there that we don't have to be fighting over the 16%. Our model is looking to grow it. We can get outside of that 16%. Our reputation has been improving. It started really with our partnership with Sherman, and we were able to give a pretty generous donation to them.
We've been invited to several college campuses. At this point, it's just about having those conversations face-to-face. This isn't about undercutting the profession. This is about providing a different level of access to care that just doesn't exist out there right now, and just having that conversation is starting to turn the tide for us. It's certainly getting better.
Okay.
You're welcome.
I would just add to that, too. I think initially when the model came out, there was this belief that this won't work, right? Patients aren't going to do that. They're not going to go to a strip mall to see their doctor. I think the patients have spoken and they don't have a choice now but to believe that it will work, and it is increasing the availability of chiropractic. I think time has kind of forced them to be more accepting of the model.
Is corporate actively recruiting docs and then sort of helping them figure out where in the chain they can work, or you're not at that level as far as helping the actual franchisee?
Oh, helping franchisee.
hire?
Yes. I actually have recruiting. I have individuals on my team that recruit on the corporate clinic side and on the franchise clinic side. Both. Yeah, we are doing both.
Thanks. Just had a question on malpractice. In light of your high compliance standards, just wondering if you can give us a sense of what the incidents of malpractice cases are in the industry, and then how Joint compares to that?
It's a good question.
I know that when we've looked at the, I don't recall exactly the incident rate in the industry, but I know ours is much less, a lot of that has to do with the simple model. Because we're not doing all of these other things, we're not treating injury victims, we're not treating people. We're doing wellness chiropractic. Our incident rate is much less. I can't give you the exact number, I don't want to throw out a wrong statistic, but I can tell you much better than the average. That's reflected in our malpractice rates with the carriers.
Yeah. If you look at chiropractic as a whole versus other providers, one of the ways that you measure safety of a profession is by the premiums they pay for malpractice insurance. You look at neurosurgeons whose annual premiums could be through the roof because there's a lot of risk with their profession. If you look at chiropractors, the malpractice premium for chiropractors is typically below 3,000 a year. It's such a safe profession to operate within.
To Amy's point, to expand a little bit, you look at what are some of the common incidences. Chiropractic is really a hands-on profession. A lot of the complaints tend to be dealing with doctors inappropriately touching patients, which we've actually eliminated through the use of our open bay.
Not eliminated, but reduced quite a bit. There's just not as much risk being in an open room with other patients and other providers, whereas behind closed doors or a closed room, you're more likely to have those kind of claims.
Anything else? Okay. Thank you.
Okay.
Show this short video that was filmed for the national conference, and then we'll have Teresa come up and tell her story. Let's show the video.
We have six clinics that are open. We're opening our seventh clinic in Buckeye. That'll open in the fall of this year, and we are acquiring an eighth clinic that has already been opened, and it's within our territory. I was born in Arizona.
It was a really great video. You just saw a sample of how amazing it was.
We have six clinics that are open. We're opening our seventh clinic in Buckeye. That'll open in the fall of this year. We are acquiring an eighth clinic that has already been opened, and it's within our territory. I was born in Arizona and raised in Scottsdale. Growing up, I wanted to be a professional dancer. My mom started me in dance at the age of seven, and I danced competitively all through school into high school. My senior year, I got a dance scholarship to a performing arts school in California. After graduation, I packed up and moved to Hollywood. I studied dance for about a year. After I'd been out there, I learned that I loved being on my own, but I liked living alone. I had to get a job.
I had to make money. I got a job at a mortgage company doing admin work. I fell in love with it. I worked hard. I learned everything I could about the industry. They loved my tenacity. That's what catapulted my career for the next 20 years. My mother was my biggest influence. She was always telling me to fly. My parents didn't make a lot of money but supported me when I moved to California. I didn't go to college. I struggled academically. She never doubted my success. I wouldn't say I was fearless, but I was always an overachiever. My husband is very driven. That's why we're so compatible. If I would've told him when he called me about The Joint and his vision, if I would've crushed his spirit, I knew what that felt like.
For me, it was not, "No. Let's think about this. Let's talk about this." It was like, "Let's do it." What I've learned most is that success is all about finding your purpose. That's what The Joint has given me, is purpose. Excuse me. I don't know why I'm getting emotional. People go through their lives never finding their purpose, and they're constantly asking why. For me, it's just been a blessing. I work on my personal growth every day. It's my phenomenal management team that works so hard day in and day out to make sure our patients and our staff are taken care of. That is so important because you can't be successful in an industry like that if it weren't for your patients.
It's important that you take care of not only your staff because they are the ones that will take care of your patients. It is amazing. We are changing lives every day. Oh, God. I can't believe I got emotional. Am I on? Okay.
Are you going to cry?
No. That video is such an icebreaker because I'm like, well, they've already seen me cry. I mean, God, how worse can it get? It's just so interesting to go back to those days because it's so different than who I am today. I wanted to be a dancer, and here I am owning chiropractic clinics. I am grateful for those years because they taught me perseverance and dedication and teamwork, and they gave me courage. Thank you, everyone, for having me here today. It's such an honor and privilege to talk about this brand that I am so proud to be a part of. I'm going to talk about my journey and how I got into The Joint, how my husband and I. We got a flyer in the mail, is how we came across it, usually we just toss our junk mail.
We got this flyer from one of the first Joints that opened up here in Scottsdale, my husband had been looking for a chiropractor because I'm going to walk around. His chiropractor actually closed her office because of the health insurance cuts, cutting back on reimbursement. We got the flyer. He calls The Joint, Dr. Steve Gubernick actually answers the phone. Dr. Steve told him that they're not scheduled to be open for another week, he assured him that it was a walk-in clinic. He didn't have to make an appointment. A week goes by, Tony walks in, as he explains it, he walked through the door, he was sold. Everything from the look, the feel. It was a minimal staff, the minimal space. It was next to a Starbucks. He didn't have to make an appointment.
He goes in, and luckily, Dr. Steve Gubernick was there, and luckily, they had just opened, so there was no patients in the lobby. If you know my husband, he's asking questions. "What is this about? Tell me more." All he needed to hear was that The Joint was a franchise and that you did not need to be a doctor to own a clinic in Arizona. We're not a PC state. He leaves, and he calls me, and he says, "Teresa, I know what we're going to do for our future." As you can see, you know my response. As soon as we could get corporate to call us back, we quickly went in. Yes. Very different than our corporate team today. It's true.
My husband must have called them five times. This was my husband's thing. I just was like, "Okay, hon. We can do this." He called, and he called, and he got them to call him back. We scheduled the appointment. We went in, and they completely forgot they had scheduled an appointment with us. They were like, "Who? What? Where? How?" We walked in, and we purchased two licenses, just two. In fact, most of the licenses in Arizona were sold out, but nobody wanted the West Valley. I don't know if you know Arizona, but nobody wanted Avondale and Goodyear and Surprise. We purchased two licenses, and we opened Gateway Crossing in 2012 and two more clinics later that same year. We purchased two, we opened three. We were aggressive. I don't know what came across us, but we were aggressive.
We didn't even wait for one clinic to break-even before we were opening the second and third. We wanted to secure our territory, and that was kind of our thing. We didn't even have an SBA loan option. We were a new concept, very different than today. They didn't know who The Joint was. We borrowed money from family. We liquidated our 401(k). If there was a Massage Envy within an eight-mile radius, that's where we're going to put a Joint, and that's what we did. We opened five clinics in three years. That's crazy. The first two, three years, we actually hired a manager to help do the build-out, manage our Joints. We stayed in the mortgage industry, and that was our whole goal all along. It wasn't, we're going to open chiropractics, and we're going to manage them. I would've said no.
We stayed in the mortgage industry, and we thought, "Okay, we're just going to open these. We're going to put staff in there, and then they're just going to grow." That's not how it works. Things were tough. We had five clinics, three years. We were struggling. The clinics that were breaking-even, it was a very minimal profit. Failure was not an option. I had sleepless nights thinking of all the money that I had borrowed from my parents. I'm not even kidding you, $150 thousand. I made the decision to quit my career and manage The Joints, and that's what I did. I thought, "I'm going to go work for free. That's fine. They're my businesses. It's an investment. I'm going to do it." I jump into managing five clinics, and I had an assistant.
I thought I could really do it was very hard. I was trying to lead others. I was trying to motivate doctors. I was trying to develop our team, I had nothing to give. I had no background in running a franchise, let alone a chiropractic clinic. Like Dr. Steve says, you're not going to find common ground with a chiropractor if you're not a chiropractor. I knew that in order to grow my clinics, I needed to develop my team. I needed to train my doctors, train them The Joint way. They're used to the traditional chiropractic. Remember, we're very unique. We're very different. I brought in a chiropractor to come in and coach my doctors. He had experience with The Joint. He had experience adjusting high-volume patients and working in high-volume clinics, and that's what I wanted.
I wanted a high-volume clinic. I brought him in, he started going from clinic to clinic, working with my doctors, observing them, teaching them, talking to them, motivating them, showing them, something I couldn't do. We worked together. We restructured our comp plans. You remember, as a non-doctor, you really are given a business, you don't know what to pay. Having a doctor come in and say, "This is what this doctor's worth. If you want to grow your clinic, this is what you're going to pay him." It was risky. We upgraded our tables. Our tables weren't even that old, but he said, "You want to save your doctors? You're going to upgrade your tables." We worked, we motivated until our sales continued to grow. It was daily. It was a weekly thing.
I thought I was going to bring in this coach on a temporary basis. Just come in, train my doctors. We'll be fine. We're going to get to the next level. It was no. As our sales started to grow, we were adding second doctors on our busy days, then our busy days turned to every day. Now we have three doctors working in our clinics. Three doctors, those are clinics that we're seeing well over 100 patients a day with around 15 new. That's where we wanted to go, and that's what it took to get there. I had to hire a chiropractor. I had to hire a coach. Not something I'm not good at. Oh, I really went through that. I have to tell you this story, because in my video, I talk about acquiring a clinic.
Well, we just acquired the clinic, it closed last month. It was a clinic within our territory. Sales were below average, but we knew it had potential. We go in to meet our new staff. Not easy, but we go in and we say, "We're your new owners. We're here to help." We talk about our expectations. We talk about our goals and our growth. We talk to the doctors about the importance of keeping up with their notes. We talk to the wellness coordinator about what she needs to do in her downtime, utilizing corporate resources. I mean, all the things that make us successful. The next day, I get a call from the previous manager letting me know that I have lost all my staff except one. One.
I couldn't help but shake my head because these employees that did not want to work for me were completely comfortable working in their comfort zone, seeing 32 patients a day, maybe one or two new patients. I say this with certainty because I was there. I was there three years ago. I was there before I brought on my coach, seeing 32 patients, maybe one or two, breaking even. It's not fun. It's not worth it. I shook my head, and it was just like, "Oh my gosh." These people work for The Joint, and they're just completely happy with being status quo, and I don't want them on our team. I just told the previous manager, "No problem. It's fine.
They can get off our train," because we're all about getting people that want to make a difference and that see the value in what we do. We are changing lives every day. I certainly didn't see this seven years ago when I got into it. I did not realize the impact that we have on patients' lives. I really was just like, "Okay, I'm going to open a business." Our clinics are seeing 120 people a day, 15, 20 new. Every night, Tony and I look at our numbers, or Alice, and we're just like, "This is nuts. This is crazy." We keep growing and growing and growing. It's very exciting, I thought that was just interesting because, as an owner, what I learned is that if you're not intentional growing your clinic, you will always be average. Always.
I wanted to be more than average. I thought to myself, "No wonder we acquired this clinic." The owner allowed it to be average. That's something with having franchisees, is you're going to have your good ones and your bad ones, but The Joint is a phenomenal model, and we've definitely taken up to the level, to that level of just extraordinary success. What I never realized eight years ago when I told my husband, "Let's do this," is that it would not only change our lives, but it would be the road that I would discover my purpose, as in my video. Like I said, three years ago, I did not feel this way. I did not have this attitude. I did not feel I was living out my dreams. I felt ineffective. I was frustrated.
It all started to change when I created an effective team of leaders. I brought in a coach, and I brought in someone that could work with my wellness coordinators. Every one of us stays in our strength zone, and that is why we're consistently successful. Even my husband, he has his full-time job in the mortgage industry, and he continues to handle the finances for our businesses, but we all work in the area of our giftedness. Now that I have found my purpose, I have a reason to be disciplined. I'm intentional with my life, I'm intentional with my work, I'm intentional with my family, and I'm intentional in adding value to others. It's just awesome that The Joint is still in its growth stages. As Peter says, that we don't even know where the cap is.
It is just so exciting, what's truly amazing about me discovering my purpose is that passion just makes me continue to climb the hill. There's no stopping me. Does anyone have any questions? Thank you. Yes.
I'm just curious, as you think now about where you are and where you're going, do you think the future is 200 patients a day in your clinics, or is it 16 clinics in your territory? What do you think?
That's a great question because we actually had our surprise clinic that was exceeding $80,000, $90,000 a month in sales, and we were capped. We couldn't grow anymore. We couldn't hold any more patients in our lobby. We couldn't add any more doctors in that clinic because it was just getting too congested. We actually asked the landlord if we could expand our space, and that's actually something The Joint looked into. We've never done that. The Joint has never expanded to over more than 1,300 square feet. The landlord said no, and I'm glad it all worked out. We ended up opening a clinic three and a half miles down the street, and we broke even in the first month.
Wow.
Yes. Yes.
Don't use that as an example.
We were very strategic about that because what we did was In a clinic, you want all rockstar doctors, but sometimes you always have that stronger doctor and that weaker doctor. Well, we took that strong doctor, and we moved him to the new clinic. We actually had a lot of patients follow, which was okay, and then we just replaced his position with another lead doctor. Now, they're neck and neck. A lot of patients did follow Dr. Tyler over. What's interesting, my husband's such a number person, is that between those two clinics, we see about 173 people a day. You can't do that in one clinic, but that's pretty congested.
The thing is that The Joint is a phenomenal model where the patients are coming in and out, but you still want comfortable. You don't want it to be a sweatshop. I think it's important that you keep it to where it's not like this machine where it's just churning people. That's what we did. Three and a half miles down the road. That's what we did. No, as Peter says, the first month break-even, that's not normal. What we did is we moved our doctor, and our patients loved it because now if they go into Waddell, and it's busy, they can go into Surprise. It really just gives them that option, and they're not waiting 30, 40 minutes.
That was something that our coach taught me, is when I was struggling with bringing a second doctor in, is he said, "Okay, you're seeing 55 people with seven new. Those seven new patients, if they come in, and they're waiting 20, 30 minutes, they're not going to come back." What he really taught me is you've got to be proactive. You've got to be prepared. Not to mention, you don't want to burn your doctors out. That's why even though we might see 90 to 100 patients in one clinic, we have two doctors. You never know if you're going to get five, 10, 15 new. We're always prepared, and that's why we're successful, and that's just so key to talking to franchisees. When they tell me, "Oh, my doctor can handle 80 patients," not for long.
What happens when you get seven patients that day? Those seven patients, they come in first time to see The Joint, and they're waiting 30 minutes? That's the tricky part of this model. You've got to invest this. You can't stop investing when you open, and that's something I learned, too. Yeah. I don't know what the cap is. Three years ago, I said, "No more clinics. I'm done. I'm not opening another one." Now that I started to see the growth and the potential, just because I stepped away, and I put someone in that knew what they were doing, it's limitless. It's absolute limitless, and that's where I said, "I can do this. I've discovered my purpose." Yeah.
Thank you.
I guess my first question is why hasn't Joint tried to hire you for corporate?
Yeah.
Aside from that, how many per day are you doing now at the unit that you bought? I think you said it was running 30. I'm just wondering where you are on that. Then
This is kind of a multi-part question, but I guess if you had to summarize, what are the key elements that you think drive to 120 a day other than just more doctors?
Getting to that, getting to 120 is repeatable elsewhere?
Yes. Well, first question is, I love working for free because what I do benefits everybody. We all work for one brand, and that's The Joint. I have franchisees calling me all the time, and I am more than happy to help them. Me helping Peter is him is just it's only going to help me. The new clinic that we just purchased only a month ago is only seeing about 32 patients, but we know it's going to take working with that doctor. That's really all that it is going in, working with the doctor, not just once a month, but weekly. Just seeing how he interacts with the patient, and sometimes tweaking just the minor things. Just how he even recommends treatment to the patient. That's something I couldn't do. How he interacts with the wellness coordinator.
The wellness coordinator and the doctor have to have synergy. That was another huge transition for us. The doctor has to be coachable, too. We have doctors in there that have 15 years experience, and here we have a coach coming in and telling them what to do. What Dr. Chris did is that he sold them on the vision. He didn't sell them on how to adjust. He sold them on how many more lives we can change every day. That's how he interviews them. He says, "Do you want to adjust? Do you want to change people's lives?" Or do you want to take notes all day? He can really tell just in the interview if they're going to be the right fit for The Joint. Not everybody is. Seeing how we get to 100 and 120 is that we have three doctors.
That's a big investment on the owner's part because for the first two hours, you might see 20 people and you've got three doctors. I just try not to even look at it. At the end of the day, you'll have 120. They'll all come in from 4:00 P.M. to 7:00 P.M. If you're not prepared, you're going to lose patients. If you're not prepared, it's The Joint that gets the bad name. I don't care if it's corporate, if it's Camelback, we are one brand. That's why we see so many patients. Why we see so many new patients, because our doctors are trained to ask for referrals. I hope that sums it up. Yeah. Anybody else? Yeah.
Yeah. How do you keep your doctors motivated over time? Do you see a natural evolution where they'll be really engaged for a couple of years? Do you need to manage that in year 3, 4?
Yes, that's another good question, too, because I struggled with that early on. How we keep our doctors motivated, well, if they're rock stars, you're going to pay them well. You're going to pay them a percentage, you're going to pay them a bonus. The percentage is on net sales. As an owner, your bottom line comes second. That's just the way it is. You've got to focus on the long term. As a franchisee, I think coming in, I was always focused on, "Oh my god, how am I going to pay my money back?" You're always thinking of your leverage. That's just been key is paying the doctors. Now, however, they've got to prove they can grow a clinic. That's exactly what this doctor did at Surprise, and I moved him over to, basically he has his own clinic now.
He has help. I pay him a percentage of sales. I pay well. We pay well. I should say we pay well. They have to prove themselves. Their conversion has to be up there. If they're in the 30s and 40s, they're not converting. That's where we make our money is the memberships, the wellness plans. Keeping them motivated, that's tough, too. They burn out. They burn out in this model if you're not getting them help. That's the thing is that Dr. Chris, my coach, is in there. It's funny because you think of I really, like I said, thought about him coming in and just training them, and then I don't need you anymore. He has to be in there weekly. Weekly, weekly. If they're sick, he covers. He's always got their back.
Always training them, always training them. He gets them help, and that help better be trained because if that help's not trained, they're no good to him because again, he's seeing the majority of the patients. My second doctors, I usually pay them hourly, then I pay them a bonus. My lead doctors, we pay very well. For them it's a career, and that's what we want. We want them to say to themselves, "I'm making more money than if I own my own business. I'm making more money than the owner." That's how it is sometimes. They're making more money than me. That's how we have to keep them motivated. It's no different than us. Yes.
Can you talk about now that you have eight clinics?
You've said yourself and this sort of doctor that's in charge of your hiring and things, who else do you have or who else does it take to run eight clinics above the clinic level?
Okay. Great question, too. We open Buckeye, our eighth clinic, in the fall. Already Dr. Chris needs an assistant because what we're finding is that if he's out there covering or when I say covering, I mean a clinic that doesn't have that third doctor that day, he's in there. He works his butt off. We noticed if he's covering too much, people start to get lazy. Our conversions start to fall. We realized that we already have to bring him an assistant so he's out there constantly motivating, constantly working with the doctors. I think that's the toughest part of this model is because our doctors will see a high volume of patients is that you have to constantly keep their purpose on the top of the hill because that's where we're all going is up there.
The more money the clinic makes, the more money they make. I think that's where the mindset has to be. Because when I first opened, the doctors were kind of like, "All right, getting paid $30 an hour. I'm going to work for $30 an hour." That's all you're going to get. Minimal effort, minimal results. That's where Dr. Chris's key job is to be out there constantly motivating them. In time we have to hire him an assistant, that way the assistant can cover as needed or he can fill in if we have a high volume of patients that day. I also have someone that handles an HR. She's my operations manager, but she handles my payroll, the wellness coordinator schedule. She interviews them. She was a wellness coordinator herself, so she understands the questions to ask.
I also have an assistant operations manager that handles my supplies, my marketing. She works with OTT. She's engaged with corporate. That's really our team. That it is. Me, myself, my job is to make sure that everything is humming along. Things are needing to be approved, just making sure that I'm serving them. Whatever you guys need, I'm there for them. It's just really a team of 4 managers, I should say. Yeah, 4 managers for 8 clinics. Yeah. Mm-hmm.
With all the success you've achieved, have you started seeing copycats or anything like that? I'd love to hear more about the competitive environment, what you feel like the real barriers to entry are for your business.
No, in Arizona, absolutely not. You have ChiroFit, which I think they have about 8 clinics here in Arizona, but no one does what The Joint does. No one. It's such a convenient, affordable, easy model. Sometimes it makes me nervous, that's why I think I'm out there trying to reach out to all the franchisees, because it is our responsibility to this brand to keep it just The Joint. That's it, no competitors. I don't know how long that's going to be, but I think it would be very hard to compete with what we've accomplished. No competitors that I know of. Any other questions? Nope. That's it.
Teresa, thank you.
Great. Yeah, you're welcome. Thanks, guys.
Teresa's also one of our national franchise advisory board members. She didn't mention that, she also does that. I didn't get mic'd up, I'm going to stay right here. A little bit of my background. I started my career with McDonald's. I'll go through the years, but it's a little bit deceiving because I'm really 45 years old. I have about 40 years in the franchise industry. I started with McDonald's. I was there about 10 years. I actually started there when I was 14 years old, and I started working with a franchisee and worked my way up to a field consultant, which is like one of our franchise business consultants. From there, I went with Dunkin' Brands, and I was with Dunkin' Brands for about 20 years, and I loved the brand.
It was a great brand. There was a time where there was a lot of talk about splitting up the brands, and Allied Domecq sold the brand. I became a franchisee, and I still thought the brand was phenomenal. I became a franchisee at Dunkin' Brands. I was a franchisee for about four years. Like Jason, I had a very successful opportunity there and got out right in time because as you know, the value of Dunkin' was very high, and when we had the economic downturn, purchasers couldn't get the money. They couldn't borrow the money based on what the brand was selling for. I got out right at the right time.
From there, I went to a company by the name of Pollo Campero, which was a startup, and that was a great experience because I spent 10 years there, and I had a great opportunity to work with a startup, and we did really well there. From that, I ended up coming to The Joint, and I'm really enjoying it here, and I think we have a tremendous opportunity. We've done a lot of work. I'll talk to you a little bit about that, but we also have a lot of work to do. What I want to do is I want to talk to you about four things. One is our operational structure and our roles. I want to take you back a little bit, what we've done in 2017, 2018. We want to talk a little bit about what we're doing moving forward here.
We have four operations pillars. I want to take you through that and then give you some key takeaways. This is the operations organization. There's three components to it. One is we have the company operations team, and that team is led by one director of operations, and then he has a regional sales manager. Like Teresa described, we have a clinical director for every eight to 10 clinics, and we have an area sales manager for every eight to 10 clinics. We have a franchise side, and then the franchise side, we have a director of RDs, which manages all our RDs, and then we also have three franchise business consultants for the non-RD areas that we have franchisees in. Last but not least, we have a clinic support center. Dr. Steve is part of that clinic support center.
We have a director of training and operation services, and we also have a director of planning and analytics. If I take you back a little bit to 2017, 2018, we kind of started our journey during that period. The first thing that we did is we needed to prioritize our operational initiatives. Well, if I give you a little bit of background, I spent about three months out visiting franchisees, trying to understand what was going on with the system, and I think it's important to have this background. Basically, franchisees didn't have the tools that they needed. They had created their own systems. Every franchisee was doing their own thing, and they were really upset at The Joint because they felt that The Joint wasn't giving them the tools that they needed.
They weren't being supported. I think you heard some of that from some of the franchisees and the RDs that spoke here. One of the things is that we wanted to prioritize our objective, what we wanted to do from an operational perspective. We evaluated and implemented new policies, with NFAB's support. These policies were very specifically focused at improving our patient satisfaction. I'll talk a little bit more about that. We created and implemented plans to increase the capability and capacity of our franchisees. That relates to what I just mentioned, which is we created tools for them, we created e-learning programs, a way to train their people. I'll talk a little bit more about that. We built and implemented a complete clinic operations plan, including a restructure of our team.
At the time, there was two director of operations for the whole operations team. If you can imagine, there was two, not director of operations, there was two district managers managing, at the time, was 48 clinics. You can imagine what that could've looked like, and you just heard Teresa talk about the organization and the results that she's getting, and she's doing it with four people. It was really unmanageable, what we did is we restructured the organization in an affordable fashion that we could scale and that we're able to do the necessary things that we needed to improve our operating bottom line. We implemented accountability measures. Basically, the ops team has weekly follow-up, weekly phone calls. They talk about the numbers. They have specific calls with clinics that are underperforming. There's a whole cadence that we're following that didn't exist before.
That's really worked very well. We started our journey to build a chiropractic culture, which Dr. Steve will talk about a little bit more later. We've started to kind of, you'll see some of our improvements have come from our performance in the clinics, and we'll talk a little bit more about that. The fact is that these initiatives are working. If you look at some of the things that we did is we implemented these tools, and these were really fundamental tools to the business. There wasn't an operating model, we created an operating model. We created a one-page business plan. We created e-learning and training techniques for the clinics to be able to train their people. If you can imagine, there was nothing. We wanted the people trained, and we wanted to be trained consistently.
We created these tools, and they go on and on, including, we created toolkits. If a franchisee was having a problem converting, they could pull this toolkit, or if they were having a problem retaining patients, they could pull this toolkit and work with that. From that, we saw franchisee satisfaction go up, and I'll talk about that in a second here. You see that ultimately delivered a better patient experience. The good news, and we're pretty proud of the fact that we were able to improve our NPS score from 1917, that was 47% to 56%, or almost a 20% improvement. For those of you that, I'm pretty sure almost everybody probably knows what an NPS score is, but it's a net promoter score, which means that today, where we had 47 of the promoters less the detractors is your net promoter score.
We went from 47 to 56. Franchisee engagement has improved 40%. We started, this is 2017. Your pie chart on the left is 2017. We did a franchisee survey, and we had an independent company do that for us. They do hundreds of thousands of surveys every year for franchisors. We wanted to set a benchmark. Where are we? Where are we today? What are our franchisees telling us? It was pretty sobering. It wasn't a lot of fun to look at, and it was difficult, from there, we developed plans, and we developed initiatives around the way our franchisees felt about how we were delivering to them.
We're happy to report that all these tools and e-learning and support and the feelings that you see with a Teresa, and you would've seen it at the conference, 93% of participation at conference, we feel really confident is our support to those franchisees is really getting them energized. When we see this energy, we also see that translating into profit. Obviously, where we had 44% of our franchisees that were engaged means actively engaged in the business. In 2017, today, as of our last survey, we have 61%. That's a phenomenal increase. Our company has told us that they don't see that 12 points, it's just pretty significant. We're pretty happy with this, and we think some of this is some of the results that we're seeing. Briefly to talk about 2019 and our four pillars. We're continuing down the same path.
The pillars don't change. One of them is patient focus, and we continue that. You'll hear some of the same themes that we started in 2017, we continued through 2018, and we're expanding those into 2019. We tweak them, we learn from them, and we're making them better. It's the same for strategic initiatives that we have. We want to continue to increase the capability and capacity of our franchisees. We think that is super important. At the end of the day, we can't do it for them. We have to enable them to be able to do it, and we don't have the capital or the resources or the DNA to operate their clinics for them. That's what the franchise business is for. We have to be accountable, and we have to provide them the tools, and we're doing that.
The third thing here is our corporate clinics. We went from losing a lot of money when I first got here to last year, where we made Can I say that number? $2.8 million or 800% improvement over the prior year. We're going to continue that path. Now our objective is just to optimize that, to continue that path, and then at the same time to open successful greenfield clinics. I'm happy to say that we've done a pretty good job with those, and the ones that we have opened are performing above the traditional ramp. Last but not least is, Dr. Steve will talk about this later, which is building a culture of chiropractic and quality, and so on and so forth. I'll talk about the first one.
As lead with patient focus, we want to implement policies that align with the patient experience. We saw an example of this with policies that we implemented in July of last year, that now we're seeing the benefits and the results of that were our conversion rates are up. We see and we can tie training specifically to a lot of our key metrics. When they use training and the clinics run training, as an example, if a clinic has trained their people, our conversion rates are 2% higher, if they train their wellness coordinators. We can clearly see that, and we can clearly use those with franchisees to motivate them to use the tools. Secondly, we want to focus on a lot of the blocking and tackling. I think Teresa kind of spoke to that a little bit.
If a franchisee thinks it's going to just come to them or from a corporate side, it's not. Teresa said something at the national conference, she didn't say here, but I thought it was very important. Her closing statements at the national conference was, "Just follow the system. If you follow the system, you're going to be successful." That's our primary focus, and we've been focused on it. We started last year. We developed a ton of tools for franchisees, and our primary focus has been to get them to use those tools and to see the benefit of them. Develop and deliver world-class training. I talked about that a little bit, but we want to improve that and enhance it. We want to do shorter segments, constant training. We think it's really important.
Particularly, with the type of business that we're in, we have an opportunity to show them sales tactics and get it out to them. With some of the new technology with Axis, we'll be able to do that. Invent a patient satisfaction measurement. What that is we go in and we measure clinics, and then we get some patient satisfaction, but it's limited on the marketing area. This to me is one of the most important things that we need to do, which is to measure every patient that we can so that when we're talking to franchisees, we're saying, "This is what your patient is saying about you." It gives more credibility at the end. We're implementing, with the new system, a patient satisfaction dashboard that's going to be in front of their face what their patients are saying about them.
It'll give us an opportunity to be able to consult more with those franchisees and coach them. Then define and prioritize system needs based on results. This is pretty simple. Sometimes we go out, and we develop a system, but is it really something that we need? This is more about tying the results that we're getting and making sure that we're focused on improving those and through making sure that we're aligned with the patient experience. I talked about improving the capability and capacity of our franchisees. I'm not going to talk much more about it other than we need to provide them the tools. From an RD perspective, there was conversation earlier where now we have quarterly business reviews with all our RDs. It's a big task. It's 21 RDs.
We spend a couple hours with each one of them, but it's really making a difference, and it's really driving the business, and we're able to talk to them. They have over 60% of our system. We really need to take the time and make sure that they're progressing, that we're giving them the tools that they need, and holding them accountable for what they're supposed to do. Then last, this is a big project. It's taking up a lot of our time, but we want to make sure that we support Axis in our new system that we're going to be implementing towards the end of the year. Our third pillar is to optimize corporate clinic. I talked about that from a 2017, 2018 perspective. It's no different. We want to optimize our profitability.
We introduced, at the conference, a labor optimization model for franchisees to be able to use because there are opportunities, and there's an opportunity for franchisees to see where their patients are coming and to be able to schedule for that. We're trying to teach them how to do that because one of the biggest issues that we have is that franchisees don't want to put that extra doctor, although Teresa did. We got to show them what the opportunity is, and we started that through the conference, but not only the opportunity, but how do you do it efficiently, and how long does it take to break-even if you're investing any money in this.
We want to reduce our turnover and Amy talked a little bit about, and Dr. Steve earlier, about the research that we've done, and we're going to learn from that and then put some actions in place to deal with those. Build bench strength, obviously. We're building greenfield clinics. We've been able to do that within our current infrastructure, our current labor models. Some businesses, you have to hire ahead. We've been able to manage that throughout and we'll continue to do that. It's not a big investment in that regard. If we're starting to open a lot more clinics, we'll have to re-look at that. New greenfields. We are very focused on achieving break-even targets within six to nine months.
Oh, okay. I'm back. All right. The fourth pillar for operations is building a chiropractic culture of quality and trust. This is not just in the clinics between the doctor and the patient. Obviously, that needs to exist, but what does it look like from The Joint to the rest of the profession? That's really what we mean by this slide. This is talking about how do we lead the chiropractic profession. We're the biggest thing in chiropractic, how do we act like it? The first thing is we need to improve industry reputation and relationships with colleges, boards, and associations, and we talked a little bit about how that's continuing to improve. Our first school that we partnered with, Sherman, there is in the bottom right. We need to increase chiropractic influence in our system.
What this really speaks to is how do we ignite the passion for chiropractic between franchisees and even our doctors so that they can achieve more success. You heard Teresa talk pretty passionately and emotionally about her ties into the business, and we know that when doctors and franchisees have that passion for helping patients, that they're more successful than the average franchisee. How do we cultivate that culture? That's a piece of it. We need to be the career path of choice for chiropractors. We talked a little bit about that. How do we increase the opportunities for success as employees or business owners for our chiropractors? We need to improve our DC employment. We talked to that in the DC survey that we did earlier this year. We need to be able to have our doctors see 60 without having them burn out.
How do we protect our doctors? We need to improve clinic training and oversight. Like I said, and what you heard from Teresa, that interaction between the doctor and the patient, the doctor and the wellness coordinator is critical to the success of the clinic. How do we continue to improve and build on what we have today? Those are all our focuses.
Although it's not up here, I just want to summarize because I kind of heard some of the conversation earlier, but this brand is easy to use for franchisees if we give them the tools. It's easy to use. You have two to three employees, four or five, depending on the volume. There's not many franchisors that can give that to a franchisee. It's easy to use, easy to operate. What we've tried to do is, and what we're going to continue to try to do, is get our franchisees to have one-stop shopping, make it easier for them to use us, make it easier for them to operate their business.
If we do that, Eric will have a lot more franchisees than he's getting today because the easier it is and the easier to operate, the easier it's going to be for them to put their money up and say, "Okay, this is a worthwhile brand." I think if you look at it from that simple perspective, our goal is to make it easy to use, easy to operate to get these franchisees. I will say as takeaways, we have a strong partnership with our franchisees. Maybe it wasn't so strong two and a half years ago, but I believe, and I've been 40 years experienced in this, I think we have one of the strongest partnerships. If not the strongest that I've ever seen. I think that Teresa is not the only franchisee that feels the way that she does.
We have many franchisees that feel that way, that's a great place to be. We're making progress in that regard. That doesn't mean that we're there. We still have detractors and we still have franchisees that don't believe in us, and we're going to continue to work on those. We have the right strategies and plans in place, I firmly believe. It's easy. Our economics are great. It's easy when the economics are great, but you got to back that up with the other strategies, because the economics won't be great if you don't implement them. I think we definitely have the right strategies. We have a solid management team, and we're committed to doing the right thing for our patients, which is the biggest thing.
We're committed to do the right thing for our franchisees, but more importantly, we're committed to do the right thing for our patients. Any questions? Yes, sir.
One of your earlier slides, the 2017, 2018 progression still showed 60% satisfaction, 40% not satisfaction. How high can it go? How long will it take you to get there? What will the impact be when you get to 80% or 90% positive?
Are you talking about for franchisees?
Yeah.
Yeah. Well, I think we don't have a lot further to go to be in the top quartile. We're right there with or above average of what a franchisor would be. Our goal is not to be average. Our goal is to go higher, we have more promoters. 50% of our franchisees are promoters, and that's a big number. Because when you look at a net promoter score, if you're zero, that's good. Zero to 30 is good, 30 to 45 or 50 is excellent, anything over that's exceptional. We're in a good place, but we could be much better. The brand is doing so well, the economics are doing well, I think that as well as we're doing, we can be doing better with our franchisees. I don't have the answer for you. 90 is almost impossible.
I'm not sure there's any franchisors out there 90 or 80. Certainly it's going to get better.
Can you just talk about what training tools or support you find make the biggest difference between someone's failure and someone's success? Teresa talked a lot about Coach Chris. He seems to be very impactful to her success. What have you found that's the key tool to get somebody above average?
Well, what we did is, as I mentioned earlier, we built all our tools based on best practices. I spent three months going out in clinics, talking to franchisees, trying to figure out what are they doing. All our tools were built with what's working and who are the top performers and what is it that they're doing. We built those tools, and then what we found is now we got to get franchisees to use them, and we knew that. Now we got to get them to use them, and we got to give them the proof. It's not just a hammer and saying, "You got to do this." The newer franchisees, it's easy because they don't have any system. That's the system. That's their training systems.
The older franchisees created their own systems. You know how hard it is to get somebody to take you away from your spreadsheet that you created. You created the spreadsheet, now I'm coming with my spreadsheet. I want you to use it, and you're going to say, "No, I'm comfortable with mine." Anyway, I think that the things that I think will have a greater impact, I mentioned, which is less training, more often. Less size, more often hitting the field level, for them to be able to capture these small bites of training. "Hey, have you thought about doing this? Have you thought about doing that? Here's how you can get your conversion up. Here's how you can retain a patient longer." Which by the way, all the numbers are heading in the right direction. Does that answer your question?
Yes.
Yeah.
You've done a lot of repair work with your franchisees. I guess I'm just wondering why some franchisees, even though you're up at the, you said approaching maybe the top quartile, why would some franchisees not want to be engaged? I just don't understand that.
Well, different reasons. Some have a history that they just can't get over. They just can't get over the history. I had a franchisee, I'll tell you a story without a name. I had a franchisee that we were talking to him about certain acquisition of his clinics, because he was just so disengaged. He could care less. He was like, "You guys are horrible. You're mean." We talked to him for quite a while, and he's completely changed his mind. He doesn't want to go. He wants to grow. That's a good story. There are some that won't change. They just won't change. It's almost like if my wife had an affair, if I felt, would I be able to stay married to her or not? I don't know what my answer. What, that's a bad example?
The point, it's a good example because some people are able to get over that, and some people aren't. There was a period here where they felt that they were mistreated, they weren't treated properly. For whatever reasons, I wasn't here, I don't know the story. This is the way they feel, and some of them haven't been able to get over that. Then there's the ones that came into this for a different reason, and they had different expectations, and they'll never get to their expectation. We'll never be able to move them to where that expectation was. Great. Thank you.
We saved the best for last.
I guess so. Can everybody just stand up and maybe you want to stretch once and then sit down? IT is always wanting you guys to focus. Thank you everyone. My name is Manjula Sriram. I'm the VP of technology, as you've been seeing me run around back and forth every time Peter raises his hand. I live and breathe technology. My background is computer science and electrical engineering. 20 plus, 23 years, to be exact, of technology background. Started out totally by fluke, on the field of medical. I was ready to go to med school, totally changed direction because of a lab TA, and loving it since then. I have a master's in business administration, again, technology information systems. Very focused on technology, and that's the field that I live and breathe. I go home, and I go write code, even today.
My work experience from the perspective, more recently, anybody who's in the finance industry has heard of Early Warning and their Zelle product. I helped launch that and get 19 banks on board with that. United Airlines, worked on their optimization model. Walgreens, working on their Medicare Part D and working through those implementations. US Foods, working on setting up their data warehousing and, again, their revenue optimization model. Vale from a telco infrastructure perspective with clients like Microsoft, Allstate, and State Farm. A lot of technology background. 15 months ago, when I looked at this position, it was extremely exciting for multiple reasons. This organization is on a trajectory. It's a 45-degree angular trajectory going straight up, which is for somebody who's into math and computer science, is phenomenal for me. I want to be on that track, to be going up.
I'm here and not looked back and loving every day of it. I want to talk about a little bit from the vision strategy, where we are going, and as an eye-opener, want to run a couple of factual pieces of information for you. It takes a blink of an eye to realize that the technology has outrun us. An example, as of this morning is, if you look at some of the laptops, none of us have HDMI cables. We're carrying this dongle around trying to hook up, and then there's another computer that Lancelot, who's sitting in the reception area, shows that has a mini HDMI. We don't even have a dongle for that. Technology is changing. Technology is ever-changing, and you look away for a minute, it changes. The other aspect is 6,000 viruses are being introduced every month.
We in this, whether it's finance industry, healthcare industry, any industry you take it, we need to protect us, our organization, and our data from it. 51% of the internet traffic is non-human. 49% is real people, obviously, or a variation thereof. 31% of the traffic that comes on the internet is with a malicious intent. 19% are spies. 5% is automated hacking, and 5% from spammers, and the scrapers and spammers is the 2%. If you look at what we are seeing in the industry outside as technology is advancing, a lot of malware attacks, a lot of virus attacks, spyware attacks, a lot of that happening. The real traffic is much smaller, we need to make sure we are protecting our data with the large majority.
With that, I want to go over the team that we have, the vision on why we moved from build to buy. You've heard Peter talk about that a little bit. The focus we've had, in 2018 and 2019, the near-term roadmap, and then the technology vision. Where are we going from here? It's a very small organic team that I have, that's focused on support, development, and security. You want it that way because you want us to build systems and processes in such fashion that we can keep our team smaller to be able to scale our business much faster and quicker. The smaller the team and the organic growth that we focus on, the more money goes to the bottom line in a lights out environment. Peter has said this in many of his calls. We have currently today a homegrown proprietary system.
For anybody who understands technology, it's written in .NET framework, which is almost non-existent today. We host a lot of data in our database, and to be able to make sure that it is refined and normalized sometimes can have challenges. The vision is, let's come up with a technology that helps us grow, that helps us scale. As you heard, I said 6,000 virus attacks each month happen in any industry you take. I need to make sure that The Joint, from a technology perspective, is prepared to handle any of such attacks, and it's protecting our patient data, and that's truly what our focus is. We basically focused on partnering with a world-class system, and we chose SugarCRM for their on-prem as well as cloud-based system support, which is why we're partnered with them.
They are SOC 2 compliant, which is why it was a big thing for us as well as European certified. If we ever choose to go to the Europe, we are covered there from the certification perspective. We are progressing towards the HIPAA compliance. Going into a private hosted cloud network and stuff, those are steps that we're taking towards that. While we're not required to be, we are taking a step towards that. We changed our strategy completely. 15 months ago when I came, we were on 75 miles an hour in a 55-mile speed zone, going towards the build strategy.
When I came on board, the question that I asked myself is, "Do I want to be in an organization that we want to continue to write proprietary software to continue and work through and make sure that I have the right talent available to me every time, or go towards a build strategy?" With our board members' support, obviously with the management support from Peter and the rest of my peers, we were able to make the decision to go to buy. I want to talk about SugarCRM as well as the legacy systems. Again, there's a lot of things that we're already doing in our current environment, but I'm talking from a vision perspective here.
The legacy systems, if you looked at the older CRM systems or older technology-driven systems in any organization, they were transactional, one transaction at a time, not aggregated to a larger level to be able to see some of the data that we have. They're siloed. If you look at the manufacturing world, you've got your shipping on one hand that's siloed. You've got your inventory on the other hand that was siloed, now everybody wants to bring it all together. New sales, services cost, and data-centric. Let's fast-forward five, 10 years now, and we are in a recurring system. A patient is from start to finish. It's a patient journey.
It's not about a single transaction of a patient, it's how is the patient progressing through the system from the lead all the way to being able to get them into our system and being able to use our services. It's seamless. You cannot have siloed environment. I need to be able to see what is my inventory? Who are my patients? How am I treating them? Who are my franchisees? I need to be able to get a full view of the system as is. Be able to continue to convert my patients, continue to sell them additional services that we offer. Services marketing. To me, referrals are the best way of doing this. If a patient refers The Joint to a second patient and brings in five other patients, that's what we're doing through this seamless modern CRM system. It's relationship-centric.
We want to build a relationship with the patient. We have so much data as we're going towards in this new environment to be able to understand the patient from start to finish, be able to market to them, be able to service them, and make them feel better, as Jason said earlier, live a better you. Sugar and The Joint relationship. Sugar integrates seamlessly with systems to provide enhanced insights into your patients. It is a CRM platform focused on that. I say that because I can take that, configure that system, be able to deploy it with some customizations, and then go and bring in industry level class systems for whether it's marketing, whether it's point of sale, and be able to integrate. You're going to see that a little further down. It's modern and intuitive.
While it takes some time to understand the interface, it is still modern and intuitive. There are several ways of doing the same thing, and as you become a power user of the system, you start to see the returns on that. It drives enhanced productivity and gives us an opportunity to view how are we performing and get additional metrics and additional data. We're going to switch gears. I talked about all the facts that we have in today's technology, our policies and procedures in terms of how we went from build to buy, and we're going to focus a little bit in terms of what we have done so far and what we're doing in the near future. As I said earlier, Atlas was a homegrown system and is still being utilized, is a homegrown system.
My initial focus when I came on board, we had several outages and system impact. While it did not impact any of the revenues or any of that, we still had some of those. It's to gain that stability, to make sure that we have a system that performs in every franchise clinic that we have and continues to service our patients and our doctors and our wellness coordinators. We're in the process of completing the EMV implementation from a PCI perspective. It gains us a better insight into PCI certification from the perspective of not hosting any of the data, being able to use tokenized data, et cetera. We're in the process of rolling that out as we speak.
We've also upgraded our franchise communication platform, bringing in additional sales services that we're working towards implementation right now. We upgraded our email system to an enterprise email system, improved email retention, spam and phishing email reduction, reduced that, and obviously, encrypted email as we progress towards the HIPAA compliance aspect. I want to focus majority of my time on this slide on Axis 1.0. We're extremely proud. This is what we are going to be rolling out. We're still targeting winter of 2019, that's still moving along on track. The first and the foremost piece that we're going to be able to give to our patients is digital onboarding. That is one of the key pieces. Today, the patients come into the clinic, they fill out paper forms, we take that data, we scan it in, the doctor takes notes, then we scan that document again.
From the comfort of their home, the patient can fill that information. They can either fill it at home or come into the clinic and fill it on a tablet. That data is immediately available to the doctor to be able to take action on, be able to take notes on. You don't have the scanning or printing of documents. That not only saves time, it also gives invaluable insights into patient being able to continue to market that to that patient, the type of treatment we want to give them. Those are all tied together, as we continue to build the system. I'll talk about this. We're just scratching the surface because as we're collecting this data, we're going to be able to provide additional features and functionalities to build on. Patient portal. The patient's going to be able to see their own data.
Patient's going to be able to update their credit card information. Patient's going to be able to pay the balance that's due. Those are some of the key pieces that we're introducing with that. Being able to actually mobile check-in, being able to check in to see, "Hey, I'm near a clinic. What's the wait time? Let me go check in and go see the doctor." Potentially see the doctor who's on call at that time or working in the clinic at that time. Automated policies and pricing enforcement. That's one of the key features we're giving. We're giving additional policies of, I think Jorge mentioned about anti-poaching, we're bringing those kind of features in in an automated fashion. Exception reporting, quick mobile access to information. How many visits do I have? When was my last visit?
Those are some of the pieces I'm going to be able to see on the mobile. Credit card process, again, as we talk through linking all the processes in the system itself, being able to charge my balance due. I want to talk about automated SOAP notes. SOAP is called Subjective, Objective, Analysis, and Plan, or is how you call it. Dr. Steve, I think, has a different word for A, but I call it Analysis, is being able to automate some of that information, being able to give referrals. Today, in our current system, Atlas, we don't have a view into why the patient left our system. If we're giving them a referral to go see another doctor to go get some X-rays done, we're able to track that information and take action on that. That's a huge benefit to see why somebody is leaving.
Obviously, PCI compliance, that is one of the most critical pieces we're going to drain out of that one. From a near-term roadmap perspective, I call it 2020 and beyond, but it's very near term, is being able to do some digital blue book. We currently have a hard copy of it. They write daily metrics, et cetera. We want to digitize that. We want to integrate the learning management system to actually, again, build a cohesive system. Automate clinic health report, patient experience survey and assessments, being able to automate some of those rather than have to fill them outside of the system and keep systematic view into that. We are working, Jason mentioned that about the automated CRM, again, bringing in a world-class system to be able to automate our marketing campaigns and being able to build a patient journey.
Integrated POS system to get better insights of what still got a patient X into the clinic. BI tool, being able to do a data warehouse and be able to give actionable reports that clinics can take action on, operations team can take action on, and we as an entire corporate system can take action on. I want to talk about where we're heading. I talked about Axis, which is what we're very proud of. That's our focus. We want to make sure we lift our current system and shift it into this new world-class platform. SugarCRM base system take the flexibility and nimbleness that we get. If you think about if I had to have a developer write security protocols, that would take me six months. I didn't have to do that because I had an extension R&D team of the SugarCRM time of it who actually built that platform. I just had to configure it for what I need for it to do.
Axis is the focus. We want to get Axis implemented. As I stated, we are on track towards the end of the year as planned. Once we get Axis done, we're looking at marketing automation, whether it's the existing platform integrated together as a single sign-on or being able to look at a futuristic product that we want to integrate with. Looking at a point-of-sale system, being able to see what additional features can I bring. Being able to get business intelligence, patient feedback, and the financial systems. Build a cohesive ecosystem.
Now you're looking at being able to view an entire system, being able to view an entire set of data that's available to everyone, to be able to take action, to be able to give a patient a better experience that ends up being in our bottom line. Better systems, better data, better insights, improved patient experience, increase in profit. That's pretty much my presentation. From a key takeaways perspective, aligning with an industry-standard, world-class CRM platform prepares The Joint for its ongoing growth. We are on a growth phase. We are in a trajectory. This is what helps us get there or continues to help us get there. We have minimized the risk of stagnation by choosing to buy. Build is always, sometimes, if you're not an IT organization with 30-40 developers on staff, there is always a risk, you're going to lose everybody that's on team.
What am I going to do? How am I going to support a system? Always buying a system that can be configured helps us minimize that stagnation risk. Technology's ever-changing. I started saying, with a blink of an eye, by the time I blink five times, it's changed five times. We are in a continuous innovative environment. We want to innovate. We want to provide our operations team, our marketing team, our sales team, opportunities to best bring in more revenue, and the only way we can do that is giving them that technology automation that we can provide. We want to provide optimal care for our patients. Those are some of the key takeaways. If anything you want to take away from this presentation is that we're continuously improving what we are building. Questions?
What do you think the biggest concern or hurdle is around the switchover? Is it the data conversion side or getting franchisees to buy in and use it? What do you think it is?
I think I'm going to answer your question in two ways. The first one is the data. Obviously, like I stated, we have so much data already in our system. Taking that, making sure it converts accurately, and represents what the legacy system has is the key risk, and to ensure that we are providing that accurate information to the patient. As we put the system into the hands of the patient, that becomes even more elevated because now the patient can see their data. That is the key risk. The other risk is while the franchisees don't have an option, because this is the system of record. This is what we're going to do. Our existing system will get retired. The day we cut over, it's going to go into a read-only, and after a certain time, we're going to retire that.
They don't have an option of not accepting the system, obviously there is that risk always there to say, we're going to hear, "Hey, this doesn't work as we want it to work." Just that field view of things. Change is always not well received. It's that transition time that is the secondary risk as well.
I guess just following up on that, there's training or something to sort of mitigate any sort of disruption that they're required to be a part of?
Thank you for asking that question. We have built in about three and a half months of training. Our operations team is extremely focused. We have partnered with them. They're building a very robust training system for them through webinars, through e-learning tools. Then we've got additional eight to 12, I think it's about 12 weeks of time that our clinic staff can go through and run through the training. We're also working with our field staff, like our RDs and our FCCs that Jorge mentioned about, to make sure that that word is getting through to all the franchisees so they are able to register and enroll in all the training classes.
Then just one more if I could.
Yes.
Could you provide any sort of examples of a new marketing technique that could come about post-implementation? Because you guys have so much data to work with. Is there something new that comes from the system?
Yeah, I think, today, a lot of the marketing that happens is very manual, right? Marketing team comes to us and says, "Can you provide us this type of data?" When we give them this data, then they take an action to be able to build whatever campaigns they want to build. That goes away, becomes more automated, right? It gets into the hands of our marketing team. The secondary aspect, I'm going to speak, I'm going to make sure Jason validates that because he is the marketing subject matter expert. It's simple things like I want to market to all the college-going teens, right? Maybe I'm opening up a new clinic where there is a whole slew of universities that are there, and they were part of a younger crowd who came once or twice, being able to capture that information more readily.
Maybe I want to capture roofing workers, right? Those are some of the pieces that additional data gives us. Now we're going to be able to capture how many of these patients are new to chiropractic, and that's going to provide them the opportunity to be able to market to them as well. I don't know, Jason, was that
Yeah. Many campaigns. Certainly, I discussed during my presentation our summer sale, that is a very manual campaign. We go to IT, they pull the query, we load it into our system, it runs. Those win-back campaigns should be happening constantly. It's just one example. We have two tracks right now. One is a pain track and one is a wellness track. When I say track, it's a content track for people. People come to us for neck pain, back pain, migraines. You can think of how rich those tracks could be, and it would all be automatically be happening, so people would be getting content that is most relevant to them and customized to them. Those are just two examples off the top of my head, but there are dozens more.
This is not. We're just scratching the surface with our initial release. From a futuristic perspective, if medical compliance allows for us to do, being able to send them videos related to their pain issues, being able to say, "Hey, here are some of the exercises you can do at home. When you come back, that'll make you feel better," kind of a thing. Those are all things that we have to look at, and they're all dependent on compliance and certification, but those are some of the data that's readily going to be available to us.
Are the franchisees bearing the cost of Axis?
There is some of it that the franchisees are helping from the perspective. They have a subscription-based technology fee that we charge them, so that's how we're helping. It is going up by $149 each month for the franchisees, just because of all the capital costs, et cetera, that we are putting in to make sure that the technology's up and stuff.
After Axis launches, what are the key metrics or KPIs you're looking for internally to judge the system as having the return and effectiveness that you expect?
I think the first and the foremost KPI is to look at the uptime. Our target is to be 5 nines, is where we want to be, 99.999%. Right now, we're hovering about 99.998%, roughly. It's not a significant difference, but there is a lot of the slowness, et cetera, that we worked through, being able to capture some of the pieces. The other metrics that we would look at, being able to capture revenue numbers better. We do a very good job right now, but more automated fashion as we link it to our financial systems, et cetera. Those are the other key metrics we're looking at as well. Obviously, uptime, number of support cases we get.
We expect to see an increase immediately after the rollout, as we achieve steady state, we want to see a decrease, at least by 10%-20% of the tickets. That's one of the key pieces we're looking at as well.
Just to follow up on the pricing question, maybe for Peter, are you getting any pushback from franchisees on the price increase, or are they pretty okay with it?
It all depends on who you talk to. Generally, I would say in the general overview of our company is that we have announced that we're raising. Their franchise agreement, they are required to pay a tech fee, that tech fee's changed over time. Some of the earlier contracts, it says it's $275. Others say $400. If you're going to sign an agreement today, it's $599. That we've gone to the entire network and said, "Okay, we're raising everybody's tech fee to $149 a month." Everybody will be at a different rate still, the maximum will still be that $599. I would say the majority of the franchisees, specifically the newer franchisees, they're asking me to invest more in technology. They get it.
There are some franchisees who are on that older contract that are questioning the right of the company to charge the fee. That's a conversation that we're dealing with as we speak.
Other questions? Thank you again for giving me the opportunity to speak to you today.
Something that Manjul does not have an issue, talk about technology in front of a group of people, especially our franchisees. Jake, do you want to join me? We're just going to open up for a couple of minutes, any questions, because you didn't get the opportunity to talk to Jake and I about questions. I know you've gone through a lot today. We've heard a lot of content. It's been very dense. I appreciate how engaged you all have been. Just one minute here, if you have any specific question for Jake and I. You're just absolutely stunned by the information that's been shared with you today.
Just wanted to circle back on one thing. You were talking about the DCs and maybe you can just touch on or remind us what the attrition rate for the DCs is, how it's changed since you guys took over. Just give us a sense of when a DC leaves, why do they leave?
As we've been following our DCs, first of all, we don't have a lot of information from the franchisees' perspective. We haven't been collecting that. We talked about the survey that we've just done for all of our DCs, we've collected a lot of information about why you came in the first place, what are the things that keep you with us, and we're just at the initial phase of looking at that. Certainly, it's the standard things you can imagine, compensation, benefits. Do I get lunch? Just what's my career path from here? Those are some of the key questions that our DCs have been asking us.
We have made changes in our own compensation in those corporate clinics, and we have roughly about 120 DCs on staff, and we've changed, we've raised their compensation, given them a different bonus plan starting in 2018. What we've seen is, let's say in 2017, our turnover with DCs in the corporate clinics was roughly around 50%. It's 30% in 2018 and falling.
Thanks. What multiple of revenue or EBITDA have you paid in the past for your RDs that you've acquired?
For the regional developers?
Yeah.
We haven't disclosed it.
Yeah, we haven't disclosed any sort of multiple on that. All the fixed costs are in each of the 10-Qs when we make those acquisitions, so you can see the total pricing, but we haven't disclosed valuation.
Okay.
You guys really are stunned. You're just waiting to get to the bar, right? All right. So is Jake. All right. Hey, listen, I want to just close this out and say, okay, what are the key takeaways from today? Number one, we are in a chiropractic market that is only becoming more and more relevant to the consumer of this country. You should come away feeling that there is an extraordinarily talented group of executives who are driving this company to achieve the vision that we've laid out. You should come away believing that we have some very sophisticated regional developers who will be instrumental in accelerating the growth of this business. You should come away feeling that there are some unbelievably passionate franchisees who are on that line level making a change or making a difference in the lives they touch every day.
I don't know how many times we heard today the mission statement repeated. We improve quality of life through routine and affordable chiropractic care. It's in the DNA of this organization, at the executive level right down to the franchisee, and we believe it, we're moving towards it, and we will achieve our goal. I thank all of you for the time you've given us. Any other questions, you can meet us at the bar. I truly thank you all for the time and attention. I know it's a lot for you guys to come to Scottsdale, take a day, spend it with us, and we're very grateful that you did. Thank you all very much.