From the Phoenix Business
by Angela Gonzales, Senior Reporter - Phoenix Business Journal
After John Leonesio grew Massage Envy to 300 franchises in 49 states and sold it in 2008, he was approached about a year later by a venture capital group to do the same thing with chiropractic care.
Texas-based Business Venture Capital Group had purchased a chiropractic business in an all-cash deal and asked Leonesio if he would help build a franchise model for chiropractic services around the enterprise. At the time, the group had about a dozen locations.
"We took about a year to rework the model and see if the membership model would work as well as we hoped it would," Leonesio said.
The Joint Corp. started selling franchises at the beginning of 2010 and now has 100 franchises in 15 states, with 26 locations already open. Twenty-five franchises have been sold in Arizona and six of those locations are open in the Valley with more coming soon. It is branded as The Joint ... the chiropractic place.
Another 74 locations are expected to open by the middle of next year.
"Every day we're adding more and more," Leonesio said.
Within 10 years he expects to sell 1,000 franchises and serve 500,000 members. Frachise startup fees cost $29,000.
"They are expanding like crazy and growing," said Dr. Judson Lee, a chiropractor at Health Coach in Phoenix. "The idea is to make adjustments more affordable because, with the insurance crisis in the country, it's becoming more and more of a problem for people to get the care they need."
Scottsdale-based The Joint uses the same membership model that Leonesio created for Massage Envy. That $300 million company had more than 800 franchisees and 300 locations when he sold it in 2008. It continues to operate under different owners.
Leonesio's goal is to make chiropractic care more accessible to everyone. Members pay a $49 monthly fee that covers up to four treatments per month. They can visit any The Joint...the chiropractic place in the country to receive care, but visits are not covered by insurance. The Joint primarily will provide adjustments to clients. The facilities will not provide massage or physical therapy services.
Leonesio sold many of the franchises to existing and former Massage Envy franchise owners.
"They understand the model," Leonesio said. "We're not doing anything that much different than we did before."
Business Venture Capital invested $500,000 to get the business started and the rest of the financing is coming from franchise sales, Leonesio said.
"The company is already profitable and cash flowing," he said. "We really didn't need any capital."
Annual revenue for the Joint Corp. in 2011 is about $2.8 million and is expected to reach $7.4 million next year. This includes franchise sales fees, royalties, software and other fees.
Leonesio declined to disclose the sale price of Massage Envy.
Dan Olsen, president of Mesa-based Franchise Growth Systems, Inc., who helped Leonesio expand the Massage Envy franchise, said he expects to see the same success with The Joint.
"John has a really good mind for business," Olsen said. "Plus, he's very good with the people he brings on board. He builds a support system around these people so they're successful."
Olsen said Leonesio hasn't needed his help this time around.
"He already has contracts and knows how it works," he said. "I think he has a really good handle on the next thing with The Joint."