Okay. Can you hear me now? Excellent. Alright. Sorry about that.
So we welcome all of you for attending. That, this is the first time we've done this event. We're really excited about it. That, the video you just saw was actually a piece that we used to launch our national conference. We just completed our national conference a couple weeks ago, brought all of our franchisees together to do exactly what our narrator was telling you, and we had almost 90 well, we had 92% attendance of representation in our network.
Now 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. And we're going to talk about that today. But I want to talk about a couple of housekeeping rules or rules. Number one, that we do have Wi Fi access available that, go to Marriott conference, and then the code is IN2019. So for any of you who want to get on WiFi, 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. We're And going 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, well, take me through the whole deck, and then I'm like, okay, I get on slide one, we boom, we go off deck, and 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. And so 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. But I'm going to ask all of you to help us stay on time. Now, 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 that's predominantly driven by franchising. And what you're going to see today more than anything else is the people, the executives, that are going to execute to that strategy. And so they're the ones that are really going to be sharing their story with their discipline of how we're going to get there. Now I just wanna cover a couple of points in my time here. I wanna talk about our mission, vision, and values, because I think that's exactly the core of how an organization aligns itself and goes forward.
You have people have to have a shared mission. They have to understand the vision. Where are we trying to go with this? And then 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.
And then I'm going talk a little bit about the market itself. And 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, and at the same time, our market is expanding. I'm going talk a little bit about that. So 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. And that's a really great place to be when you look at where we go as an organization to achieve that vision that we've set for ourselves.
Now I'm just going go through quickly. I'd like you all to memorize our safe harbor statement
the next slide. Have you
all got that memorized? That these are the things I'm gonna be talking about. We talked about that 1,700 path. How are we gonna get there? And you're gonna see today what that's gonna look like.
How are who are the people driving us to that ability to achieve that 1,700 plus unit? Now we have a really simple mission, and it's a very powerful mission to improve quality of life through routine and affordable chiropractic care. And can't emphasize how profound that is for our franchisees, for our doctors, for the staff to get the level of engagement and commitment. Can you imagine your job is to improve quality of life? I mean that's a very powerful place to be and that we really utilize this as the true mission.
You'll see this this mission on the wall of every single clinic that we have out there. Now what's our vision? You know, where do we want to grow when we grow up? What do we want to be when we grow up? And it's pretty straightforward.
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. And finally, we want to build and maintain that world class IT structure. You know, I recently was at the International Franchise Association's convention. This is a gathering of all franchisors in the country and some from around the world, and 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. And how are you going to take advantage of that?
How are you going make sure that you don't get left behind? And 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. That these are what we put on the wall every day.
And from my experience of building and managing franchise systems for thirty plus years, that core value of trust defines everything. It's a franchising is like marriage. In some country or some states, it's easier to get a divorce than to break a franchise agreement or terminate a franchise agreement. So this isn't just a one off deal. We're entering into this ten year relationship that can go on and go on and go on.
And in any kind of relationship, I've been married now for thirty six years and what's one of the things you can talk about being married for thirty six years is you're gonna have conflict. It's part of the process. And 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. And 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 the length that 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 taken in the marketplace. So if you don't have that that striving, you become you get out of market. You become not current. That you, you're behind, whether it's technology driven or otherwise.
Respect. This is the the core to how we, talk to each other. If you respect somebody, you can disagree, but you can talk and you can share information. That's fundamental in the franchise community. And finally, accountability.
It's really important that we share an understanding of roles and responsibilities and hold each other accountable to 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 or to build that business. The opioid epidemic continues. And I'm not gonna spend a lot of time on this, but this is just ripping this country apart, and we're all looking for noninvasive ways to get out of pain that are non opioid based, non knife based.
And 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 with 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 that 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. I mean, that's part of that fear of those thirty percent who are in pain and looking for ways to address it. And finally, sixteen percent of the American people are using chiropractic at least in the last twelve months. So what happens when that sixteen percent goes up to seventeen, eighteen, nineteen, twenty percent? You get that critical mass.
We're right at the forefront where that's happening in that retail center. Our target audience is release seekers, predominantly millennials. Thirty nine percent of our patients today are millennials. Thirty four percent are ex gen. So these are the people who are looking for that non invasive way to get out of pain.
And what moves them forward? They need a relief. They need a story. They need to understand how chiropractic can help them. And 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 heard many of you have heard me say that twenty six percent of our patients we had four hundred and thirty four thousand patients who opened that door for the first time in 02/2018, and twenty six percent of them had never seen a chiropractor before. I mean, those are amazing numbers in a retail where twenty six percent of the people who opened the door for the first time have never used your product or service before. That's that's pretty indicative of the future in front of us. What I love about this slide, this is a Google trends map or or slide, and what it's looking at is just how many times the word chiropractor and chiropractic have been searched. Now I was told 80% of all searches take place on Google, and this is going from 2004 to present.
And what you see there is that steady increase in the search. People are looking. Now if you can see the the the point at 2010, it starts jogging up. Why? Well my theory is The Joint Corp was formed in 2010 and we went retail and so people had more and more exposure to the concept of chiropractic in that professional setting and you can see that trend line which is any business would love to see.
Our path to 1700. This is what today is going to be about. Today, we're at four fifty four clinics, four zero four franchised, 50 corporate. This is the end of Q1. And that, 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. And today, these are the people who are gonna tell you how we're going to get there. And I'm really excited. I've been involved in franchising for a long time, and I could not be more proud of this team up there that profoundly understands our business model, is executing at the highest level, and I think really going to allow us to achieve this vision that we've set out for ourselves.
So that's the end of my formal remarks. Yeah. Questions for me, you can hold on because you had a lot of time to talk to me, but we'll maybe see in in the afternoon, we are and the breaks certainly come to me. But with that, I'm gonna turn it over to Jake Singleton, our CFO.
Use the podium if that works. Can everybody hear me? Great. Sounds good. So, again, I'm gonna echo a lot of what Peter said.
A lot of what I'm gonna 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 gonna table set some things, and then I'm gonna get out of the way.
We are really proud of the management team, the executive team we have in place. So we're gonna 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.
So another quick footprint. As of March 31, 454 clinics open across 33 states. Two shades there, the lighter blue, that's our, regional developer, territory that's covered. Now, again, we're doing this at the state level, so, 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. So we've talked a lot in the past. Currently, we've got about fifth a little over 50 of the MSAs in the country are currently covered by a regional developer. And of our franchise units, a little over three quarters are under the purview of RD oversight right now. And then where are we going?
This is that same 1,700 that we've we've shown time and time again, and this is our heat map. You know, again, if you drill down in there, we've talked a lot about it in the past. You know, 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 the heart of this analysis is gonna present today. So, 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. And we believe very strongly in this, and this assumes no growth in the chiropractic market that, you know, 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. And then we're gonna complement that with our own corporate portfolio. So when you talk about the franchising side, you know, that is going to be led through the regional developer They are the key accelerant of what we're doing here. So we're gonna leverage them.
We're gonna continue to leverage them. And then you talk about our corporate portfolio. Again, that's a mix. It's either gonna be greenfield units, that de novo development that we're gonna do from the ground up, or the acquisition of Greenfield units. And we're gonna talk about those two tactics a little bit more here in a second.
But really in 2019, you can see that the momentum that we're on right now, you know, q one eighteen, we sold 16 licenses. Q one nineteen, we sold 30. You guys heard on our first quarter call, they sold 30 licenses in April alone. Now, again, that's some of that is driven by the timing of our franchise disclosure document to kind of front loaded some of the quarter there. But to have 30 license sales in a month is is incredibly impressive, and that's the momentum that we're on right now.
Clinic openings, again, doubling q one eighteen to q one nineteen. And then we're back into corporate development. So when Peter came on board, we really shut down the expansion of our corporate portfolio, and we're back into that. So in q one, we opened up those two greenfields. We also acquired a unit back, and then we also announced that in early April, we opened a third Greenfield unit.
So 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. You know, we talk a lot about, you know, getting to that national scale of recognition. That thousand units is that tipping point we wanna get to. And the fastest way we're gonna get there is to open as many storefronts as we can, and we think the regional developer strategy is gonna take us there. So we've got 21 regional develop developer teams in the field right now.
So 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, and we're seeing that momentum. You know, we talked about it. 22 licenses in '16, 37 in '17, 99 in 2018, and we've got 60 through April. We are seeing them accelerate. We talk a lot that if, you know, if we're not seeing that acceleration, you know, the strategy isn't as robust, they are absolutely performing to a high level.
We're really excited about their progress. And then 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. And then for their ongoing support, training, and all the other obligations, they do receive a 3% cut of that 7% royalty that we charge. So then we go to the second piece of our strategy, our corporate clinics.
And, really, you know, 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. So, really, we're gonna talk a little bit more about how we are going to redeploy that capital and kinda continue to expand our corporate portfolio. So three real ways that we can deploy that capital.
You know, the first is really, reacquiring those those existing units from franchisees. The second, that de novo corporate greenfield development. And then the third is we can reacquire those regional developer territories kind of as they reach maturity, and we can recapture that full economics. So the first one we'll touch on is just the franchise unit acquisition. And, really, the objective here, you know, it was the premise of the IPO.
You know, we know the unit economics of this business are exceptionally strong. So if you go out and target some some units that are out there, you know, franchisees sell for a variety of reasons, We have the right of first refusal on any deal that that, you know, is proposed to change hands in our system. Right now, we're focusing that, you know, in our current geography. So we have Southern California, Arizona, and New Mexico is our current footprint. So our current strategy is to continue to cluster where we have overhead.
We're gonna talk a little bit in a second, you know, what is the potential, where we could go for those additional unit acquisitions. So, again, this was, you know, 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 kinda give some historical background as to, we've done a number of these.
We've done, you know, I think 19 transactions now, you know, 17 kind of on the heels of the IPO funds. We did one reacquisition in '18 and another one in '19. Now I wish we could get them all for 30,000. We're not gonna see that. You know, those, again, these are very unique circumstances with franchisees.
And, you know but you can see the average price of the kind of the early cohort there was about $230,000 per clinic. But we have developed a kind of buyback analysis tool that we use. So we go through eight step you know, eight different kind of fields of criteria, and we grade each of those to kinda give us an idea as to, you know, 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.
So we've opened three units so far this year, Azusa, Carlsbad, Flagstaff, Arizona. And, you know, again, part of the IPO, we went out and built, 29 of these from the ground up across four states. We've talked a lot about, you know, that's really where we got into an issue with some of the early performance of our portfolio was that greenfield those greenfield clinics specifically in, Illinois. So we, turned a lot of those over to the regional developer there in Illinois. We ended up closing a few clinics, but 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, kind of the continued increase in that time to breakeven that we're seeing across the portfolio. You know, the other key stat I wanted to put out there is that, you know, we continue to evaluate, you know, the the territory that we have. We believe that there's ample runway from us to continue this strategy. So Peter's talked a lot about in the past between 1025% of the portfolio could come from corporate clinics. You know, 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 kind of clustering of about eight to 10 units as their level of oversight. So what we did here is we just went out, you know, that same 1,700 circles that we looked at. We looked at all those territories and said, where is there at least eight? Where could we build out that level of overhead? And so you can see there's still 250 plus clinics that could come in that purview of a market that holds at least eight units.
If we step back and look at a market that just has four or more units, there's over 400 clinic potential if we look at something like that. So plenty of runway for us to develop our corporate portfolio, in conjunction with our franchise strategy. And then the last is the regional developer acquisitions. So, 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.
So you can see the timeline there. In 2019, we repurchased, South Carolina. So very mature market for us. Made a lot of sense for us to go in there and recapture that full economic potential. You know, there are, continued runway.
We have 21 of them out there. The key there is that, you know, we we believe in the strategy. We are not gonna go out and bring these people on to develop territory and then come back and buy out their territory. You know, 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 kinda continue our expansion footprint. So, you know, that'll kind of happen over time as we, you know, move into those opportunities. So really, like I said, a high level table setting. I'm gonna turn it over in just a minute here to our VP of sales and development that's kinda gonna go to a different, layer for you there. So I might ask also that we hold my questions until the end because I think a lot of them are probably gonna be addressed by, by the team that's coming up.
So really excited to, you know, introduce VP of franchise sales and development, mister Eric Simon.
Thank
you. Thanks, Jake. Great job. Great job. The official baton.
Alright. Got my security blanket up here, my notes as I fly through. Are we done? Okay. Here we go.
The other way. Alright. 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. So I'll jump into well, I'll answer the question, who am I and what am I doing here, right? I have about twenty two years of franchising experience on just about all different levels in the franchise model. From the franchisor perspective, I worked with big brands like Mailbox, etcetera, and the UPS store where I did domestic international development. I worked from AMCO, double a d d, MCO, for a while as a 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, right? I did that for about five years in Southern California between 02/2012. And if you remember that, that was a real interesting time to get into personal aspect there. We were regional developers of that concept as well.
And then for a while, I worked for, Frandata out of the DC area, which is a, research and consulting firm that specialized in the franchise model. So 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 are trying to tap into the franchise space, and 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, and vendors are always looking to get their services in front of franchisees and vendors, so we help them with that. So being a part of all these different levels, I feel, gives me a little bit of unique perspective on things.
And, 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 are they're putting real money into this, right? 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. So that being said, this is what I'd like to walk through with
you
today. And 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 and open and operating clinics as quickly and as smartly as possible, right?
And the reason being is because there's probably about 3,800 franchise brands out there domestically, okay? 3,400, I would say, active, have done some sort of franchising within the last three years. And there's only a handful, maybe about 150, of those brands that have hit that 1,000 unit mark. And those brands are looked up like 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 do you do it? And I think about that every day, and that is my goal is to get there for The Joint to get there as quickly and as, smartly as possible. So 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 And then ultimately, not just the 1,700 unit mark that we talk about sometimes our maximum build out, but some of the new programs, some of the new tests that we're doing that, as we 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. So the first thing that goes through my head is, is that 1,000 mark an obtainable short term goal? Okay? That's the first thing I think of. And, 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, four fifty 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? And I took brands that are in our, industry, right, that are that that I admire over the last twenty two years, that some of our franchisees are actually in, in addition to our concept, which is Massage Envy, Orangetheory, Planet Fitness, Anytime Fitness, Sport Clips, Jimmy John's. Okay?
These are brands that I think are good to look up to. And it is clear that all these brands have reached that 1,000 unit mark in a forty or seven year time frame. And the two brands that actually hit that seven years, if you remember that 2007 and 2012 mark, they actually it was a lot harder for franchise brands, in my view, to grow their unit count during that time, right? Franchisees were growing their unit counts because they were picking up maybe clinics that were 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 units.
So this slide tells me that it's very realistic for the short term to grow to 1,000 units from where we are today. Okay? Then the next question I have is, 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? And this is a slide that shows our RD growth versus non RD growth. And the light blue category here, this is from 2010 to last year, right, when we really started aggressively franchising.
And the light blue is all the clinics that were open and operating under an RD, Regional Developer Area, Past and Present. 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. And what you see here is that if you go down to that access is that the regional developers are responsible for 77% approximately 77 of our unit growth or unit count. That's a big number. And how that relates to the overall system wide sales is that at the end of twenty eighteen, we had $165,000,000 in system wide sales.
Those clinics that were under an RD model or under an RD territory accounted for $104,000,000 of that. So that's big numbers. And 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, includes our brand more brand awareness, becoming a household name. So 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?
So the next question I have is, okay, where do we go from here, right? First, I want to know what is our where do we fit in the chiropractic industry? Okay? And there's three twenty seven million people who live in America today. According to the Gallup Palmer study, sixteen percent of Americans have used chiropractic care in the last twelve months.
That's fifty two point three million people. Last year, in 2018, we had approximately 560,000 active unique patients. And if you do the math, we only have 1% of the actual business that's out there. So we have a massive opportunity in front of us. And in fact, we have to get these clinics open fast enough so the people who want to use our services can.
Right? And then the next step is, how do we get there and what are we doing? So 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. And the next 1,000 this is where we're going. The next twelve sixty five units to get to 1,700, this is where we're going. And what I love about these circle maps that it's 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 fifteen 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 give you the gist of it, and he'll even go into more detail about these circles and who our patient count and all that kind of stuff. But every single one of our patients has to fill out an intake form.
We almost have a complete demographic of who our patient is. And we plot all these 560,000 people on a big map. All right? And we understand their demographics and psychoanalytics, and then we purchase other information based on our customer of today, who our customer of tomorrow is. And we draw a circle around it.
You count up all those circles, you get to seventeen hundred seventeen nineteen clinics. So these are our core this is the areas where our core customers are. This is where we're going in the future, and this is what our maximum build out will look like when we get to seventeen nineteen units. Almost 1,000 of them are going be in the RD areas as it sits today. Okay?
So to make sure that we get to that point, you know, one of the things that we make sure is our franchisees are our number one asset, but the number 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 hands so they can reach their goals so that we can reach our goals. All right? So we develop all sorts of real estate manuals, franchise sales process, construction manuals, as you can imagine. And in addition to that, something that George Armentero has brought up, about a year and a half ago, are quarterly business reviews that we do every quarter, with our region developers.
Every single one at the end of the quarter gives us a complete review of what's happening within their region. And for me, what that allows me to do is make sure that these region 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. Because 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 find the shopping centers in the right space within those shopping centers. If we can have three 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. So that's something that we try to push in that QBR. And then if we don't have a franchisee for that circle, then what are we doing to get there? All right?
Because 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. And 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 in the franchise sales side all the way to lease lease execution.
Because once we have an executed lease, we plan on opening that store. Right? So that's the major part right there. There's about eight people who are in our department, including ourselves. Six out of the eight are really focused on the regional developers and supporting them in everything that they do.
And now we get to the 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 region developers. And you can see on the your side, left side, franchise sales, we have seen a huge spike in that in the last year, right? In 2016 and 'seventeen, we totaled 59 franchise sales. Last year alone, we had 99. And what would you call that?
82.9% of that is from regional developer areas. And 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 they're having. The breakeven numbers are going great.
The morale is up. And the other 40% are buying because, in a lot of cases, the positive validation that they're getting in the field. Right? And we have, again, 40% of new people, new blood coming into the system, which is extremely valuable. And this year, almost all the sales have come from our regional developers.
We already have 60, which is more than twenty sixteen, twenty seventeen combined. And 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 ten years with the franchise fees and stuff like that. But 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. So very important that we keep filling this pipeline for a variety of reasons, most notably to get them open, right? Out of, 2016, we had 56, and we need to get these open faster.
There's no question about it. Right? The real estate portion takes the longest time, so we got to figure out ways to get proactive. And part of that is to get our regional developers with a draw 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, is that we're on the upswing about this.
And at the end of Q1, we have 12 that have opened. That's five more than we had Q1 of last year. And we feel very strong that we're going to hit our guidance numbers, 70 to 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, right? If I came up here and said we had 50 or 40 of those, then I'd probably have a different conversation with you guys.
But we have 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, but we have the sales ready to go. They're just in various stages of development. And 172 are not going to open in the eight month time frame because franchisees buy more than one, and their development schedules are stacked.
You know, they might open a couple one year, a couple next year. But we have the numbers to get to where we wanna go. And 85% of these deals are from regional developer territories. Okay. All right.
Now we have to continue to feed the pipeline, right? Because if I do the math in my head, we have four fifty four open and operating clinics. We have 172 franchise agreements and letter of intent signed, but that doesn't equal 1,000. So we have to keep feeding the pipeline to get to where we wanna go in the short term. And 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, what are all the support tools that we're getting our region developers, are they working or not?
And then also where we get our deals. And what I mean by that is we have really three buckets of franchisees. I can put our franchise into three buckets, okay? One is doctors who are open and operating clinics, okay? I would say that's anywhere from 26% to onethree of our network.
The next, 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. Okay?
So we have a whole lead database that nobody else has, and we'll talk about more of what we can do with that in a second. The second bucket is, our biggest bucket, and in there, 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 jump brands.
In my personal experience, there's very few people that jump industries, like QSR to health and wellness or something like that. You know, maybe a few, but usually stay in the industry and jump brands. And everybody is fighting for those franchisees. So we have to cast a wide net in terms of marketing, to get those. And then the third bucket is, and we have a few of these, I would always say, family mini private equity groups that have 40 or more clinics.
They have a strong financial resources. They have strong organizational structures. And we have a few that are coming up that will probably also be in that 20 to 30 category. And each bucket has different messaging. And each bucket has different places where to find these people.
So we have to really kinda get creative, make sure we're, zeroed in on our message to attract these people. Okay? And, from a franchise sales perspective, we have all the same challenges as a typical franchise company has. All right? But to extend on that, we actually have three additional ones that no very few franchise companies have.
And one is when you think about owning a franchise, you think about chiropractic. Right? When people think about a franchise, it's, you know, food or a gym or, you know, something like that. The second is they do realize that they can be a chiropractic franchise owner, they think they have to be a doctor. And again, that's not the case.
And then three, when we get past those two things, we have the PC model, which, you know, I think I finally understand. It's it was a little bit difficult when, you first are exposed to that. All speed bumps. Everything that we've actually accomplished in in overcoming actually, our national developer regional developer director has done a great job in in in, having our candidates and franchisees comfortable with the PC model. So, all of yes, sir?
How how, what what
percentage of the chain is the for the mega franchisees?
Very few. I would say like I mean, I don't know the percentage, but we have two franchisees that are over the 40 clinic mark. And we have a couple that, though, will are going to, let's say, get their toe in the water by opening two to five clinics, and then grow to that 2,030. Okay? So where was I with that?
All right. Well, we'll just go
to this slide right here. So one of the things I wanted to show you is our overall lead this is the most important KPI, this one over here on the left, right, the lead the, lead to sale conversion rate. Right? That's the one that will tell you just about everything. And overall, the franchise industry is at 1.6%, lead to sale close ratio.
And I like that number. It might seem high because for years in franchising, it's been one to 1.2. But, a company called FranConnect, who is very well known in the franchise industry, developed, they have a contact management system, which a lot of franchise companies use. Right? And end of two thousand seventeen, they had 462 brands that used their franchise sales module.
That accounted for 11,500 actual sales. And it goes into the cloud, and they aggregate all this information. So to me, this is gold. Right? This is this is 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.
So I feel very comfortable that 1.6% is what we need to benchmark ourselves against. And you can see that last year and this year that we are at least doubling that number, right? Our region developers are doing even more than that last year in terms of lead to sales. So from our processes, our marketing, where we're getting leads, everything right now I feel comfortable is working, right? And then 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. And website is not necessarily a bucket.
You've 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. So, you can see kind of where we get our leads. And just some other notes is that, you know, we 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 had a we believe in clustering, and we get a lot of franchisees that buy more than one unit, more than one license. So that would be why this is much lower. So we're I'm very proud of that number.
And then from a timing perspective, that lead to sale, we're at that one hundred and fifty two day mark. In my experience with other brands, they're really more in the 90 to, let's say, one hundred and twenty day. But because we have those three extra challenges, sometimes our franchise sales process takes a little bit longer. And I don't think we're going to really get out of that. So we might be able to shave off twenty days and stick to the one hundred and twenty ish time frame 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.
And then the, once we get a deal to open in the eight month time frame, we got to shorten that. Right? And part of that is getting proactive on the real estate side because that, in some cases, takes months. Okay? And that's what, we're doing now.
And then finally, some of the things that we're doing, you know, should say as chiropractic care becomes more mainstream, as we, go from that sixteen percent of Americans that have used chiropractic care in the last months, the twelve months, to eighteen, nineteen, twenty, twenty five, we need to start thinking, you know, where else we're going to go beyond that 1,700 unit mark. And here are some of the things that we've been, either testing, talking about, and actually executed on. So the first thing is the rural and the super urban model. You know, when we talked about that first category of doctors who who, are franchisees, the unit economics change in the model because they're not if they're owner operators, they're not paying for a doctor. They're actually paying themselves.
So 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? You know, what are the profitability and unit economics of that store? Because there's a lot of those in Texas, Oklahoma, Alabama, California, Upstate New York, where there are no circles. And we can immediately take a look at that now and see what where should we go in terms of population if we have an owner operator, Okay? And then the super urban model locations.
Now we have circles already in Manhattan and the Bay Area Peninsula, for instance, or Boston. But we really need to take a look at the economics because rent is 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. There's a lot of density there. People need chiropractic care there.
But what is the best way for us to enter that market? So those are some of the things we're talking about in that. And then this one, I think, this is kind of near and dear to my heart, the DC Path Ownership Program. You know, we, again, have this pool of leads where they're not opening up any other business besides the clinic, right, whether it's us or an independent, to be quite honest. That's the two things you can do.
And at a very, early stage, doctors are taught to open a clinic, right, to be successful. And we want to be I think a program like this moves the industry instead of just a joint, right? We want to help the industry get these DCs to reach or doctors to reach their dream of owning their own clinic. And 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. But 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've got a program that we can really market and grow. And the way we would do that is through apprenticeship, through mentorship and then obviously through partnership with our franchisees. We have a doctor that come 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 and L, and 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.
And from a transition period, franchisee to feel comfortable is that that DC will actually backfill his position, train that position. He's going to have to do that stuff on the in the new store anyway, and then build a business plan for the new clinic. So 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 seek our teeth in. And then, as we continue to grow and as we understand who more about who wants and need 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 nontraditional type locations. Okay?
And by teaming up with other concepts, we're able to reach a customer base and people who need our services that you might not we might not have been able to get before. So one of the things that we've already done is teamed up with a concept called Relax to Back. And if you haven't heard about this, Relax to Back became our franchisee in 02/2018, and they opened up the first location, February 2019. Okay? And 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. And, they are a retail concept that caters to people who are in pain. They have a similar patient that we do.
Right? And if you they sell, like, massage chairs. They sell ergonomically correct furniture. They sell pillows and all sorts of stuff that helps people get out of pain. And what we did was we carved out two sixty eight square feet in a 2,400 square foot footprint and put a joint inside the Relaxed Back location.
Okay? In an area where, well, I should say that. And it's a great model. You walk in, you go to the desk, and the wellness coordinator gives you the intake form that you need to fill out in an $8,000 massage chair. Okay?
So 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, and, 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, and 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, a typical concept. So we're really excited about it.
Relaxed Back is a great franchisee. They're a franchisor. They understand what it means to be a franchisee. They haven't changed the model, and, we're excited to see where this can expand in the future. All right.
And now, I know people so this is, as we continue to go to cities that are more on that 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 that, 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. They're trying to rush through the gate, take their kids. I know you packed about 75 pounds of stuff and you're carrying on that you're pressing over your head into the storage bin.
These are our patients times 10 in terms of dealing with pain. And AviationPros, in 2017, which is a trade publication, said that in the major hubs, once people go through security, they spend one hundred and thirty seven minutes at the airport. In Austin, Texas, where one of our franchisees is going to be putting this is going to break ground this week, the dwell time is ninety minutes. Okay? And 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. So we've teamed up, our franchisee has teamed up with, ExpressSpa, which is the leading, spa massage service in airports. According to their deck, they have about a 50% market share in that. And, we'll be opening up the first Austin, Texas Express Spa Relax the Back, by the end of Q3 it should open. Okay.
Should be breaking out. That's really it. Our regional developer strategy is working, okay? We got to continue to feed them and 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, and that's what I look at a lot.
And then 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 but beyond that. And and that's it. Any questions? Yes, sir. Yes.
Yeah. Sure.
Please repeat the
question. Oh.
Okay. So let me make sure I understand it too. So, how does the flow work in terms of franchise sales to openings? Because because we have, you know, 99 sales, let's say, last year. Is that gonna equate to 99 sales in
We could start with 16.
Yeah. So this is my theory behind it. Okay? And I'll tell you. In 02/2016, you know, the morale and everything opposite of what was happening right now in the franchise community happened in 2016 in that time frame, 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. So the feeding the pipeline during the franchise sales was very low in that time frame, which means you're going to have a lull in the opening process because you just don't have that pipeline filled. Now one of the things that we did have that, kind of helped us, we didn't take as big of a dip, maybe it's 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 breakeven numbers were going, what new patient counts were doing.
And then the last 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? Yeah? Okay. Do you wanna answer that?
No.
Yeah.
We have a I know these guys are probably gonna talk about oh, sorry. Do we help our franchisees who are not DCs with finding a doctor for 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 gonna be in your presentation in terms of where, but, we do help our d our franchisees, support them in helping them find DCs for their clinic. Yeah.
We also live out there. That's what he's gonna talk about in a little bit. Yeah. Absolutely. Yeah.
Which is a big part of not just DC recruitment, but, reputation and and all that kind of stuff. Yeah. Yeah. K. I'll remember this.
I'm just following up on my 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. So do we see a fallout in franchise agreements signed, but they never open, right, essentially? Yeah. And we did I guess it depends what the fallout is.
There's always going to be franchise agreements that don't open, right, and for whatever reason. Personal lives get in the way and all sorts of stuff. But 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. And 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 union economics, because of the breakeven time frame. 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. So it's been actually kind of a 180. So we haven't there are franchise agreements that sign but not open, but for us, the termination process is very few. Very few.
Yes, sir? Yes. Now it's gonna take a team effort to come up with a lot of these answers, but some of the things that we've been thinking about before is, oh, sorry. Sorry. What are we doing, in terms of thinking how are we thinking about getting into the super urban markets?
All right. Real estate is one thing, right? We have an 800 to 1,200 square foot 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. But how small can we go to make sure that the real estate rent is in line with our unit economics?
Can we do a 500 square feet? The Relax the Back model says we can go pretty small because we only have a two sixty square foot model inside their clinic. You know, if I hesitate to say it without talking to the team back there, but 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 to, like, relax the back to go into more of these urban locations where they're in already? So 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 because the other thing is a 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. You know, I grew up on Long Island. You you could have one in the Chrysler Building on Floor 8 as long as it's they have their main base on Main Street, you know, on the Floor Level. So I think you have a we can get creative on that, and 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.
No. I keep pressing. Sorry. Yes, sir. Are there Like, said
taking 3% back of of two and a half.
You know? Changing the unit so is there plans or talks about changing the unit economics on an RD? I haven't had any. No. No.
Well, that's a good question. I'm not sure that's actually okay. Let me repeat the question. Yes, yeah, and that's because so 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? So in the why are we gonna be more evened out as opposed from an RD territory and a non RD territory? Well, I can tell you right now, this is as it sits today with the RD that we have today. And there are some major markets that do not have a regional developer.
And I'll tell you the whole North, well, just about the Northeast. I'll say from New York North is no RD, and we're gonna put, like, we can have, like, these are you can't really see the circles because they're so concentrated, but you can have 400 units up there. So 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, you know, different than doing business. I do.
Right? I know how to so it's different. But, you know, I do plan on I think it'd be wise for us to continue to look for a redevelopment in that location, which means this will actually go into that site. Yeah. Yeah.
Yeah. Thank you. Yes, sir. I can tell you from a franchise development standpoint, everything's on the table. It depends on everybody else, operations and stuff like that.
Oh, sorry. Sorry. This might be New York to me. Five minutes. Okay.
So, you know, 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 venues? Because they have so many, stores across the country. Especially Walgreens has great real estate. Right? They're known for, like, their real estate.
Again, I don't see why we wouldn't entertain that idea. We're in daily use centers. As long as 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. So as long as it's where people go that they would wanna do that on a, you know, 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. I think the you know, on a franchisee base, we had to see if the economics make 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 should I mean, it's a great idea.
There's a lot of locations. That'd be that's much more than 1,700.
So
thank you guys very, very much. And now I'll bring up the brains in front in terms of all the real estate side. He's gonna get into a lot more details with with the demographic and how we created these circles, which I'm sure you guys are gonna love. So Richard Matthews, please come on up. Our director of real estate
Take my keys back. Yeah.
I got it. One sec.
Hi, 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. So they always say those who can do, those who can't teach. So I moved from teaching to doing. And I worked at PetSmart for ten years and helped open 700 clinics and develop their models. And I've been at The Joint for four years and we've built two twenty clinics in the time that I've been here.
So 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 and then kind of an expansion of new potential markets that Eric touched on briefly. So 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.
So 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?
And that answers the question of what. What do we have? What kind of information do we have? But that doesn't tell us anything about how or why. So 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. So by building explanatory models we can understand why things happen. Once we understand the why of the data, then we can develop a strategy and replicate that criteria across different parts of the country. So 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. And so we use those tools to build the strategy and then to build our actual day to day operations. So in short, we want to understand the importance of location and apply those learnings to new centers. So the first thing we do every January, I get very excited on January 1 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 four thirty units in 31 states.
And we had a lot more than that but some of them didn't spend any money, some didn't have usable addresses, some aren't in The United States, but in The United States 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 31 we had clinics in 31 states. We have patients from all 50 states including Washington DC, Puerto Rico, all Canadian provinces and territories so the Northwest Territories and Yukon they're coming down. We have patients from 24 countries on six continents. But this is a map of just The United States and I get very excited when I see all this stuff.
So we still have it's only 557,000 as Eric said, that's only 1% of the chiropractic universe. So 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. So after I mapped the patients I assigned each patient to a ZIP Plus 4 location. The ZIP 4, 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. Zip Plus 4 has 10 households so that's essentially that number of houses on one side of one street for one block. So that's the kind of granularity we can apply our demographics to. So a lot of retailers use ZIP codes. You go to Home Depot, they ask you what your ZIP code is.
They are trying to get the same information that we get from our intake, 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, so we get really granular information about our patients. And 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 eight miles from where we are right now. We're right about here so this is a map of various clinics locations in North Phoenix and where their patients are.
The different colored dots are assigned to different clinics. So we can by doing this every year evaluating 400, four fifty 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 spots right down here show where there's mountains. So 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. And also it shows the loyalty that our patients have. So 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. So 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. And then we have psychographic information. Psychoanalytics came about thirty years ago and 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. And there are several different versions of it out there, but usually they have about 60 to 80 different clusters, psychographic clusters are the terms.
The one we use has about 70 and how they are divided, the companies that create these tools are marketing firms, merged with credit bureaus to really evaluate how people spend their money. And so one example of a cluster, cluster number one 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 how many of them, you 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 is tight, they drive Chevy Malibu's, 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. So we regressed 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. So there are 70 clusters in The United States.
I've sorted all our clusters on our most our over indexed customers, which is our most important cluster, and 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. So 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. So the famous map where there is dark blue color, that color is and say this is where our core customers are, those 25 psychographic clusters who have told us that they are our best patients and how they react to us and how they spend money and how far they are willing to travel and what their lifestyles are like, we know who they are and we know where they live across The United States. So we look for those people, those 25 clusters who count for 70% of our patients, we actively look to see where they live. Who are they? They make up a wide age range.
We heard that millennials are 39% of our customers are for our patients. Generation X is 34% of our patients, but we have baby boomers as well. So that's a wide age range. So 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 are good patients. They say sitting is the new smoking, So you've got to get up and be active. In the video that we showed is people coming into the clinics because they sat at a computer all day. So white collar people are good patients for us.
Blue collar patients are great patients for us because they are out working their body hard every day and need relief from us. And 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. So our median household income range is between 50,000 and $100,000 again, a very wide spectrum of the population. So 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. And 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 four fifty clinics and 500,000 patients. So we really know who our patient is Our patients tell us who they are. All we have to do is listen to them and find out find more people like them.
So here is our national build out potential. This is the 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 United States what their psychographic component is and we just look for where our best customers live. And in those, we found where shopping centers are, the circles that Eric described. We found there is 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 are 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. And that's how we come up with the 1,700 right now. And that's based on current usage and our current business model.
So where do we put clinics? What are we looking for? We want to be where the people are. This is a 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. So 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 is 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?
So 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, and then within the location of that center we want to be in visible, accessible locations. So those three things are what we consider when we evaluate a location. So 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 to support a clinic? Because as we've seen, we are only doing getting 1% of the population to come into our cities. So we want to avoid thinly populated areas. And clustering clinics help build the brand.
Clustering, we've talked about this phrase before, is really locating clinics in adjacent trade areas. So 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 markets, putting clinics in adjacent trade areas is really fundamentally important for us. And 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. So the income range is not static. We can be very fluid in that income range. And still, that's most of the people in The United States.
These are our location specific learnings for our site selection. A daytime workforce population helps. Our intake form people indicate where they live, so it's more of a residential approach to real estate. So 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 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 work day.
But we don't know what it's all about and it's 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 haircut, 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. So 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. So we want to be in your routine space. And 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. So we want to be in a place that's visible and accessible. A lot of franchisees tell me, what's the magic formula? And I say, being visible and accessible to lots of your customers. There is 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 a if a center has some kind of regional mid box tenants, things like a Ross or a Marshalls, HomeGoods 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. So we want to have smart growth as well. We just don't want to put 17 clinics out 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.
And our franchisees sometimes get nervous if one is located kind of close to where they are. They feel very protective of their space. So since I joined The Joint, I've been tracking all our clinics that locate within five miles of an existing clinic. We certainly right now we have 62 openings since the January. And what I'm trying to calculate and capture is the behavior of how patients move from one clinic to another.
And it's far less in The Joint than other forms of retail. People 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. So people are willing to drive past one clinic to go to that patient, to go to that doctor that they trust. So we see far less patient interaction, patient movement than other traditional retail.
But I tracked 62 cases and we're still 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 the franchisee, if they open both, can leverage marketing and leverage operations as well. And the new clinics that open are 50% above historical ramps because they're entering a market that already has some existing brand awareness. So 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, so we provide due diligence from multiple frameworks. We get input from marketing and operations and their experience and the purpose is to accelerate that clinic opening process. That regional developer in their territory really plays a crucial role because I can't get out to look at every site so that regional developer has to be our eyes and ears on the ground because they want to open strong successful clinics as well. So they are I train them in what to look for and they're out looking for us. And the results since we established our site acceptance committee, 88% of the clinics we evaluate are above average.
So we've had great strides in marketing and in operations, but the real estate, the due diligence that we apply through the site committee has helped build the brand as well. And the new clinics that we open are 104% above historical ramps. So 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. So we eventually 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 and we've seen some successful small markets opening and 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 United States is that people are moving back to cities. The move from suburb to suburbs that began sixty years ago is now according back particularly among younger generations.
Millennials love to live in cities, they are great patients of ours, so they are living in cities and we are going to have to move back into this, we are going have to find those cities. But, those cities don't have a lot of traditional daily use automobile focused shopping centers. As time develops, we're going have to move into those markets as well and we're looking at non traditional airports, dual concepts and university locations as well. We have another growth source and that's infill. We've seen recently beginning in the fall two clinics that were doing really well, two of our top 10 clinics really said, we're doing so well we can't handle how great we're being right now.
So they had to 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 two clinics, both of them opened around September or October. Six months later they're doing 38% better in the market.
So they've gone from two clinics to four clinics and in six months we've added 38% to the overall market. So we think this can happen in many, many more of our best markets. These top like for instance our top 50 clinics are now 87% above the chain average and they're comping at 24%. So at some point we should think about what our strategy might be into developing an infill characteristic for development. So 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 tools and our build out potential is based on reliable and proprietary analytics. Our current database has 400 predictive variables and 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.
And 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 told us who they are. Any questions?
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 skewing towards a younger population. So and we tend to be most of our clinics are in Sunbelt cities. We started they're older you know, for us, so we've had time to build that brand awareness, but density and a little in a shift towards that younger population.
Hi. How are you seeing the owners or property owners give you either more incentives or fulfill you into tier one to tier three kind of locations? How's that changed over
the past few years? You know, commercial real estate is really competitive now. You know, a theme that's out there that, we're over retailed. And I'm in in a group that advises the International Council of Shopping Centers, I'm on the North American Research Task Force and ICSE, the International Council of Shopping Centers, sort of the shopping center lobbying group has, you know, is constantly worried about that message that we're overbuilt. Not a lot of retailers, new centers are being built now.
So we're competitive for these new kinds for the small box space in good centers. We're not the only one looking for them. We are, desirable for owners of of, space for 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 so, landlords can like us now.
Five years ago, we weren't all that, you know, the service sector, which has a different tax for a lot of municipalities, is different than retail. So we, you know, have shifted from being sort of a questionable tenant to really a desirable tenant now.
Do 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 to really drive patient traffic over time in that key variable of sort of awareness and visibility?
Yeah.
You know, if you if
you take an idea that you get large you should get larger and larger, and 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. And you see, some retailers like Tennant, like Target for instance, got bigger and bigger and bigger, a 100,000 feet, 125,000 feet and now the Targets are opening 10,000 foot stores. So, you know, the rent structure for us then going from a thousand feet to 2,000 feet it gets a little we prefer that 1,000 foot box and if we have to we have some clinics that are 1,800 feet, 2,000 feet, but they don't do the size of the box isn't a variable that is a good predictor of sales unlike the number of retailer, that could put more product on the shelf. So it just becomes we are getting less return on that investment.
So we really have to have good visibility and accessibility of that 15 feet. That 15 to 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. So while 15 feet doesn't give us a lot of flexibility, we really want to be in those. We really have to have we 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, the metrics look like when you go into a more virgin market. And then also, if you could just touch on the traffic stats for the type of centers that you typically go into. Yes. The second question first.
If we get average daily traffic counts, our sort of divider between weak and strong is 20,000. So if you're below 20,000, that's we're going 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. So I have every confidence that that clustering is going to just add on to that. So our marketing tool marketing team has helped get that initial up, that initial sales up in those new territories.
And then when we cluster, it's going to be an exponential effect. Yes, the ramp 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?
The short answer is I think it was Chicago is an amazing market. We opened up those 11 clinics in a relatively short period of time. And that was just the time when we got over our skis. And that that was a time when our breakeven was running between eighteen and twenty four months. That wasn't what was expected.
And so as those clinics were underperforming and putting financial pressure on the company, that's when I was coming on board and looking at, okay, you know, with this underperforming, that's why I was brought in the first place. And so what's the most effective way to deal with this? And that the the sites were all okay. They'll be on yes. Some could be better than others, but there was reasonable sites.
It's an amazing market. Illinois is an absolutely chiropractic market. And 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 operation side of it, which is putting that financial pressure on. And we now have our dean in 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 side issue.
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 open them up in the middle of the winter without a marketing campaign behind it. You're going to hear from Giorgio Monteiros, our VP of Operations, who really came in completely restructured our oversight in support of the clinics, and you'll see the well, you're seeing the results every quarter about the impact that's had on overseeing the clinics. We had a since we had a little bit of a sound issue this morning on the video, and it's such a great video. We're gonna play it for you one more time with real sound.
So if you guys wanna go ahead and tee it up, that'd be great.
Franchisees, patients, doctors, and
Now we're not gonna keep you here for two days. We condensed it into just this one afternoon, and that I would like to introduce David Glover. David Glover is a very sophisticated franchisee before he came into The Joint. David Glover, who's our regional developer, who's gonna speak in the next few minutes, is actually the very first regional developer that this company ever had. And he's continued to 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 02/2018. They were regional developer of the year in 02/2016. They've done an amazing job utilizing this model as a regional developer to really accelerate the growth in the territories that he that he is a part of. And so I'm gonna ask David to come join us.
Let's give him a great round of applause.
Can y'all hear me?
We can.
Awesome. Alright. This one on the right? Yes. Alrighty.
Hang on. Somebody moved my speech around just to confuse me. All right. Well, 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 thirty minutes with you in a meeting, and I do all the talking. 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 eight years ago.
A little background on myself just to start. I got started with an accounting degree from the University of Texas in Austin. I then went into public accounting for three 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.
And a family friend introduced me to a guy who's a young real estate developer starting out, and I said, what the heck? And I went with him, and I started out first building an office building, overseeing and off constructing an office building, project manager and leasing. And that was where it was started. Ultimately, I became president of the firm and partner with him. Twenty years later, our company thrived despite the oil downturn in Houston, and then after twenty years, in late two thousand and three, I sold out to my partner.
So I was 46 years old, and I was like too young to retire. Ann and I only knew real estate well. That had been our background. And by the time I was done selling the company, was 02/2004, and I saw that there was a real estate crisis coming a few years from then. So I did not want to go load up on real estate right then.
So what do we do? Well, we talked to some franchise brokers because we did not know what else to do. And 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. And our family told us we were nuts.
So and 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. So after our families told us we're crazy, we bought three licenses to open three clinics in Houston. Well, they wanted to do these little one mile circles.
And I drew them on the map, and I see Richard back there going, drawing on maps, I like that. But we had circle cleavage and stuff and I was like, oh, I don't I'm not controlling that whole area. So 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. So we did a clustered rectangle for three clinics in that rectangle in the heart of Houston, Texas, in the River Oaks Galleria and Memorial areas of Houston, if any of you all are familiar.
So clustering is really powerful. It provides shared local print advertising. And back when we started, the Internet was just getting going. We didn't have a lot of digital marketing. So also we're able to easily share employees between our clinics.
Know, okay, you work today at River Oaks. Oh, we need you over tomorrow at the Galleria. Well, it's only ten or fifteen minutes apart. No big deal. Also, our customers were migrating back and forth in that area, and so we were sharing the same customers in our clinics, which was nice.
So they're getting our level of service, which they're all the same, but ours is special. So we opened our first three clinics in ten months. I mean, we kind of hit it hard. We subsequently bought two more licenses. So 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. So it was cranking. So 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, had 20 units? And then 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.
And advertising co op is where all the franchisees in a region and 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. And so co ops are incredibly powerful. The other thing we learned from I mean, 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. So that's incredible. And we learned about clustering of the real estate. So what we 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 interview in North Phoenix and one in South Phoenix, and they're like, oh god, takes me an hour to go to one of the clinics. I'm like, well, that was bad design. So 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. And I saw that, and I saw I thought people were going to kill each other.
So I was like, okay, I'm going to make sure people know where they're going from the get go. So, I did not want to have to be determined licenses floating around. So after four years, we sold all five of our clinics. And due to the strength of the recurring cash flow model and the memberships, we sold on a six times multiple. We sold for $6,250,000 cash.
And 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. So we closed, and 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 misogyny. So now we can check being a franchisee off our list, and it's time to be a regional developer. Well, that other concept I won't mention again was founded by a guy named John Lanisio here in Phoenix. And when an investor group came in and bought the original joint that had been founded by a chiropractor long ago and was kind of semi dormant, They were bringing John in as a CEO. And 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.
And so Ann and I immediately flew out to Scottsdale and sat down with John. And we said we want Houston, Dallas, Austin, and San Antonio. And we ended up buying 58 licenses That time, okay. So 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, So we would pay $0.25 on the dollar. So if a license costs $30,000 to the franchisee, as a regional developer, we would pay $7,500 in advance. So we bought 58 licenses, $7.05 7,500 each. That was about $825,000 back then. So that was our buy into the poker game.
So you're gonna say, what is a regional developer? What do they do? Well, we develop regions. That's real simple. Right?
The, I wasn't totally sure. I had these 58 licenses, but I wasn't quite sure what we did or how to do it. So being the CPA nerd I am, I went out and bought a book. And I bought this book, Grow to Greatness, How to Build a World Class Franchise System Faster. And I said, boy, what a great game plan.
And I bought this brick brand new, and you can see I actually used it quite a bit. It I I learned a lot from it. So that was that was embarrassing. I hate to say I learned a lot of this from a book. So what a regional developer does is we award franchises.
Now awards is a fancy word for sales franchises. We generally prefer people that live in that town, even near their clinic locations 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. So I think one of the most important things that we do is help them find good real estate. And I remember Richard flew out to Houston one time and was like, hey, why do your clinics do so good?
Let's go look at them. I said, well, they're good real estate. It's real simple. So 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.
And they were good. They were hungry, had a lot of energy. Then 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. So they'd take a couple of weeks, they would call all the landlords in that area, and they'd find potential 1,000 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. So by having a good broker, having a proven franchise brand and 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, oh, yeah, well, 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 Yelp's background. So they move that tenant along to greener pastures. Or they choose not to renew a tenant who didn't have a renewal option. And failure to have a renewal option in their lease is a big mistake that most people don't even catch. So, you know, all of a sudden they've been there five years and the landlord says, sorry, I'm raising your rent $10 a foot and because I want to put these other guys in.
So that's how they could be availables became available, and we got a lot of spaces that way. So I'd call that broker and I would say, okay, Joe's buying these trade areas, etcetera. So they'd put together they'd find all that real estate. They would put together do I need that? Yeah.
They put together a tour book. This one is for actually one trade area, but it's got tabs. And each tab, you know, at the front, it would have a map of it all, but then it would have a, you know, the pretty landlord brochures for each center. And 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 how many licenses they bought, and we'd just drive around.
And when they got in that car, a lot of them were like, well, I don't know about real estate, but by the end of the day, they had a pretty good working knowledge because we schooled them. So then they find a lease, they'd work an LOI and get that going. Now most of these people don't kind of have a real estate background or legal background, so they get this big old thick lease and go, oh my gosh, what do all these words mean? Well, you need to hire a real estate attorney or a lease reviewer. And 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.
But so they review the document for them and help them negotiate it, and I was very involved in every lease, helping them strategize and, you know, like, well, that's probably not that important or you really need this or whatever. So we spent 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. We then 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, or 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. But we knew some and typically, as a regional developer, we preferred a general contractor who's built one of these before just to make our lives a little easier and so we didn't have to train somebody every time. Then 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 is before digital marketing was big. Ann and I were big into postcard mail outs. That's what we did in that other brand.
And we were big in mailing out 10,000 postcards a month, every other month, all around. You know? And people get them, and most people just pitch them in the trash can. But they saw them, and that was an impression. And, Jason, don't impressions count?
So then once they get open, we help them with their opening, and we usually have a tent that's at the joint and they could put it at their opening with balloons on it and make a splash. And after they open, we help them with their future business planning and operations, disseminate information that comes down from corporate. And in order to maintain a good brand continuity, we did a lot of periodic inspections. And we'd either, you know, 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, but so you counsel them. Okay. So back to when? Let me back up. We purchased 58 licenses.
Okay. Okay. I do need this. And now I've got 58 licenses to sell. So where are they going?
What am I going to do? So each this is Houston, for example. You see all these little squiggly weird shapes? They're not circles. They're I don't even know the name of them.
And but those were defined by streets, major roads, rivers, lakes, whatever, and those were trade areas. And so these were projected Houston trade areas. And there's a lot of them. And 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, you know.
And we've subsequently learned, well, it's better off if you have them close together closer together. But the typical franchisee's reaction is I don't want anyone near me stealing my customers. That's just basically franchising. So we built these maps and then we I think I have a couple of them. I did that.
That's Dallas and there's Austin. Some of them are crossed out. Don't always get these updated as much as possible, and they're San Antonio. So I've got my maps. I know my inventory.
I need franchisees. So my my next job is to sell licenses. Well, I said, okay. I got 58 licenses to sell. That's a lot.
But I like clustering. What's going to do it faster? Faster, keep working on the book. In Dallas and Houston, I required every franchisee to buy three contiguous trade areas. In Austin, San Antonio, two.
Being the CPI I was, I well, that's probably faster to sell 58 if I divide by three. So that's what we did. We required them to buy three contiguous ones in Houston and Dallas and two in Austin and San Antonio. And that upped the ante. It meant we got, I think, a even higher caliber of people that had some had some money to to play with, and they were definitely more engaged.
Okay. So we sell these units. We sign a bunch of agreements, paperwork. Well, the name of this game is opening the units. You know?
And up until then, it doesn't do any good until they're open. So we push to get them open quickly, and sometimes that takes a little longer than you want. And, landlords sometimes make you pull your hair out. Okay. So once they started getting open and we had four, five, six in a market, we would start to establish advertising co ops.
So everybody would come in and we'd say, okay, well you guys are getting ready to do something big and powerful here in Houston or Dallas or wherever. And they're like, what? I don't know. So and 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 and so they do that. There are some. But Houston and Dallas were expensive for TV, so we went with radio. We used to do radio at that other brand I'd been involved in before, and it got the word out and made impressions. So we really got those going early on.
Our Houston Co Op, actually won an award at the last conference, is I think they're the top of the food chain for coops. I mean we've got some really good franchisees there, very powerful, strong motivated people. And 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. So you see that in the lower left corner down there. So we the co op paid the University of Houston $150,000 to be their official chiropractor.
And that is it was very different. But it's going over well. So once this happened, who do we hear from next? Dallas Cowboys call us. And we've heard from, I think, SMU and 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. So anyway, our strategies appear to be working. So why is a regional developer so powerful? Because we're getting accelerated growth of the concept before copycats come in, and that's huge.
We don't want to go open 20 and then somebody else goes open twenty. I mean, we want to have world domination. I set the bar kind of high. Also, when you're in early, you control the best real estate. Four minutes?
Okay. You control the best real estate. You get in early, and you find the best real estate. And that's how you dominate. So 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. Okay. We have 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.
So one of the things 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 they don't know no one knows about franchising. I barely knew about franchising. We kind of stumbled across it.
And,
you know, what does it
take to open a clinic? Well, FDD, our franchise disclosure document, says it's like $180,000 to $340,000 And let's just say for talking purposes, let's say that number is $250 because that's a minimum and maximum, but 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, I mean, boy, they just love our those are just slam dunk loans. They look at the borrower.
I mean, can't this be somebody with zero? Well, they can be pretty close to zero with this concept that's so good and strong. But they come in and borrow 80%. So $250,000 franchise, they need 20% down equity. That's $50.
Well, I think most people could go pull together $50 from family, friends, create a partnership, somehow syndicate it out, and you can get a clinic. So that's really, 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 in corporate. So that's pretty incredible. Good job, Peter.
So anyway, I want to say thank you and any questions and all that. So, Manjula, you were, like, giving me time or we was that my time to start questions or time to be done? Time to be done. Okay. That's a good question.
The that first franchise was pretty was pretty strong, and it flew off the off the launch pad. And I have a lot of friends that are still in it. And, you know, they're all kind of wanting to get out of it and it's morphed and changed. The Joint is we had okay, so we had five clinics. We had 180 employees.
That's a lot of employees. 140 of them were massage therapists and 40 front desks. And that'll worry out. Our concept has a much lower head count. I mean, you've got when you open a clinic, you'll have one at the front desk and one chiropractor in back.
Now, obviously, they can't work all the hours of the week and all that, so you'll have multiple of those. And then as you get busier I mean, I've got clinics in Houston that are running three chiropractors full time because they're that busy. So but it's still much easier to manage. And so on a multiple basis, make darn good money with this. And I mean we had one of our franchisees speak at the conference here recently and he's clearing $1,000,000 a year with six or seven clinics.
So it's if someone wants to scale up, it works.
Thank you very much.
Thanks, David. That was awesome. Do I have
my clicker up here? Okay. Good. For you.
Alright. I'm gonna start my countdown here so I make sure I stay on time. Let's see. So
how come this is not working?
Is not Oh, this is the
wrong one. Okay. Got it. Alright. There we go.
So 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 in the real estate machine, and it's really impressive. But 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. So a little bit about my background.
I have had a twenty plus year career, and that's what I do. I build brands. And 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 it's a strong relationship. And those are the situations where the whole is greater than the sum of the parts.
So that's what I do. It's what I specialize in. And 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. I have done it I 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, and 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. But so 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 and R advertising, consumer trends, consumer research, brand positioning, portfolio positioning, that kind of a thing. I was just that guy. And then most recently, headquartered in Phoenix is 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 ten years. And we pretty much rebuilt every part of that company. So I have long stints, and now I'm at The Joint.
And it's my first bite at health and wellness, and 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 call for a tenth of a percent of traffic growth, and I'm just not interested in doing that anymore. I love The Joint. This is 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? And 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, and 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. So 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. I'll if you don't know what a funnel is, I'll talk about that in a minute. So it's a very good competency for us. We're also really good at promotions.
So 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, in terms of promotions in this category. And yes, they do exist.
We're not a heavily we don't discount heavily, but every promotion doesn't to be a discount. In this case, our summer sale, we're targeting lapsed patients. And that's one of the things that we can do with the data that we have. We know everybody has come in. We know how long they've been in, and we can do mass market promotions, and then we can do highly targeted promotions towards our own patient base.
So 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, the last seven or eight years, 40,000 articles about chiropractic.
So we are a prolific blogger, but there's more to content than blogging. And that's something that we're learning how to be better at, and that 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, and 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.
So creative and communications, I would say, an ongoing competency. And then David Glover just set me up really nicely because he talked about co ops, and he talked about the the clustering and the benefits of clustering. And that allows us to play in in the traditional marketing space. And just because digital is hip and cool doesn't mean there isn't a room for traditional marketing channels in your advertising in your marketing plan. It's the exact opposite.
There's great opportunity there. TV is still the number one brand building entity in the world, and we would love to be on TV all over the country. We just can't afford to do it yet, not in every market, but we can in some of them. And so these are all things that are that would be a growing competency. So we're going to talk about all this stuff.
But let me start off by saying so when we talk to franchise prospects, and we're in there, and we marketing everybody gets a slot. We go in there, and we get our forty five minutes. And and how do we sell them on The 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 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 with self care and what Amazon has done to brick and mortar retail for products, but services have taken their place. And 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.
So 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, 15,000,000,000. 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. So 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.
And then something that someone mentioned earlier is franchising. There's a lot of franchising experience. It's what Peter prioritizes on his senior teams, you have to understand franchising. It's not intuitive. It's a skill.
And he always prioritizes people in leadership positions who have that experience. And so I think you put all this together, and it makes a joy an enticing opportunity. I wanna talk about three things. I wanna talk about brand identity. I wanna talk about marketing methodology, and then I wanna talk about talk a little bit about brand openings, but then I want to talk about the future, and then 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. And 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. And we mapped the patient journey to chiropractic.
What does it look like? What 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? And after we did that, we presented it last year to our franchisees. And then the next thing we did is we built a brand architecture. And I know I probably have a lot of financial type folks in here, but 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. So 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? So one of the things that we talk about is, okay, what about mindset? And certainly, that is something that all of our new patients have in common. These are open minded people that have a problem, and their problem is pain, and it's messing up their life.
It's debilitating them. They're searching in the marketplace for solutions to that pain, and there are not a lot of answers. They really get to a breaking point. They've tried different things. They've tried popping Advil.
They've, God forbid, they've tried opioids. They've tried massage. They've tried stretching, acupuncture, you name it, because they go through all 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, and they don't get it. And 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've got to go get your antibiotics. But 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 just you have no confidence that you're gonna be any better off at the end of the the rabbit hole?
So people just blow it off. And that's why we are where we are, where we have a serious pain epidemic in our country. And in comes The Joint. And Peter talked about it early, our mission to improve quality of life through routine and affordable chiropractic care, and we do it differently. We've taken something that's complex and confusing, and 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. And I think we could do a lot better there, but we've got 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 we wake up every morning looking to do that. And then we're vested.
Because if you're a chiropractor and you're putting your hands on people's bodies every day, that is a it's an intimate relationship, and you have to be vested in your patients' goals to be a great chiropractor. So the three legs of the stool, Peter we showed them in the video. Peter talked to them about earlier. This is what we came up with them, accessibility, credibility, and empathy, the core delivery, the three legs of the stool for the perfect joint chiropractic experience that helps patients live a better life. So 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 better the best version of you, and that's really what it means to the consumer. So 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. So it's a significant area of focus, and Peter has 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 hook?
Can we thank for your visit today? They tend to say one of these three things. First and foremost, it's usually a referral, right, 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 then the rest of them attribute it to some kind of a laundry basket of signage or community engagement or they saw an ad.
But that's basically the three areas. So what we 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, 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. And so part of in order to do that, to have credibility with people that are successful, somebody mentioned David suggested they hate their jobs, but they're successful people, maybe had a great corporate career.
They're just tired of it. So it's not like you're dealing with people that are necessarily wet behind the ears. They just wanna know that you know what you're talking about. So one of the things that we do is we spend a lot of time talking about we spend a lot of time talking about marketing methodology, and what we do is we call it a purchase funnel. And 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.
But the big picture is we know how to market a corporate we know how to market a clinic successfully, period. We're really dialed in, and it gets better and better every year. And it's because we understand the patient journey to chiropractic. We've got four fifty plus test kitchens, and we've tried we've improved it every single year. So 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. And it involves three phases. So you've got this prospect, and it's coming into the funnel. And every industry has its own funnel, and they all look different depending on what the category is.
And there are three layers to this funnel, and they're all important. They all have to be present in well balanced marketing plan in our industry. The first one is your awareness layer, and 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.
Then you get to a lead generation layer, and 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, and we can find those people in our platforms. And this is and digital marketing drives this almost exclusively.
So this is where we get really dialed in with what some industries call hand raisers or people that have flags online or they look like somebody who might be a relief seeker. And then we talk about our smallest audience, and but these are the the most important.
This is what we would call
it foundational. We don't even call it conversion because it's 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. So 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 been I've worked on, but like this. So this is really important. So you know, 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. And we do most of this for our our franchisees, and 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 practice is you just have to commit to them.
You have to do them, and you have to do them consistently, and there has it has to be seamless between a local outlet and what we do nationally. And if you do it and you commit to it, and 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 from a chiropractor, a local mom and pop who might have been working in that trade area for twenty years. It doesn't matter, because he or she is not doing not following SEO best practices, and we are, and we know how to do it, and we're way ahead of the game. So when our franchisee signs his or her lease and their franchise deal, we're already working on that SEO plan. And so it becomes really powerful for us.
It's something that we fund out 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. And the other thing is community marketing. Some things will never change, and 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, and you've got to get out in your trade area, and you've got to meet them, and you've got to network.
And so these are really foundational tactics for marketing, and it's what we build on. It's what we teach. And 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. This is probably 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, and it'll tell you how fast it's growing. But this refers to the amount of the rising interest in chiropractic search. And this is something that we can target through primarily through search engine marketing. This is probably our number one this is the tool that competitive chiropractors actually use the most. Chiropractors are not big advertisers, but they've learned about search engine marketing, and so we train our franchisees to maximize their leads.
It's very important. And then we also use the Facebook and YouTube platforms as well. They have traffic driving ads and units that we use as well. So this becomes our lead generation layer. Like I said, for most franchisees, they're gonna spend more on this layer than anything else.
But one of the things that we're running into in some markets is we're running out of leads. I mean, there are only so many. They come, and they're there, and they're gone, and you gotta buy them all up. But what do you do when the leads are dried up? And this is when you get to awareness marketing.
And 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 in the marketplace and create our own demand, like a real consumer brand, not just a referral or a lead generation machine. And this is where we are 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 Facebook platform to do awareness advertising. And then what's also important is public relations. If we're going to start a national conversation about chiropractic as the leader of this category, and PR becomes an important tool for that. And increasingly, that's a growing competency for the joint.
We want to be a national player in the PR scene, and that's something that we're working towards. So these are all channels that support this top layer. So really, a well balanced clinic marketing plan should include all three of these elements, and that's what we teach. In addition to ongoing marketing methodology, there are grand openings, and we're really proud of this. It gets a lot of attention.
We have reduced the time to breakeven or cash flow positive from roughly eighteen months down to six months, And we're pretty proud of that, and it didn't just happen automatically. It's just like anything else. You roll out a plan, and then you make it better, and then you make it better. And sometimes our franchisees even contribute to that. And it just gets more and more dialed in, and 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 they know if they hit those benchmarks that they're almost guaranteed to have a successful opening. And so 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. And we certainly support them at headquarters.
And also your RD or your FBC, whichever the case may be, also supports them. So we're very proud of the work that we've done. This is definitely a huge upside and strength 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. And 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 talked about 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. So it certainly can't be all of our advertising, but there's got to be a portion of our advertising dedicated to that. So this is really exciting. One of the things you'll see in the fall is 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. And then the second thing is marketing automation. Manjul will be up here later to talk about Axis, which is our new CRM platform. Peter has mentioned it in multiple investor presentations. It's huge.
I mean 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's it could be so much better. And what we're talking about is, you know, the right message to the right time to the right consumer that happen automatically, that aren't so five minutes, 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 in their purchase behavior. And 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.
So this is a whole new territory. We hired somebody on our marketing team to lead this, but this is going to be I think it's going to be 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. So I would say for the future that these are the two things, at least for me in 2019, that I'm big picture that I'm focused on as much as anything because I do think it 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 a 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 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. And 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 a lead conversion and lifetime patient value. And that is really it.
I hope I'm sure I talked 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?
We do. It's a well, first of all, we we can't tell a franchisee what to do, but that's part of our model. So we we have a a text in campaign. It's one of our it's like our strongest call to action, and we typically will give away I don't think I'm giving away anything secret. You can anybody can see that when you go online.
You can get a free adjustment, and we usually have a grand opening weekend, a two or three day period where they can come in and get an adjustment. And and I can't emphasize enough how it really just comes down to hitting those metrics. So 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 months breakeven 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 is that the end of the road, or can it get any better?
I'm gonna help you answer that. In in small box retail, that six to nine months time to breakeven is is golden. How far we can push it, we're we're focusing on meeting the six to nine months as our minimum.
There you go. Thank you.
Anyone else? Alright. 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? We're doing a national promotion, and that is a direct marketing campaign. So 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. Any time we do a promotion the second time around, typically, we get better at it. It's just human nature.
So that actually started it started in June. Okay. Thank you very much. Appreciate it, everybody.
I think you're supposed to introduce us.
Oh, I am.
That's okay. Alright. Hi. I'm Amy Karome, and this is my friend, doctor Steve. I'll tell you a little bit about my background.
I joined The Joint four years ago. My background has been startup high growth human resources. So 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. And I joined The Joint, four years ago because I believe the health and wellness is really where the future is going.
Go ahead, doctor Steve. Alright.
And I'm doctor Steve Knoff. I'm the chiropractor of on the leadership group. I got my degree my doctorate in chiropractic from Northwestern Health Sciences University in Minnesota. I've been with The Joint since 02/2011, 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, and I also serve on a couple of other boards, for associations within chiropractic as well.
Okay. So we're really gonna 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. So Peter mentioned this in the opening. One 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. So however you wanna join our team, we wanna have we wanna be the place that chiropractors want to go. This is 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, so I have a team that supports the corporate clinics.
I also have a recruiting team, and then I have our director of risk and compliance services. And then doctor Steve also has a new member joining our team to focus on, DC relations with the colleges and training. So, this question came up earlier today, I think. Where are the chiropractic schools? So 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. We grad 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 kind of convincing the doctors to move further away from those schools where they graduated. So 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.
So about 1,200 chiropractors currently in The Joint as employees, and then about 40% of our chiropractors have fifteen or more years of professional experience post graduation. We get about 23% that are Palmer grads, which is one of the the biggest chiropractic school, and then 16% came from Life University. Okay. So Jason mentioned some patient research that he did recently, and we piggybacked off his patient research and did research with our chiropractic team. And 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 fifteen years later, how do those interests change.
You know, 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 talk to doctors that have left us just to get an all encompassing view of how our brand is perceived. And it was the first time that anything like that's ever been done, and and it was a really exciting initiative that we did.
And we're gonna use that information to really refine our recruiting messaging and make sure that the things that they're looking for in a in a company when they graduate or when they're looking for a career path, that our messaging is is clear that we're we're addressing those 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 a brand of The Joint Chiropractic. So 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 to go through, so they see us as supporting their career path.
Okay. So why do chiropractors choose The Joint? So this is out of that research study that I talked about. There's definitely some reasons why they like this model. The doctors mentioned not having to do marketing.
If they were to start their own independent practice, right, 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.
So that's really what makes this model attractive to those professional chiropractors that might have fifteen 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 wanna run my own company anymore. I wanna do what I wanna 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.
So we talked about the simple model, and I just kinda wanna walk you through, maybe a day in the life of in one of the clinics. And you actually heard David talk to this earlier, starting with just what does staff look like in our clinics. It's 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, you know, running at 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 as David was talking about. Now 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.
I think you should definitely go and check it out. I think a lot of you could benefit. But, you know, what 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 or an 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. You know, how how do they get through 60? But we have a really very focused model. All we do are consultation exams and adjustments, and so it allows our doctors to focus on the chiropractic adjustment. If many of you had 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. And 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, you know, 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 than the adjustment, or are you ever going to? And, you know, the answer that's been given is it's just a matter of timing. You know, 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, but 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, and we're focused on this right now. One of the other things that we typically get questions about is, you know, how 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. So how do we know that we have good doctors? And this is kind of how we we determine that. First of all, our 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, you know, any issues with chiropractors, make sure that they either have their license or practice if they're doing it well, or make sure that they don't have it if they're not doing it well. So 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. So we work with three required vendors right now, that understand what our limits are, the requirements for the malpractice coverage.
They understand who needs to be covered so that all all the parties are covered appropriately, and we're making sure that we're 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 because that starts to affect the, insurance premium as well. So 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, and we need to have certification of that, and we track that, as a system, full time, part time doctors. You know, 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? And actually, it's 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. And so a lot of these determinations are already made for them. It's different in a cash practice. Patients are electing your care, and 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 in insurance kind of payment system. So 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? And 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.
And that can't be the mindset or the mentality in our model. One of our things that we 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. And so 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 We like to make sure that our doctors are are up to date on on current best practices, but, really, that's that's more what school and continuing ed is for. Switching gears a little bit in in compliance, we're gonna talk a little bit about the professional corporation structure. So 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 wanna briefly cover what that is, why it's here, and and how we comply with that in all of our states. The PC model stands for a professional corporation model. So there are states that limit the practice of medicine in varying degrees. And 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. So for example, you know, California is a PC state where you have to be a licensed provider to own and operate a chiropractic clinic. So what does that look like for our franchisees? How do how do we comply? How do we manage that?
And really what we do is we manage that through a system of contracts that really set up the responsibilities for each role in in in the that participate in the clinic. And 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, and so they can do all the on-site 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 have, they can do payroll for the PC in some states.
It just depends on what the state allows or does not allow. And then you have the the third leg here is the chiropractors in the clinic who obviously practice and provide care to the patients. And really the PC model, you have contracts between all the parties that lay out all the responsibilities and roles and clarifies it. And 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't. Again, it varies by state.
And so it's really important that as we go into these states, our franchisees work with local health care attorneys to understand those little nuances in in each state, rule or regulation. Now I tend to spin this a little bit in franchisee training and and discovery day because a lot of franchisees are not interested in in this complication. They they think this is a lot of extra paperwork for them. They don't wanna do it. It's more legal work potentially.
But for me, what this actually does is it sets a franchisee up with a chiropractic partner. Now 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 nondoctor. And so there's this built in chiropractic partner in the PC model that kind of serves as the 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. So, you know, even in non PC states, I still encourage franchisees to find this chiropractic partner who they can work with in this capacity. This is just really formalizes the relationship. The other thing is, know, 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.
And what's interesting is 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. Now that's not anything we do at The Joint currently or maybe future. Who knows? We'll see where this goes.
But we don't do it now. And so 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. Now 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 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, but it's really very similar to what, trauma centers do. If you look at trauma center levels, you have levels one through five. And trauma center levels of one offer way more services than a level five does.
And so 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 joints growth goals. Thousand 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? You know, we know that we need to add doctor staff as clinic volumes grow. So not only are we opening new clinics, but we're growing our existing clinics. So what does staffing look like for that? And 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. Yeah. 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. And so 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 gonna talk about later, in a second here about.
Any questions? Do you have the microphone? So
do you find that there's pretty robust acceptance among the chiroprivate community for The Joints 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. So I I started in 02/2011, under the CEO John Leonecio, CEO. And so I've watched a lot of this progression and maturity of The Joint Chiropractic over the last few years.
And it certainly started out that, we were 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.
You know, 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%. You know, our our model is looking to grow it. We can get outside of that 16%. So our reputation has been improving.
It started really with our our partnership with Sherman, and we're able to give a pretty generous donation to them. We've been invited to several college campuses. And so 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. So it's certainly getting better.
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 gonna do that. They're not gonna go to a strip mall to see their doctor.
And 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. And so I think, you know, time has kind of forced them to be more accepting of the model. Is
corporate actively recruiting docs and and then sort of helping them figure out where in the chain they can work, or are you are you not at that level as far as helping the actual franchisee?
Oh, helping franchisees. Yes. I actually have recruiting I have individuals on my team that recruit on the corporate clinic side and on the franchise clinic side. So 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 incidence 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. And a lot of that has to do with the simple model. So because we're not doing all of these other things, we're not treating injury victims, we're not treating, people who have these we're doing wellness chiropractic. Our incident rate is much less. I can't give you the exact number, and I don't wanna filter out a wrong statistic, but I can tell you much better than the average.
And our and that's reflected in our malpractice rates with the carriers.
Yeah. And 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. So you look at a 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 just it's such a safe profession to operate within.
And 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, and so a lot of the the complaints tend to be dealing with doctors inappropriately touching patients, we've actually eliminated through the use of our open bay. Mhmm. 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 closed room, you're more likely to have those kind of claims.
Anything else? Okay. Thank you.
Show this short video that was filmed for the national conference, and and then we'll have Teresa come up and tell her story. But let's show the video.
We have six clinics that are open. About the joint and his vision, if I would have crushed his throat, I knew what that felt like. So for me, it was not no. Let's think about it. Let's talk about this.
It was like, let's do it. Am I on? Okay. Are you gonna cry? No.
You know, 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? And it's just so interesting to go back to those days because it's so different than who I am today. I mean, I wanted to be a dancer, and here I am one in chiropractic clinics.
But but I am grateful for those years because they taught me perseverance and dedication and teamwork, and they gave me courage. So so thank you, everyone, for having me here today. It it's such an honor and privilege to talk about this brand that I am so proud to be a part of. I'm gonna 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 we came across it. And usually we just toss our junk mail, but we got this flyer from one of the first joints that opened up here in Scottsdale.
And my husband had been looking for a chiropractor, because his I'm going to walk around. His chiropractor actually closed her office because of the health insurance cuts, cutting back on reimbursement. So we got the flyer. He calls The Joint, and Doctor. Steve Gubernik actually answers the phone.
And Doctor. Steve told him that they're not scheduled to be open for another week, but he assured him that it was a walk in clinic. He didn't have to make an appointment. So a week goes by, and Tony walks in. And as he explains it, he walked through the door, and 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. I mean, just anything completely different than what he had been used to, you know? And so he goes in, and luckily, Doctor.
Steve Gubernik was there. And luckily they had just opened, so there was no patients in the lobby. And he if you know my husband, he's asking questions. You know, what is this about? You know, tell me more.
And 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, so we're not a PC state. So he leaves and he calls me and he says, Teresa, I know what we're going to do for our future. And as you can see, you know my response. So as soon as we could get corporate to call us back, we quickly went in. Yes.
Very, very different than than our corporate team today. And it's true. My husband must have called him five times. And and this was my husband's thing. I just was like, okay, hon.
We can do this. And he called and he called, and he got him to call him back. We scheduled appointment. We went in, and they completely forgot they had scheduled an appointment with us. They were like, who?
What? Where? How? And we walked in, and we purchased two licenses, just two. And 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. So we purchased two licenses. And we opened Gateway Crossing in 2012 and two more clinics later that same year. So we purchased two. We opened three.
We were aggressive. I don't know what came across us, but we were aggressive. So we didn't even wait for one clinic to break open 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, so we borrowed money from family. We liquidated our $4.00 1 ks. If there was a massage MV 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. Crazy. So the first two, three years, we actually hired a manager to help do the build out, manage our joints, and we saved the mortgage industry. And that was our whole goal all along. It wasn't, you know, we're going to open chiropractics, and we're going to manage them.
I would have said no. But we stayed in our mortgage industry, 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. And that's not how it works.
So things were tough. We were 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.
And I kept I had sleepless nights thinking of all the money that I had borrowed from my parents. I'm not even kidding you. A $150. So 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. And so I jump into managing five clinics, and I had an assistant.
I thought I could really do it, and it was very hard. I was trying to lead others. I was trying to motivate doctors. I was trying to develop our team, and I had nothing to give. I had no background in running a franchise, let alone a chiropractic clinic.
And like Doctor. Steve says, you're not going to find common ground with a chiropractor if you're not a chiropractor. So 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, very unique. We're very different. And so I brought in a chiropractor to come in and coach my doctors. And he had experience with The Joint. He had experience adjusting high volume patients or working in high volume clinics, and that's what I wanted.
I wanted a high volume clinic. And so I brought him in, and 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. And we worked together. We restructured our comp plans. You remember as a non doctor, you know, you really are given a business and you don't know what to pay.
You know, so 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. And so so it was risky. We upgraded our tables. Our tables weren't even that old, but he said, you wanna save your doctors?
You're gonna upgrade your tables. And we worked, and we motivated until our sales continued to grow. I mean, and it was daily, and it was it was a weekly thing. And I thought I was gonna bring in this coach on a temporary basis. You know?
Just come in. Train my doctors. We'll be fine. We're gonna get to the next level. But it was no.
I it was like as our sales started to grow, we were adding second doctors on our busy days. And then our busy days turned to every day. And now we have three doctors working in our clinics. Three doctors, and those are clinics that we're seeing well over 100 patients a day with around 15 new. So so 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. I really went through that. But I have to tell you this story, because in my video I talk about acquiring a clinic.
Well, just acquired the clinic. It closed last month. And it was a clinic within our territory. Sales were below average. And but we knew it had potential.
So we go in to meet our new staff. Not easy, but we go in and we say, we're your new owners. You know, 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. And the next day, I get a call from the previous manager letting me know that I have lost all my staff except one. One.
And 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 mean, and 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. So I shook my head, and it was just like, oh my gosh. You know, here's a these people work for The Joint, they're just completely happy with being status quo. And I don't want them on our team.
And I and I I I just told the previous manager, no problem. That's fine. They can get off our train because we're all about getting people that wanna make a difference and that want to you know, that see the value in what we do. I mean, we are changing lives every day. And 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 mean, I really was just like, okay, I'm going to open a business. But our clinics are seeing 120 people a day, fifteen, twenty new. It's like every night, Tony and I look at our numbers, our analysts, and we're just like, this is nuts. This is crazy.
And we keep growing and growing and growing. It's very exciting, but I thought that was just interesting because as an owner, what I learned is that if you're not intentional growing your clinic, you're not you will always be average. Always. And I wanted to be more than average. And I thought to myself, no wonder we acquired this clinic.
The owner allowed it to be average. And that's something with having franchisees, is you're going have your good ones and your bad ones, but this joint is a phenomenal model, and we've definitely taken it up to the level, to that level of just extraordinary, extraordinary success. So what what I never realized eight years ago when I told my husband, let's do this, is that it would not only change our life, but it would be the road that I would discover my purpose. And so my video. And 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. And it all started to change when I created an effective team of leaders.
You know, I brought in a coach, and I brought in someone that could work with my wellness coordinators. And every one of us stays in our strength zone, and that is why we're consistently successful. And even my husband, he has a 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. And so 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.
And what's awesome that the it's 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. And it is just so exciting, and what's truly amazing about me discovering my purpose is that passion just makes me continue to climb the Hill. And and there's no stopping me. So does anyone have any questions? Thank you.
Thank you. Thank you. Yes. Well, it's it's that's a great question because we actually had our surprise clinic that was exceeding $8,090,000 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. And we actually asked the landlord if we could expand our space, and that's actually something The Joint looked into. I mean, we've never done that. The Joint has never expanded to over more than 1,300 square feet, but 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. Yes. Yes. Yes.
Yes. Now confused. No. We were very strategic about that because what we did was the doctor in a clinic, you always have you you want all rock star 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.
So we actually had a lot of patients follow, which was okay. And then we just replaced, you know, his position with another lead doctor. And but and so now, I mean, they're they're neck and neck. A lot of patients did follow doctor Tyler over. But what's interesting, my husband's such a numbers patient number person, is that between those two clinics, we see about 173 people a day.
Now you can't do that in well, I shouldn't say that. You could do that in one clinic, but I mean, that's pretty congested. I mean, the thing is that, you know, the joint is a phenomenal model when the patients are coming in and out. But you still want comfortable. You know, you don't want it to be a sweatshop.
So I think it's important that, you know, you keep it to where it's not like this machine where it's just, you know, churning, churning people. And and that's what we did. It's three and a half miles down the road. I mean, that's what we did. So and and, no, as Peter says, that's it's the first month breaking even, that's not normal.
But 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. So it really just gives them that option, and they're not waiting thirty, forty minutes. And 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 you've got and they're waiting twenty, thirty minutes, they're not gonna come back. So what he really taught me is you gotta be proactive. You've gotta be prepared.
You know? And not to mention, you don't want to burn your doctors out. So so that's why even though we might see 90 to 100 patients in one clinic, we have two doctors. You know? Because you never know if you're gonna get five, ten, 15 new.
So we're always prepared, and that's why we're successful. And that's so key to talking to franchisees. And when they tell me, Oh, my doctor can handle 80 patients, not for long. Not for long. And what happens when you get seven patients that day?
You know, and those seven patients, they come in first time to see The Joint, and they're waiting thirty minutes? Uh-uh. So that's the tricky part of this model. You gotta you gotta invest this. You can't stop investing when you open, and that's something I learned too.
Yeah. As far as I don't know what the cap is. And three years ago I said, No more clinics. I'm done. I'm not opening another one.
So 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 it's absolutely limitless. And that's where I said, I can do this. I've discovered my purpose. Yeah.
Uh-huh. Yes. Well, so first question is, I love working for free because what I do benefits everybody. I mean, we all work for one brand, and that's The Joint. And so I have franchisees calling me all the time, and I am more than happy to help them.
So me helping Peter is him is is just it's only going to help me. So the new clinic that we just purchased only a month ago has only seen about 32 patients, but we know it's going to take. It's going take working with that doctor. And that's really all that it is, is going and working with the doctor, not just once a month, but weekly, And just seeing how he interacts with the patient and sometimes tweaking just the minor things. Just how he even recommends treatment to the patient.
And that's something I couldn't do. So and then how he interacts with the wellness coordinator. The wellness coordinator and the doctor have to have synergy. So that was another, you know, huge transition for us. The doctor has to be coachable too.
Mean, we have doctors in there that have fifteen years experience, and we hear we have a coach coming in and telling them what to do. So what Doctor. 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.
And that's how we interview them. You know, he said, do you wanna adjust? Do you wanna change people's lives, Or do you want to take notes all day? And so that's 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 one hundred and one hundred and twenty is that we have three doctors. And that's a big investment on the owner's part because you for the first two hours, you might see 20 people, and you've got three doctors. And I just try not to even look at it. But at the end of the day, you'll have a 120. They'll all come in from four to seven.
And if you're not prepared, you're gonna lose patience. You know? If you're not prepared, it's the joint that gets the bad name. It's the and it's like, I don't care if it's corporate, if it's CamelBak. We are one brand.
And so that's why we see so many patients. And why we see so many new patients? Because our doctors are trained to ask for referrals. So so 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, and do you
need to manage that in year three, four?
Yes. That's another good question too because I struggled that with that early on. How we keep our doctors motivated, well,
if they're rock stars, you're going to pay
them well. And you're going pay them a percentage. You're going pay them a bonus. And the percentage is on net sales. And as an owner, your bottom line comes second.
And that's just the way it is. You've gotta focus on the long term. I mean, as and as a franchisee, I think coming in, I was always focused on, oh my god. How am gonna pay my my my money back? You're always thinking of your leverage.
So that's that's just been key is is paying the doctors. Now, however, they got approved. They could grow a clinic, and that's exactly what this doctor did at Surprise. And I moved him over to, you know, basically, he has his own clinic now. He has help.
But I pay him a percentage of sales. You know? I pay I pay well. We pay well. Well, I should say we pay well, but they have to prove themselves.
And their conversion has to be up there, you know? If they're in the 30s and 40s, they're not converting. So that's where we make our money is the memberships, you know, the wellness plans. So and then keeping them motivated, that's tough, too. They burn out.
They burn out in this model if you're not getting them help. You know? And that's the thing is that doctor Chris, my coach, is in there. And and it's funny because you think of a I really, like I said, thought about him coming in and just training them, and then I don't need you anymore. But he has to be in there weekly, weekly, weekly, weekly.
And 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 seen the majority of the patients. So my second doctor, I usually pay him hourly, and then I pay him a bonus. But my lead doctors, we pay very well. So for them, it's a career, and that's what we want.
We we want them to say to themselves, I'm making more money than if I own my own business, and I'm making money than the owner. And that's how it is sometimes. They're making more money than me. But but that's how we have to keep them motivated. You know?
It's no different than us. Yes?
Can you talk about now that you have eight clinics and you've said to yourself and this sort of doctor that's in charge of, you know, 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. So we opened Buckeye, our eighth clinic, the fall. But already, Doctor. Chris needs an assistant.
Because what we're finding is that if he's out there covering or and when I say covering, I mean a clinic that doesn't have that third doctor that day, he's in there. I mean, he he works his butt off. And I noticed, and we noticed, if he's covering too much, people start to get lazy. Our conversions start to fall. And so we realized that we already have to bring him in assistance, so he's out there constantly motivating, constantly working with the doctors.
And 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. And the more money the clinic makes, the more money they make. And I think that's where the the the mindset has to be. Because when I first opened, the doctors were kinda like, alright. Getting paid $30 an hour.
I'm gonna work for $30 an hour. And that's all you're gonna get. Minimal effort, minimal results. And so so that's where doctor Chris's key job is is to be out there constantly motivating him. So in time, we have to hire him an assistant.
So then 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.
And then I also have an assistant operations manager that handles my supplies, my marketing. She's worked with OTT. She's engaged with corporate. And and that's that's really our team that it is. And then me, myself, my job is to make sure that everything is is humming along.
You know? Things are needing to be approved. You know, just making sure that I'm serving them. You know, whatever you guys need, I'm there for them. So it's just really a team of of four managers, I should say.
Yeah. Four managers for eight for eight clinics. Yeah.
Mhmm. With all the success you've achieved, have you started seeing copycats or
anything like that? I'd love to
hear more about, like, the competitive environment, what you feel like the real barriers to entry are for your business.
No. I mean, in Arizona, absolutely not. You have ChiroFit, which I think they have about eight clinics here in Arizona, but but no one does what The Joint does. No one. And it's such a a convenient, affordable, easy model.
I it it's almost sometimes it makes me nervous, and that's why I think I'm out there trying to reach out to all the franchisees because it is our responsible. It's our responsibility to this brand to keep it just a joint. That's it. No competitors. And and I don't know how long that's gonna be, but I I think it would be very hard to compete with with what we've accomplished.
So no competitors that I know of. Any other questions? Nope. That's it. Great.
Yeah. You're welcome. Thanks, guys.
Therese is also a national one of our national franchise advisory board members. She didn't mention that, so she also does that. So I didn't get mic'd up, so I'm gonna say right here. So a little bit of my background. I started my career with McDonald's.
I'm not gonna you know, I'll go through the years, but it's a little bit deceiving because I'm really, like, 45 years old. But I have about forty years in the in the franchise industry. I started with McDonald's. I was there about ten years, but I actually started there when I was 14 years old. And I started working with a franchisee and worked my way up 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 twenty years. I was with Dunkin' Brands for about twenty years, and I love the brand. It was a great brand, but we went through there was a time where there was a lot of talk about splitting up the brands and, you know, it was sold to you know, it was Allied Domics sold the brand. So I became a franchisee, and I still thought the brand, you know, was phenomenal. So I became a franchisee of 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, you know, as you know, the the value of Dunkin' was very high. And when, you know, when we had the economic downturn, you know, you know, the purchasers couldn't get the money. They couldn't borrow the money based on what the brand, you know, was selling for. So I got out right at the right time.
From there, I went to a company by the name of Pollo Campero, which was a start up. And And that was a great experience because I spent ten years there, and I had a great opportunity to to work with a start up, and we did really well there. And then from that, I, you know, I ended up coming to The Joint, and I'm really enjoying it here. And I think it's we have a tremendous opportunity. We've done a lot of work.
Talked to you a little bit about that. But, you know, we also have a lot of work to do. So what I want to do is I want talk to 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.
Then 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. We have 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. And then 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. Then 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 that we have franchisees in.
And then last but not least, have a clinic support center. Doctor. Steve is part of that clinic support center. And then we have a director of training and operations services. And then we also have a director of planning and analytics.
So if I take you back a little bit to 2017, 2018, we kind of started our journey during that period. And the first thing that we did is we needed to prioritize our operational initiatives. And one of the things that we wanted to do is 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. And, basically, franchise franchisees didn't have, you know, the tools that they needed.
You know, they had created their own systems. Every franchisee was, you know, 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. And I think you heard some of that from some of the franchisees and the RDs that spoke here.
So one of the things is that we wanted to prioritize what we wanted to do from an operational perspective. We evaluated and implemented new policies with NFAB support. And 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.
And that relates to what I just mentioned, which is we created tools for them. We created e learning programs, way to train their people. And I'll talk a little bit more about that. We built and implemented a company clinic operations plan, including a restructure of our team. At the time, there was two director of operations for the whole operations team.
So if you can imagine, there was two not director of operations. There was two district managers managing at the time was 48 clinics. So 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 when she's doing it with four people. So so it was really unmanageable. So what we did is is we restructured the organization in an affordable fashion that we could scale and that we, you know, that we're able to kind of do the necessary things that we needed to improve our operating bottom line.
We implemented accountability measures. Basically, we have the ops team has weekly follow-up, weekly phone calls. They talk about the numbers. You know, they have specific calls with clinics that are underperforming. You know, so there's a whole cadence that we're following that didn't exist before.
So, you know, that's really worked very well. And then we started our journey to build a chiropractic culture, which as Doctor. Steve will talk about a little bit more later. But 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.
And the fact is that these initiatives are working. You know, if you look at some of the things that we did is implemented these tools, and these are these were really fundamental tools to the business. So there wasn't an operating model, so 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. So we wanted the people trained, and we wanted them to be trained consistently. We created these tools, and they go on and on, including we created tool kits. If a franchisee was having a problem converting, they could pull this tool kit. If they were having a problem retaining patients, they could pull this tool kit and work with that.
From that, you know, we saw franchisee satisfaction go up, and I'll talk about that in a second here. And then you see that, you know, that ultimately delivered a better patient experience. And 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. And, for those of you that I'm pretty sure almost everybody probably knows what an NPS score is, but, you know, it's a net promoter score, which means that today where we had 47 of, you know, the promoters less the detractors is your net promoter score. So we went from 47 to 56.
And, you know, franchisee engagement has improved 40%. So 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.
And we wanted to set a benchmark. Where are we? You know, where are we today? What are our franchisees telling us? And it was pretty sobering.
It wasn't a lot of fun to look at, and it was difficult. But from there, we developed plans, and we developed, you know, initiatives around the way our franchisees felt about how we were delivering to them. And, you know, we're happy to report that all these tools and elearning and support and, you know, the feelings that you see with the Teresa, and you would have seen it at the at the conference, and 93% of, you know, participation in our conference, we feel really confident that our support to those franchisees is really getting them energized. And when we see this energy, we also see that translating into profit. Because obviously, we have where we had 44% of our franchisees that were engaged engaged means actively engaged in the business You know, in 2017, today we have as of our last survey, we have 61%.
And that's a phenomenal increase. Our company has told us that they don't see that 12 points. It's just pretty significant. So we're pretty happy with this, and we think some of this is some of the results that we're seeing. So briefly to talk about 2019 and our four pillars, we're continuing down the same path.
So the pillars don't change. Have 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 to 2018, and we're expanding those into into 2019. You know, we tweak them.
You know, we learn from them, and we're making them better. But, you know, it's the same four 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 G and A to provide to operate their clinics for them. That's what the franchise business is for. But we have to be accountable, and we have to provide them the tools, and we're doing that. The second thing the third thing here is our corporate clinic.
So, you know, we went from, you know, losing a lot of money when I first got here to, you know, last year where we made, can can I say that number, 2,800,000.0 or 800% improvement over the prior year. And we're gonna continue that path. And now our, you know, our objective is just to optimize that, to continue that path, and then at the same time, to open successful Greenfield clinics. And 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. And then last but not least is Doctor.
Steve will talk about this later, which is building a culture of chiropractic and quality and so on and so forth. So I'll talk about the first one. You know, the as Lee with patient focus, we wanna implement policies that align with the patient experience. And we saw an example of this with policies that we implemented in July that now we're seeing the benefits and the results of that were, you know, our conversion rates are up. You know, we see and we can tie training specifically, you know, to a lot of our key metrics.
When they use training, you know, and the clinics run training, for as an example, if a clinic has trained their people, our conversion rates are 2% higher if they train their wellness coordinators. So 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, you know, kind of spoke to that a little bit. But, you know, if a franchisee thinks it's gonna just come to them or or from a corporate side, it's not.
And, you know, Teresa said something at the national conference. She didn't say here, but I thought it was very important. She said that her closing statements at the national conference was just follow the system. If you follow the system, you're going to be successful. And 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. So develop and deliver world class training. I talked about that a little bit, but we 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 you know, show them sales tactics and get it out to them. And with some of the new technology with access, we'll be able to do that. InVensive patient satisfaction measurement. So what that is is, yeah, we go in and we measure clinics, and then we get some patient satisfaction, but it's limited, you know, on the marketing area.
Well, 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 talking to franchisees, we're saying this is what your patient is saying about you. And it gives them you know, it gives more credibility at the end. So we're implementing, you know, 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, and it will give us an opportunity to be able to consult more with those franchisees and coach them. And then define and prioritize system needs based on results. And, you know, this is pretty simple.
Sometimes we go out and we develop a system, but is it really something that we need? So this is more about, you know, 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. So 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 a conversation earlier where now we have quarterly business reviews with all our RDs.
It's big task. It's 21 RDs. We spend a couple of 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. And they have over 60% of our system. And so 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.
And then last, we're this is a big project. It's taking up a lot of our time, but we want to make sure that we support access in our new system that we're going to be implementing towards the end of the year. Then 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 conference a labor optimization model for franchisees to be able to use because there are opportunities, and it's already you know, there's an opportunity for franchisees to see where their, you know, where their patients are coming and to be able to schedule for that. And 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. Right? So 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, you know, and how long does it take to break even and if you're investing any money in this. And then we wanna reduce our turnover. And, Amy talked a little bit about, and Doctor. 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. And build bench strength, obviously.
We're building greenfield clinics. We've been able to do that within our current infrastructure, our current labor models. We haven't had to some businesses you have to hire ahead. We've been able to manage that throughout, and we'll continue to do that. So it's not a big investment in that regard.
But if we're starting to open a lot more clinics, we'll have to relook at that. And then new greenfields, you know, we are very focused on achieving targets within breakeven targets within six to nine months.
Okay. I'm back. Alright. So the fourth pillar for operations is building a chiropractic culture of quality and trust. This is not just in the clinics between the doctor
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. So this is talking about how do we lead the chiropractic profession. We're the biggest thing in chiropractic.
How do we act like it? So 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 continuing to improve. Our first school that we we partnered with, Sherman, there is in the bottom right. We need to increase chiropractic influence in our system. And so 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 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. So 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. So 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? And then we need to improve clinic training and oversight. Like I said, and what you heard from Teresa, that interaction of between the doctor and the patient, the doctor and the wellness coordinator is critical to the success of the clinic. So how do we continue to improve and build on what we have today? Those are all our focuses.
So 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 that can give that to a franchisee.
So it's easy to use, easy to operate, and what we've tried to do is and what we're gonna 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. And if we do that, Eric will have a lot more franchisees than he's getting today because the easier it is and the easier it operate, the easier it's going to be for them to put their money up and say, okay, this is a worthwhile brand. And I think, you know, if you look at it from that simple perspective, our goal 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, you know, two and a half years ago, but I believe, and I've been forty years' experience in this, I think we have one of the strongest partnerships.
It's not the strongest that I've ever seen. I think that Theresa is not the only franchisee that feels the way that she does. We have many franchisees that feel that way, and that's a great place to be. We're making progress in that regard, and we're going to and that doesn't mean that we're there. You know, 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 I mean, it's easy. Our economics are great. So it's easy when the economics are great. But you've got to back that up with the other strategies because the economics won't be great if you implement them.
So I think we definitely have the right strategies. We have a solid management team and combined 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.
So any questions? Yes, sir.
So one of your early slides, seventeen, eighteen progression still showed kind of sixty percent satisfaction, forty percent not satisfaction. How high can it go? How long will it take you to get there? And what will the impact be when you get to
8090% positive?
Are you talking about the for franchisees? Yeah. Yeah. Well, it's 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 what a franchisor would be.
Our goal is not to be average. Our goal is to go higher. But from a we have more promoters. You know, 50% of our franchisees are promoters, and that's a big number. You know?
Because when you look at a net promoter score, if you're zero, that's good. Zero to third I mean, zero zero to 30 is good. You know, 30 to, you know, 45 or 50 is excellent, and anything over that's exceptional. So we're we're in a good place, but, we we could be much better because we have so you know, the brand is doing so well. The economics are doing well.
And, you know, and I think that well as what we're doing, we can we can be doing better with our franchisees. So I don't have the answer for you. I don't, you know, I don't 90 is almost impossible. I'm not sure I mean, I'm not sure there's any franchisors out there 90 or 80 or you know? But certainly, it's it's gonna 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? Theresa talked a lot about Coach Chris. He seems to be very impactful to her success. So what have you found that's the key tool to get somebody above average?
Well, what we did is, as
I as I mentioned earlier, we built the we built all our tools based on best practices. So I spent three months, you know, going out in clinics, talking to franchisees, trying to figure out what are they doing. So all our tools were were built with what's working and what's you know, what who are the top performers and what is it that they're doing. So we built those tools. And then what we found is is now we gotta get franchisees to use them.
We knew that. Right? I mean, that's so now we gotta get them to use them, and we gotta give them the proof. You know, it's not just a hammer and saying you gotta do this. The newer franchisees is easy because they they didn't have they they don't have any system.
That's the system. You know, that's their training systems. The older franchisees created their own systems, and you know how hard it is to get somebody to take you away from your spreadsheet that you created. Right? You created the spreadsheet.
Now I'm coming with my spreadsheet. I want you to use it, and you're gonna say, no. I'm comfortable with mine. You know? And but, anyway, I think that the the the things that I think will have a greater impact I mentioned, which is, you know, less training more often.
You know, less less size, more often hitting, you know, hitting the field level, you know, 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? You know, 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?
You've done a lot of repair work with your franchisees. And I guess I'm just wondering why some franchisees, even though you're still you're up at the you said approaching maybe the top quartile, Why would some franchisees not be not wanna be engaged? I just don't understand that.
Well, different reasons. You know, some have a history that they just can't get over. You know, 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. You know, he was like, you guys are horrible. You're mean. And so we talked to him for quite a while, and he's completely changed his mind.
He doesn't wanna go. He want he wants to grow. That's a that's a good story. You know? But there are some that won't change.
They just won't change. They it's almost like it it's almost like if if my wife had an affair, would I be 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. But, you know, it's it's the point is, yeah, it's a good example because some people are able to get over that and some people aren't.
And there was a period here where they felt that they were mistreated. You know, 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.
And then there's the ones that came into this for a different reason, and, you know, they they had different expectations, and they'll never get to their expectation. Now when there's, You know, we'll never be able to move them to where that expectation is. Great. Thank you.
I guess so. Can everybody just stand up and maybe wanna stretch once and then sit down? Because, you know, IT is always wanting you guys to focus. Thank you, everyone. My name is Manjula Sri Ram.
I'm the VP of technology as you've been seeing me run around back and forth every time Peter raises his hand. But I live and breathe technology. My background is computer science and electrical engineering. Twenty plus, twenty three years, to be exact, of technology background. Started out totally by fluke on the field of medical.
You know, I was ready to go to med school, but totally changed direction because of a lab TA and loving it since then. I have a master's in business administration, again, 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. U. S. Food working on setting up their data warehousing, and again, their revenue optimization model.
And Vail from a telco infrastructure perspective with clients like Microsoft, Allstate, and State Farm. So a lot of technology background. Fifteen months ago, when I looked at this position, it was extremely exciting for multiple reasons. This organization is on a trajectory. It's it's a 45 degree angular trajectory going straight up, which is, you know, for somebody who's into math and computer science, it's phenomenal for me.
Right? I wanna be on that track to be going up. So I'm here and not look back and loving every day of it. So I wanna kinda talk about a little bit from the vision strategy where we are going, and kind of as an eye opener, 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, you know, if you look at all some of the laptops, none of us have HDMI cord cables. So, you know, they're carrying this dongle around trying to hook up, and then there is another computer that Lancelot, who's sitting in the reception area, shows that has a mini HDMI. So, you know, we don't even have a dongle for that. So 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. And we in this, whether it's finance industry, health care industry, any industry you take it, we need to protect us, our organization, and our data from it. And then 51% of the Internet traffic is nonhuman. 49% is, you know, real people, obviously, or variation thereof. 31% of the traffic that comes on the Internet is within malicious intent.
19% are spies. 5% is automated hacking, and 5% from spammers, and scrapers and spammers is the 2%. So if you look at what we are seeing in this industry outside as technology is advancing, a lot of malware attacks, a lot of virus attacks, spyware attacks, a lot of that happening. So, you know, the real traffic is much smaller, so we need to make sure we are protecting our data with the large majority. With that, I kinda wanna go over the team that we have, the vision on why we moved from build to buy.
You know, you've heard Peter talk about that a little bit. The focus we've had in twenty nineteen twenty eighteen and 2019, the near term road map, and then the technology vision, where are we going from here? So it's a very small organic team that I have that's focused on support, development, and security, and 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, you know, 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 nights out lights out environment. So 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 dot net framework, which is almost nonexistent 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 add challenges. So the vision is, right, let's come up with a technology that helps us grow, that helps us scale. So as you heard, I said six thousand 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. So 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 two compliant, which is why it was a big thing for us as well as, you know, European certified. So, you know, if we ever choose to go to the Europe, we are covered there from the certification perspective. And we are progressing towards the HIPAA compliance, you know, going into a private hosted cloud network and stuff.
Those are steps that we're taking towards that. While we are not required to be, we are taking a step towards that. So we changed our strategy completely. Fifteen months ago when I came, we were on, you know, on 75 miles an hour in a 55 mile speed zone, you know, going towards the build buy strategy build strategy. And when when I came on board, you know, the question that I asked myself is, do I want to be in an organization that we wanna 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 and our board members with our board members support, obviously, with the management support from Peter and and the rest of my peers, we were able to make the decision to go to buy.
So I want to kind of talk about Sugar CRM 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. So 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, right? You've got your 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, but now everybody wants to bring it all together. New sales, services cost, and data centric.
Now let's fast forward five, ten years now. And, you know, we are in a recurring kind of a system, right? A patient is from start to finish. It's a patient journey. It's not about a single transaction of a patient, but 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, right? I need to be able to see what is my inventory, who are my patients, how am I treating them, Who are my franchisees? Who are so 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.
And then services marketing, right? How to me, referrals are the best way of doing this, right? If I 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. And then 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, you know, live a better you. So Sugar and joint relationship, right? Sugar integrates seamlessly with systems to provide enhanced insights into your patients. It is a CRM platform focused on that, right? And I say that because I can take that, configure that system, be able to deploy it with some customization, 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.
And you're gonna see that a little further down. It's modern and 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. And then it drives enhanced productivity and gives us an opportunity to view how are we performing and get additional metrics and additional data.
So we're going to switch gears. You know, I talked about, you know, all the facts that we have in today's technology, our policies and procedures in terms of, you know, 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. So 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, etcetera. So 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, you know, 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 Access one point zero. We're extremely proud. This is what we are going to be rolling out.
We're still targeting winter of twenty nineteen, so 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, and we take that data, we scan it in, the doctor takes notes, and then we scan that document again. Now 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, but it also gives invaluable insights into patients, being able to continue to market that to that patient, the type of treatment we want to give them. Those are all tied together, you know, as we continue to build the system.
And 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 is going to be able to see their own data. Patient is going be able to update their credit card information. Patient is going be able to pay the balance that's due.
So those are some of the key pieces that we are 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, so that's one of the key features we're giving. You know, we're giving additional policies of, you know, I think George mentioned about anti poaching, you know, so we're bringing those kind of features in an automated fashion. Exception reporting, quick mobile access to information. So how many visits do I have? When was my last visit?
Those are some of the pieces I'm gonna be able to see on the mobile. Credit card process, again, as we talk through link, you know, 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. And Doctor.
Steve, I think, has a different word for A, but how you call it analysis, is being able to automate some of that information, being able to, you know, give referrals. So today, in our current system Atlas, we don't have a view into why the patient left our system. So if we are giving them a referral to go see another doctor to go get some x rays done, we are able to track that information and take action on that. That's a huge benefit to see why somebody is leaving. And obviously, PCI compliance, that is one of the most critical pieces we're gonna gain out of that one.
From a near term road road map perspective, I call it 2020 and beyond, but it's very near term, is being able to do some digital blue book. You know, we currently have a hard copy of it. They write daily metrics, etcetera. 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 assessment, 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 you know, 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 field got a patient x into the clinic. And then BI tool, being able to do a data warehouse on 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. So I wanna talk about, you know, where we're heading.
So I talked about access, which is what we're very proud of. That's our focus. We wanna make sure we lift our current system and shift it into this new world class platform, SugarCRM based system, gives us the flex take the flexibility and nimbleness that we get. You know, 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 and d team at the Sugar CRM time of it who actually built that platform.
I just had to configure it for what I need for it to do. So access is the focus. We want to get access implemented. As I stated, we are on track towards the end of the year as planned. Once we get access done, we are 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 that we wanna integrate with.
Looking at the point of sale system, being able to see what what additional features can I bring, Being able to get business intelligence, patient feedback, and the financial system? 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. So, you know, better systems, better data, better insights, improved patient experience, increasing 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. You know, 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.
You know, build is always sometimes if you're not an IT organization with 30 to 40 developers on staff, there's always a risk. You know, you're gonna lose everybody, right, that's on team. What am I gonna do? How am I gonna support a system? So always buying a system that can be configured helps us minimize that stagnation risk.
Technology is ever changing. You know, I started seeing with a blink of an eye. By the time I blink it blink five times, it's changed five times. And 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. You know, if anything you want to take away from this presentation is that that we're continuously improving what we are building. So questions?
What do you think the the biggest concern or hurdle is around the the 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. Right? The first one is the data. Obviously, we 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.
And 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, right, because this is the system of record. This is what we're going to do. Our existing system will get retired.
You know, 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. So they don't have an option of not accepting the system, but, you know, obviously there is that risk always there to say, you're going to hear, you know, hey, this doesn't work as we want it to work, you know, just that field view of things. Change is always not well received. So, you know, it's that transition time that is a secondary risk as well.
I guess just following up on that, so there's training or something to sort of mitigate any sort of disruption that they're required to be part of? Thank
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 are building a very robust training system for them through webinars, through e learning tools, and then we've got additional eight to twelve, I think it's about twelve weeks of time that our clinic staff can go through and run through the training.
And we want to make sure we are going to use it. We're also working with our field staff, like, you know, our RDs and our FCCs that George mentioned about, to make sure that word is getting through to all the franchisees so they are able to register and enroll in all the training classes.
And 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, you know, a lot of the marketing that happens is very manual. Right? We you know, marketing team comes to us and says, can you provide us this type of data? And when we give them this data, then they take an action to be able to build, you know, 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, and I'm, you know, I'm going to speak and I'm going to make sure Jason validates that because he is the marketing subject matter expert. You know, it's simple things like, you know, I want to market to all the college going teams. Right?
Maybe I'm opening up a new clinic where there is a whole slew of universities that are there, and they were 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. You know, 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
So many so many campaigns. Certainly, when we I discussed during my presentation our summer sale, and that is a very manual campaign. We have to we go to IT. We pull they pull the query. We load it into our system, and it runs.
But 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.
But 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. You know, those are just two examples off the top of my head, but there are dozens more.
And a and a futuristic, that's this is not you know, again, we're just scratching the surface with our initial release. But from a futuristic perspective, have, you know, if compliance and, you know, medical compliance allows for us to do, being able to send them videos related their pain issues, right, 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. Again, 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 burning the cost of access?
There is some of it that, the franchisees are helping from the perspective from a it's basically they have a subscription based technology fee that we charge them, so that's how we are helping. It is going up by $149 each month for the franchisees just because of all the capital costs, etcetera, that we are putting in to make sure that the technology is up and snuff.
After access 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, right? We we our target is to be, you know, nine five nines is is where we wanna be, 99.999. You know? And and right now, we're we're hovering about 99.998 roughly. It's not it's not a significant difference, but, you know, there is a lot of the slowness, etcetera, that we work through, you know, being able to capture some of the pieces.
The other metrics that we would look at being able to capture revenue numbers better, right? We do a very good job right now, but more automated fashion as we link it to our financial systems, etcetera. So those are the other key metrics we're looking at as well. Obviously, uptime support, you know, number of support cases we get. You know, we we wanna we expect to see an increase immediately after the rollout.
But as we achieve steady state, we want to see a decrease at least by 10 to 20% of the of the tickets. So that that's one of the key pieces we're looking at as well.
Just a follow-up on the the pricing question maybe for Peter. But are you getting any pushback from franchisees on on the price increase,
or are they pretty okay with it?
It all depends on who you talk to. That generally, I would say in the general overview of our company is that we have announced that we're raising everybody who's already paid. Their friends in agreement, they are required to pay a tech fee. And that tech fee has changed over time. So some of the earlier contracts, it says it's $2.75.
Others say 400. If you're if you're gonna sign an agreement today, it's $5.99. And that we've gone to the entire network and said, we're raising everybody's tech fee to 149 a month. So everybody will be at a different rate still, but the maximum will still be that $5.99. I would say the majority of the franchisees, specifically the earlier that the newer franchisees, they're asking me to invest more in technology.
They get it. There are some franchisees who are in that older contract that are questioning the right of the company to change to charge the fee. So 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.
Jake, if you wanna join me, we're just gonna open up for a couple of minutes. Any questions? Because You didn't get the time, the opportunity to talk to Jake and I about questions. And so if you I know you've kind of 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. But just one minute here if you have any specific question for Jake and I. Or you're just absolutely stunned by the information that's been shared with you today.
I just wanted to circle back on one thing. You were talking about the the DCs, and and maybe you can just touch on or remind us what the the attrition rate for the DCs is, how it's changed since you guys took over. And then, just give us a sense of when a DC leaves, why why do they leave?
Well, the in in as we've been following our DCs, first of all, we don't have a lot of information from the We haven't been collecting that. We talked about the survey that we've just done for all of our DCs. And so we've collected a lot of information about, you know, 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. And, certainly, it's the standard things you can imagine, compensation, your benefits, you know, do I get lunch?
Just, you know, what's my career path, you know, from here? So those are some of the key questions that our our DCs have been asking us. Now we have made changes in our own compensation in those corporate clinics. We have roughly about 120 DCs on staff, and we've changed we've kind of raised their compensation, given them a different bonus plan starting in 2018. And what we've seen is, let's say, 2017, our turnover with DCs in the corporate clinics was roughly around 50%.
It's 30% in 2018 and falling.
Thanks. What revenue or sorry, what multiple of revenue or EBITDA do you have you paid in the past for your RDs that you've acquired?
For the regional developers? Yep.
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 q's when we make those acquisitions. So you can see the total pricing, but we haven't disclosed valuation.
You guys really are stunned. You're just waiting to get to the bar. Right? Alright. So is Jake.
Alright. Hey, listen. I wanna just close this out and 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. You know, 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 and we believe it. We're moving towards it, and we will achieve our goals. And I thank all of you for the time you've given us. Any other questions, you can meet us at the bar.
And I truly thank you all for the time and attention. I know it's a lot for you guys to come out of your, you know, come to Scottsdale, take a day, spend it with us, and we're very grateful that you did. So thank you all very much.