100 Chiropractic
Healthcare
Founded 20186 locationsThe company sells franchises that operate "100% Chiropractic" locations. Depending on state law, franchisees either operate a clinic providing chiropractic services through licensed professionals or manage a professional corporation offering such services. Franchisees are responsible for securing and developing their location, meeting the franchisor's standards, and completing training programs. They offer services and products designated by the franchisor and must comply with all applicable laws and regulations. The franchisor provides assistance with opening, operational efficiency, staff training, and marketing. There are two franchise models: one where the franchisee directly hires and manages licensed chiropractors, and another where the franchisee enters into a management agreement with a professional corporation (P.C.) that employs the licensed personnel.
Company Profile
Website:100percentfranchise.com/
Year Founded:2018
100 Chiropractic Franchise Cost
| Franchise Fee: | $300,000Key Metric |
| Total Investment: | $339,742 - $782,080Key Metric |
| Liquid Capital: | $92,500 |
| Royalty Fee: | 7% of gross sales |
| Marketing Fee: | Not specified |
Quick ROI Calculator
Based on 100 Chiropractic's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:6
Scale relative to 1,000 locations
Franchised Units:111
Corporate Units:6
Additional Information
Processing Franchise Details
Our AI is extracting detailed information from franchise documents.
Company history, executive team profiles, and legal disclosures will appear here once document processing is complete.
Search Interests & Trends
Search Volume Data and Trend Analysis
Search Interest & Trends
No Trends Data Available
Trend analysis data for 100 Chiropractic is being collected. Check back soon for insights.
AI-Powered Due Diligence Analysis
Our advanced AI analyzes Franchise Disclosure Documents (FDDs) to identify potential risks and opportunities across 10 critical categories.
17
High Risk
Critical items
45% of total
17
Medium Risk
Monitor closely
45% of total
4
Low Risk
Manageable items
11% of total
38
Total Items
Factors analyzed
10 categories
6.71
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
6 risks identified
2
3
1
Limited Operating History and Brand Recognition
High
Explanation:
- 100 Chiropractic was founded in 2018, giving it a relatively short operating history in the competitive healthcare market. This limited track record increases the risk of unforeseen challenges and potential instability.
- The brand is relatively new, meaning limited brand recognition and a smaller established customer base compared to more established competitors. This could make attracting patients and building a successful practice more challenging.
- The FDD mentions the system "may continue to develop and modify," indicating potential ongoing changes to the business model, which could disrupt operations and require additional investment from franchisees.
Potential Mitigations:
- Thoroughly research the franchisor's management team, their experience in the healthcare industry, and their plans for future development. Look for evidence of a well-defined and sustainable business model.
- Carefully analyze the provided financial performance representations (Item 19) and understand the assumptions behind them. Consider consulting with a financial advisor to assess the feasibility of the business model.
- Evaluate the franchisor's marketing and advertising support (Item 11) to understand how they plan to build brand awareness and attract patients to your clinic.
FDD Citations:
- Item 1: Mentions the company's founding and the ongoing development of the system.
- Item 20: Provides information on the number of outlets, which can help assess the system's growth and stability.
- Introduction: Confirms the company's focus on a specific chiropractic care method and the use of the 100% Chiropractic brand.
Dependence on Franchisor's Management and Support
High
Explanation:
- As a relatively new franchise system, franchisees are heavily reliant on the franchisor for training, support, and ongoing guidance. If the franchisor experiences financial difficulties or management changes, this support could be jeopardized.
- The FDD mentions training programs (Items 4 and 5), but the quality and effectiveness of these programs are unknown given the franchisor's limited history. Inadequate training could hinder franchisee success.
- The franchisor controls the marketing and advertising (Item 11), which limits the franchisee's ability to independently promote their business and adapt to local market conditions.
Potential Mitigations:
- Carefully review the franchisor's training program and speak with existing franchisees to assess its effectiveness. Seek clarification on the level of ongoing support provided.
- Evaluate the franchisor's financial statements (Item 21) to assess their financial stability and ability to provide ongoing support. Consider seeking legal and financial advice to understand the risks.
- Review the franchise agreement (Exhibit B) for details on the franchisor's obligations regarding training, support, and marketing. Negotiate for greater flexibility and control where possible.
FDD Citations:
- Item 1: Describes the franchise system and the franchisor's role.
- Item 4: Outlines the initial training program.
- Item 5: Discusses the online training platform.
- Item 11: Details the advertising and marketing programs.
Rapid Growth or Expansion Challenges
Medium
Explanation:
- While Item 20 provides data on outlets, the FDD doesn't explicitly address the franchisor's growth strategy. Rapid expansion can strain resources and negatively impact support provided to existing franchisees.
- Rapid growth can also lead to inconsistencies in quality and service across the franchise system, potentially damaging the brand's reputation.
Potential Mitigations:
- Inquire about the franchisor's expansion plans and their strategy for managing growth. Seek assurances that support and resources will not be diluted.
- Review the FDD for details on quality control measures and how the franchisor plans to maintain consistency across the system.
FDD Citations:
- Item 20: Provides information on the number of outlets over time, which can indicate the pace of growth.
Heavy Regulation in the Chiropractic Industry
Medium
Explanation:
- The FDD acknowledges that the chiropractic industry is heavily regulated. Changes in regulations or increased scrutiny could impact the business model and require costly adjustments.
- Franchisees are responsible for complying with all applicable laws and regulations, which can be complex and vary by jurisdiction. Failure to comply could result in penalties and legal issues.
Potential Mitigations:
- Research the regulatory landscape in your target market and consult with legal counsel specializing in healthcare regulations to ensure compliance.
- Inquire about the franchisor's resources and support for navigating regulatory requirements. Seek clarification on their process for updating franchisees on changes in regulations.
FDD Citations:
- Item 1: Acknowledges the heavily regulated nature of the chiropractic industry.
Reliance on Principal Owners
Medium
Explanation:
- The FDD highlights the importance of Principal Owners and their business skills, financial ability, and personal character. The success of the franchise may be heavily dependent on these individuals. If they leave or experience personal or financial difficulties, it could negatively impact the franchisor's stability.
Potential Mitigations:
- Research the background and experience of the Principal Owners. Assess their track record and commitment to the franchise system.
- Inquire about the franchisor's succession plan and how they would manage the departure of key personnel.
FDD Citations:
- Item 1: References the importance of Principal Owners.
Lack of Information on Litigation or Past Regulatory Issues
Low
Explanation:
- Item 3 states that the franchisor and related parties are not currently subject to any injunctive or restrictive orders. However, it doesn't provide information on past litigation or regulatory issues that may have been resolved. The absence of this information makes it difficult to fully assess the franchisor's history and potential risks.
Potential Mitigations:
- Conduct independent research on the franchisor and related parties to identify any past legal or regulatory issues. Consider consulting with an attorney specializing in franchise law.
FDD Citations:
- Item 3: Provides information on current litigation and regulatory actions.
Disclosure & Representation Risks
3 risks identified
2
1
Perpetual Non-Compete Obligation
High
Explanation:
- Item 6 states that the non-compete and confidentiality restrictions survive the agreement "in perpetuity." This is highly unusual and restrictive, potentially preventing franchisees from ever working in a similar business, even after the franchise relationship ends, regardless of the reason for termination.
- This could severely limit future career options and earning potential, especially if the franchise relationship ends prematurely or on unfavorable terms.
Potential Mitigations:
- Negotiate with the franchisor to limit the duration of the non-compete to a reasonable timeframe after termination, such as the two years mentioned in Item 5 for competitive businesses.
- Seek legal counsel to review the non-compete clause and assess its enforceability in your jurisdiction. Some states have laws limiting the scope and duration of non-compete agreements.
- Fully understand the implications of this clause before signing the agreement. Consider the potential impact on your future career plans.
FDD Citations:
- Item 6: "The restrictions and obligations of this Agreement shall survive any expiration, termination or cancellation of this Agreement and shall continue to bind Covenantor, his heirs, successors and assigns in perpetuity."
Broad Non-Compete Scope
High
Explanation:
- The non-compete clause in Item 5 is very broad, prohibiting franchisees and their immediate family from having any interest in "any business that offers products or services the same as or similar to those offered or sold at 100% franchises." This vague language could be interpreted to encompass a wide range of businesses, even those not directly competing with 100 Chiropractic.
- This restriction could limit opportunities for diversification or involvement in other healthcare-related ventures.
Potential Mitigations:
- Negotiate with the franchisor to narrow the definition of "competitive businesses" to specifically identify the types of businesses that are truly competitive. Request clear examples of prohibited businesses.
- Seek legal counsel to review the non-compete clause and assess its reasonableness and enforceability in your jurisdiction.
FDD Citations:
- Item 5: "...nor any member of your immediate family...shall perform services for, or have any direct or indirect interest...in, any business that offers products or services the same as or similar to those offered or sold at 100% franchises."
Limited Dissemination of Confidential Information Enforcement
Medium
Explanation:
- Item 4(c) outlines the franchisor's intention to limit the dissemination of confidential information. However, the practical enforcement of this limitation within the franchisee's business could be challenging.
- There's a risk of unintentional or unauthorized disclosure by employees who may not fully understand the restrictions or the importance of confidentiality.
Potential Mitigations:
- Implement robust internal controls and training programs for all employees regarding the handling of confidential information.
- Establish clear procedures for accessing and storing confidential information, including secure systems and password protection.
- Regularly audit compliance with confidentiality policies.
FDD Citations:
- Item 4(c): "To limit dissemination of Confidential Information to only those of the Company Franchise’s officers, directors and employees who have a need to know..."
Financial & Fee Risks
3 risks identified
3
Post-Termination Royalty Payments
High
Explanation:
- The franchise agreement stipulates continued royalty payments even after termination if the franchisee continues using the franchisor's trademarks or systems. This creates a significant financial burden post-termination, potentially hindering the franchisee's ability to start a new business or transition smoothly.
Potential Mitigations:
- Carefully review the definition of "trademarks and systems" in the franchise agreement to understand the scope of this clause.
- Negotiate with the franchisor to limit the duration or amount of post-termination royalty payments or to clearly define permissible activities after termination.
- Consult with a franchise attorney to fully understand the implications of this clause and explore options for minimizing potential financial impact.
FDD Citations:
- Item 5, Note 1: "If your Franchise Agreement is terminated, you may be required to continue royalty payments for so long as you or our assignee or successor continues to use our trademarks or systems in any way."
Unilateral Indemnification Obligation
High
Explanation:
- The franchisee is required to indemnify and hold the franchisor harmless against any claims or losses arising from the franchisee's operations, while each party bears its own legal expenses. This exposes the franchisee to potentially significant financial risk, even if the claim is frivolous or the franchisor contributes to the loss.
Potential Mitigations:
- Negotiate with the franchisor to limit the scope of the indemnification clause to claims arising solely from the franchisee's negligence or intentional misconduct.
- Ensure adequate insurance coverage to protect against potential claims and losses.
- Consult with a franchise attorney to review the indemnification clause and understand its potential implications.
FDD Citations:
- Item 6, Note 4: "You must protect, indemnify, and hold us harmless against any claims or losses arising out of your operation of the franchise business. Each party will bear its own expenses of any litigation to enforce the agreement."
Mandatory and Uncapped Computer System Costs
High
Explanation:
- The franchisor mandates specific computer systems, software, and updates, with no limitations on the frequency or cost of changes. This exposes franchisees to unpredictable and potentially substantial expenses, impacting profitability.
- The franchisor has no obligation to reimburse for these costs, placing the entire financial burden on the franchisee.
Potential Mitigations:
- Request a detailed breakdown of projected computer system costs over the franchise term, including potential upgrades and updates.
- Negotiate a cap on the annual increase in technology fees or request a longer timeframe for implementing mandatory upgrades.
- Explore alternative vendors for required software or hardware if permitted by the franchise agreement.
FDD Citations:
- Item 7: "The Franchise Agreement does not limit the frequency or cost of these changes. We have no responsibility to reimburse you for any of these costs."
- Item 7: "You must obtain the components of the Computer System that we designate and ensure that your Computer System, as modified, is functioning properly within 60 days’ notice from us."
Legal & Contract Risks
3 risks identified
2
1
Washington State Franchise Investment Protection Act Superseding Franchise Agreement
High
Explanation:
- The Washington Franchise Investment Protection Act (FIPA) may supersede the franchise agreement in areas like termination and renewal, potentially giving the franchisee more rights than outlined in the agreement.
- Court decisions in Washington could also supersede the franchise agreement, creating uncertainty about the enforceability of certain provisions.
Potential Mitigations:
- Carefully review the Washington FIPA and relevant case law to understand potential discrepancies with the franchise agreement.
- Consult with a franchise attorney specializing in Washington law to assess the impact of FIPA on the franchise relationship.
- Negotiate with the franchisor to address any concerns arising from the potential conflict between the agreement and Washington law.
FDD Citations:
- Item 17.h, Washington Addendum: "RCW 19.100.180 may supersede the franchise agreement...including the areas of termination and renewal...There may also be court decisions which may supersede the franchise agreement..."
Washington State Restrictions on Non-Compete and Employee Solicitation
High
Explanation:
- Washington law severely restricts the enforceability of non-compete agreements against employees and independent contractors, based on earnings thresholds.
- Washington law also prohibits franchisors from restricting franchisees from soliciting or hiring employees of the franchisor or other franchisees.
- These restrictions could limit the franchisor's ability to protect its business interests and the franchisee's ability to retain employees.
Potential Mitigations:
- Consult with a Washington State attorney to understand the implications of these restrictions and ensure compliance.
- Consider alternative strategies for protecting confidential information and trade secrets, such as robust confidentiality agreements.
- Develop strong employee retention programs to mitigate the risk of employee poaching.
FDD Citations:
- Item 17.h, Washington Addendum: "Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable..."
- Item 17.h, Washington Addendum: "RCW 49.62.060 prohibits a franchisor from restricting...soliciting or hiring any employee..."
Washington State Required Financial Assurance and Deferred Payments
Medium
Explanation:
- The Washington Securities Division has required a financial assurance from the franchisor, indicating potential concerns about the franchisor's financial stability.
- As a result, initial fees and payments are deferred until the franchisor fulfills its pre-opening obligations, which could impact the franchisee's initial cash flow.
Potential Mitigations:
- Carefully review the franchisor's financial statements (Item 21) and discuss the financial assurance requirement with a financial advisor.
- Inquire about the nature of the financial assurance and its implications for the franchisee.
- Develop a detailed financial plan that accounts for the deferred payment schedule.
FDD Citations:
- Item 17.h, Washington Addendum: "Based upon the franchisor's financial condition, the Washington Securities Division has required a financial assurance..."
Territory & Competition Risks
3 risks identified
2
1
No Exclusive Territory
High
Explanation:
- The FDD explicitly states that franchisees will not receive an exclusive territory. This means you could face direct competition from other 100 Chiropractic franchisees, corporate-owned locations, or other brands owned by the franchisor.
- This significantly increases the risk of market saturation and cannibalization, potentially impacting revenue and profitability.
Potential Mitigations:
- Carefully evaluate the existing and planned locations of other franchisees and corporate-owned stores in your target market.
- Negotiate with the franchisor for a protected radius or other territorial considerations, although the FDD suggests this is unlikely.
- Focus on building a strong local brand presence and customer loyalty to differentiate yourself from competitors.
FDD Citations:
- Item 12: "You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control."
- Item 12 (Area Development): "As to the Area Development Agreement, you will not receive an exclusive territory."
Franchisor Competition
High
Explanation:
- The franchisor reserves the right to establish competing businesses, including those offering similar services under different brands, and alternative distribution channels like internet-based facilities, even within your territory.
- This direct competition from the franchisor could significantly impact your customer base and revenue.
Potential Mitigations:
- Thoroughly review the "Reserved Rights" section in Item 12 to understand the full extent of the franchisor's competitive activities.
- Seek clarification from the franchisor on their current and future plans for competing businesses and distribution channels in your target market.
- Develop a strong competitive strategy focused on local marketing, customer service, and building a loyal client base.
FDD Citations:
- Item 12, Reserved Rights (i)-(v): Details the franchisor's rights to establish competing businesses and distribution channels.
- Item 12: "We reserve the right to use alternative means of distribution, including the Internet, within your territory… we are not required to pay you any compensation."
Site Approval and Development Timeline
Medium
Explanation:
- The franchisor has absolute control over site selection and approval, based on various factors including demographics, competition, and projected growth. Failure to secure an approved site within 180 days of signing the Franchise Agreement can lead to termination.
- This tight timeframe and stringent criteria could create challenges in finding a suitable location and delay business launch.
Potential Mitigations:
- Begin site selection research immediately after signing the Franchise Agreement.
- Engage a real estate broker experienced in commercial properties suitable for chiropractic practices.
- Communicate proactively with the franchisor throughout the site selection process to ensure alignment and expedite approvals.
FDD Citations:
- Item 12: "You must lease or purchase a site… that we have approved in writing within 180 days… If you do not secure an approved location within the 180-day period… we have the right to terminate the Franchise Agreement."
Regulatory & Compliance Risks
3 risks identified
2
1
Compliance with Healthcare Regulations
High
Explanation:
- The FDD mentions the chiropractic industry is "heavily regulated." This implies significant risks related to licensing, patient privacy (HIPAA), record-keeping, billing practices, advertising restrictions, and other healthcare-specific regulations.
- Changes in regulations or failure to comply could lead to penalties, legal action, and reputational damage, impacting franchise success.
- The FDD puts the onus of compliance on the franchisee, stating it's their "responsibility and obligation" to ensure adherence to all applicable laws.
Potential Mitigations:
- Thoroughly research federal and state regulations related to chiropractic practice in your target market.
- Consult with legal counsel specializing in healthcare compliance to ensure all operations meet requirements.
- Implement robust compliance programs, including training for staff, regular audits, and updated policies and procedures.
- Secure appropriate insurance coverage to mitigate potential financial risks associated with regulatory violations.
FDD Citations:
- Item 1, 1.4: "You acknowledge that the chiropractic services industry is heavily regulated and that it is your responsibility and obligation under this Agreement to ensure that your development, opening and operation of the Franchised Business is in accordance with all applicable laws, rules and regulations…"
- Throughout the FDD: References to "Clinic Services" and the nature of the business imply ongoing compliance requirements.
Management Agreement Compliance for Non-Chiropractor Franchisees
High
Explanation:
- The FDD outlines two franchise models: providing chiropractic services and providing management services to a Professional Corporation (P.C.).
- For non-chiropractor franchisees, the management agreement with the P.C. is crucial. Non-compliance with state-specific regulations governing such agreements could lead to legal issues and invalidate the business structure.
Potential Mitigations:
- If pursuing the management services model, engage legal counsel specializing in healthcare and corporate law to review and ensure the management agreement complies with all applicable state regulations.
- Ensure the P.C. is properly formed and licensed, and that the management agreement clearly delineates responsibilities and adheres to legal requirements for ownership and control.
FDD Citations:
- Item 1.1: Describes the two franchise models (Clinic Services and Management Services).
- Item 1.3: References the management agreement and its importance for non-chiropractor franchisees.
Confidentiality and Non-Compete Restrictions
Medium
Explanation:
- The FDD includes provisions related to confidential information and non-competition. These clauses can be complex and may restrict post-franchise activities.
- Understanding the scope and duration of these restrictions is crucial, as violations can lead to legal disputes.
Potential Mitigations:
- Carefully review the confidential information and non-compete clauses with legal counsel.
- Ensure clear understanding of the restrictions on using proprietary information and engaging in competing businesses after the franchise agreement ends.
- Negotiate reasonable terms if the restrictions seem overly broad or burdensome.
FDD Citations:
- Item 5: Discusses non-competition and the protection of confidential information.
Franchisor Support Risks
5 risks identified
1
3
1
Site Selection and Approval Delays
High
Explanation:
- The FDD outlines a strict timeline for site selection and approval (6 months total, with 150 days for initial selection and 30 days for lease/purchase after approval). Delays in any of these stages can significantly impact the launch timeline and incur unexpected holding costs.
- The franchisor's subjective site approval criteria ("demographics; traffic count; parking; ingress and egress; neighborhood; competition…; size; appearance; and other physical and commercial characteristics") create a risk of disagreement and potential rejection, further delaying the process.
- While the franchisor states they "will not unreasonably withhold approval," the lack of objective criteria leaves room for interpretation and potential disputes.
Potential Mitigations:
- Proactively identify multiple potential sites that meet the franchisor's general criteria before signing the Franchise Agreement.
- Engage a real estate broker experienced in the target market and familiar with the franchisor's requirements.
- Clearly understand the approval process and criteria. Request written clarification on any ambiguous points.
- Negotiate a reasonable extension clause in the Franchise Agreement to address potential delays.
FDD Citations:
- Item 11: "Together we will mutually agree on your proposed Franchised Business site within 6 months… You must use your best efforts to seek and select a mutually agreeable site within 150 days… You must then obtain lawful possession of the Premises… within 30 days of our approval."
- Item 11: "The site must meet our criteria for demographics; traffic count; parking; ingress and egress; neighborhood; competition…; size; appearance; and other physical and commercial characteristics."
Limited Franchisor Support in Site Acquisition
Medium
Explanation:
- The FDD states, "Franchisor does not typically purchase or own the premises that you will lease." This places the entire burden of site acquisition (identification, negotiation, and lease/purchase) on the franchisee.
- Lack of franchisor involvement in lease negotiations can put the franchisee at a disadvantage, especially if they lack experience in commercial real estate.
Potential Mitigations:
- Consult with an experienced real estate attorney to review lease terms and negotiate favorable conditions.
- Seek guidance from other franchisees in the system regarding their site acquisition experiences.
- Develop strong negotiation skills or hire a professional negotiator.
FDD Citations:
- Item 11: "Franchisor does not typically purchase or own the premises that you will lease."
Dependence on Approved Suppliers
Medium
Explanation:
- The franchisor mandates the use of "designated and approved suppliers" for equipment, signs, fixtures, and other items. This limits the franchisee's flexibility in sourcing potentially more cost-effective options.
- Dependence on approved suppliers can create a risk of supply chain disruptions or price increases imposed by the franchisor or its affiliates.
Potential Mitigations:
- Carefully review the list of approved suppliers and their pricing. Compare with market rates to assess competitiveness.
- Inquire about the franchisor's process for approving new suppliers if needed.
- Negotiate favorable terms with approved suppliers, leveraging the collective bargaining power of the franchise network.
FDD Citations:
- Item 11: "Identify the equipment… and the designated and approved suppliers from whom you must or may buy or lease these items (which might be limited to or include us and/or our affiliates)."
Lack of Delivery and Installation Support
Medium
Explanation:
- The FDD explicitly states, "We do not deliver or install these items." This leaves the franchisee responsible for coordinating and managing the logistics of delivery, installation, and setup of equipment and fixtures, adding complexity and potential delays to the pre-opening phase.
Potential Mitigations:
- Research and secure reliable local contractors for delivery and installation services.
- Factor in delivery and installation lead times into the project timeline.
- Obtain detailed installation instructions and support documentation from the approved suppliers.
FDD Citations:
- Item 11: "We do not deliver or install these items."
Limited Pre-Opening Assistance Beyond Specified Items
Low
Explanation:
- The FDD begins by stating, "Except as listed below, we are not required to provide you with any assistance." This suggests limited support beyond the specific pre-opening obligations outlined in Item 11.
- While the listed obligations are important, other aspects of pre-opening preparation (e.g., local marketing, staff recruitment, and operational setup) may require additional support not explicitly provided by the franchisor.
Potential Mitigations:
- Clarify with the franchisor the extent of support available beyond the listed items in Item 11.
- Network with existing franchisees to understand the level of support they received during pre-opening.
- Develop a comprehensive pre-opening checklist that includes all necessary tasks and resources, accounting for the limited franchisor assistance.
FDD Citations:
- Item 11: "Except as listed below, we are not required to provide you with any assistance."
Exit & Transfer Risks
5 risks identified
1
3
1
Restrictive Transfer Provisions Superseded by Washington State Law
Medium
Explanation:
- While the FDD mentions transfer fees and processes, the Washington addendum states that RCW 19.100.180 may supersede the franchise agreement regarding termination and renewal, potentially impacting transfer restrictions as well. This creates uncertainty about the actual enforceability of the franchisor's standard transfer provisions in Washington.
Potential Mitigations:
- Consult with a Washington-licensed franchise attorney to understand the interplay between the Franchise Agreement, FDD, and RCW 19.100.180 concerning transfer restrictions. Clarify permissible restrictions and any limitations imposed by state law.
- Negotiate clear and compliant transfer provisions within the Franchise Agreement that align with Washington state law to avoid future disputes.
FDD Citations:
- Item 17.h, Washington Addendum: "RCW 19.100.180 may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise."
Limited Transfer Fee Justification
Low
Explanation:
- The FDD only states that transfer fees are collectible to the extent they reflect "reasonable estimated or actual costs." This lacks specificity and could lead to disputes over what constitutes "reasonable" costs.
Potential Mitigations:
- Request a detailed breakdown of the franchisor's typical transfer costs. Negotiate a cap on transfer fees or a clear process for determining these fees based on actual expenses incurred by the franchisor.
FDD Citations:
- Item 17.h, Washington Addendum: "Transfer fees are collectable to the extent that they reflect the franchisor’s reasonable estimated or actual costs in effecting a transfer."
Non-Compete Restrictions Limited by Washington Law
Medium
Explanation:
- Washington law significantly restricts the enforceability of non-compete agreements for employees and independent contractors based on earnings thresholds. This could limit the franchisor's ability to protect its brand and confidential information after a franchisee exits.
Potential Mitigations:
- Carefully review the non-compete provisions in the Franchise Agreement with legal counsel to ensure compliance with RCW 49.62.020 and RCW 49.62.030.
- Consider alternative protective measures, such as strong confidentiality agreements and robust trade secret protection strategies.
FDD Citations:
- Item 17.h, Washington Addendum: Discussion of RCW 49.62.020 and RCW 49.62.030 regarding non-compete limitations.
Restrictions on Employee Solicitation Voided in Washington
High
Explanation:
- Washington law prohibits franchisors from restricting franchisees from soliciting or hiring employees of the franchisor or other franchisees. This could create challenges in maintaining staff and protecting the franchise system's stability during and after transfers.
Potential Mitigations:
- Understand the implications of RCW 49.62.060 and how it impacts workforce management within the franchise system.
- Focus on creating a positive work environment and offering competitive compensation and benefits to retain employees.
FDD Citations:
- Item 17.h, Washington Addendum: "RCW 49.62.060 prohibits a franchisor from restricting… a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor."
Waiver of Rights Limitations in Washington
Medium
Explanation:
- The FDD notes that waivers of rights under the Washington Franchise Investment Protection Act are generally unenforceable except in specific, negotiated settlements. This limits the franchisor's ability to protect itself from certain claims, even during a transfer.
Potential Mitigations:
- Ensure all agreements are carefully drafted and reviewed by legal counsel to comply with Washington law regarding waivers and releases.
- Focus on transparent and fair dealings with franchisees to minimize potential disputes and legal challenges.
FDD Citations:
- Item 17.h, Washington Addendum: "A release or waiver of rights executed by a franchisee may not include rights under the Washington Franchise Investment Protection Act… except when executed pursuant to a negotiated settlement…"
Operational & Brand Risks
4 risks identified
1
2
1
Site Approval and Lease Acquisition Risk
High
Explanation:
- The franchisor's site approval process and the requirement to secure a lease within 30 days of approval creates a tight timeframe, potentially leading to rushed decisions and unfavorable lease terms.
- Failure to secure a suitable site within 6 months can lead to termination of the franchise agreement, representing a significant financial and time investment loss.
- The franchisor's subjective site selection criteria, while aiming to ensure brand consistency, can limit franchisee flexibility and potentially lead to disputes.
- The FDD doesn't specify who is responsible for lease negotiation support, potentially leaving the franchisee to navigate complex legal and commercial terms without adequate experience.
- Item 2 mentions equipment and setup responsibilities but doesn't clarify delivery and installation, potentially causing delays and unexpected costs.
Potential Mitigations:
- Begin site selection immediately upon signing the Franchise Agreement and engage a real estate broker specializing in commercial properties.
- Negotiate lease terms concurrently with the site approval process to expedite the 30-day timeframe. Include contingencies related to franchisor approval.
- Thoroughly review the franchisor's site selection criteria and engage in open communication to understand their expectations and address potential concerns proactively.
- Seek legal counsel specializing in commercial leases to review and negotiate favorable terms and protect your interests.
- Clarify with the franchisor the process for equipment delivery and installation, including associated costs and timelines, and secure quotes from third-party vendors if necessary.
FDD Citations:
- Item 2: "We do not deliver or install these items."
- Item 11: "Together we will mutually agree on your proposed Franchised Business site within 6 months...You must then obtain lawful possession of the Premises through lease or purchase within 30 days of our approval..."
Limited Franchisor Assistance
Medium
Explanation:
- The FDD states that the franchisor is not required to provide assistance beyond the specified pre-opening obligations, potentially leaving franchisees with limited support in critical areas like ongoing operations, marketing, and business development.
- This lack of ongoing support can increase the burden on franchisees, particularly those new to business ownership or the chiropractic industry, and impact their ability to succeed.
Potential Mitigations:
- Carefully evaluate the level of support offered by the franchisor and assess your own needs and capabilities. Consider seeking external mentorship or business coaching.
- Network with existing franchisees to understand the practical level of support provided and identify potential challenges.
- Negotiate additional support services into the Franchise Agreement, if possible, or explore third-party providers for areas like marketing and business consulting.
FDD Citations:
- Item 11: "Except as listed below, we are not required to provide you with any assistance."
Dependence on Franchisor's Site Selection Criteria
Medium
Explanation:
- The franchisor's stringent site selection criteria, including demographics, traffic count, and proximity to competitors, can limit the availability of suitable locations and potentially create challenges in finding a profitable site.
- While the franchisor states they will not unreasonably withhold approval, the subjective nature of some criteria can lead to disagreements and delays.
Potential Mitigations:
- Thoroughly research the local market and identify potential sites that align with the franchisor's criteria before signing the Franchise Agreement.
- Engage in open communication with the franchisor regarding site selection and seek clarification on any ambiguous criteria.
- Consider conducting independent market research to validate the franchisor's assessment of a potential site's viability.
FDD Citations:
- Item 11: "The site must meet our criteria for demographics; traffic count; parking; ingress and egress; neighborhood; competition from, proximity to, and nature of other businesses; size; appearance; and other physical and commercial characteristics."
Lack of Franchisor Involvement in Lease Negotiation
Low
Explanation:
- The FDD doesn't explicitly state that the franchisor will assist with lease negotiations, leaving the franchisee potentially vulnerable to unfavorable lease terms and increased financial burden.
Potential Mitigations:
- Seek legal counsel specializing in commercial leases to review and negotiate lease terms.
- Request the franchisor's input on the lease terms, even if they are not directly involved in the negotiation process.
- Compare lease terms with those of other franchisees, if possible, to identify potential red flags.
FDD Citations:
- Item 11: (Implicit lack of mention of franchisor involvement in lease negotiations)
Performance & ROI Risks
3 risks identified
1
2
Limited Financial Performance Representation
High
Explanation:
- Item 19 mentions a financial performance representation but provides no details within the provided FDD excerpt. The reliance on FY 2022 data alone, without further context of market conditions or trends, makes it difficult to assess the long-term profitability potential.
- The short operational history of the franchisor (founded in 2018) combined with limited financial data raises concerns about the predictability and sustainability of franchisee profits.
- The FDD advises review with a professional, indicating potential complexity and the need for expert interpretation, which itself highlights the risk.
Potential Mitigations:
- Thoroughly analyze the full Item 19 and compare the provided data with industry benchmarks and competitor performance.
- Consult with a financial advisor and franchise attorney to evaluate the financial performance representation and understand the underlying assumptions.
- Request additional financial data from the franchisor, including information from earlier years if available, and inquire about the rationale behind using only FY 2022 data.
FDD Citations:
- Item 19: "Item 19 contains a 28-page financial performance representation based upon historical numbers from clinics in operation in FY 2022."
Rapid Growth and Potential Over-Saturation
Medium
Explanation:
- Item 20 reveals significant growth in the number of outlets (from 64 in 2021 to 94 in 2022, and projected 117 in 2023). This rapid expansion could lead to market saturation, increasing competition among franchisees and potentially impacting individual franchisee profitability.
- Table 5 projects a large number of new franchises (59 signed but not open, plus 19 projected), further emphasizing the risk of oversaturation.
Potential Mitigations:
- Carefully analyze the franchisor's market research and expansion plans, focusing on your specific territory.
- Assess the competitive landscape in your target market to understand the existing and potential future density of 100 Chiropractic clinics.
- Discuss with the franchisor their strategies for managing growth and supporting franchisees in a competitive environment.
FDD Citations:
- Item 20, Table 1: Outlet growth figures.
- Item 20, Table 5: Projected new franchise outlets.
Technology Dependence and Costs
Medium
Explanation:
- The franchisor mandates specific computer hardware and software (Computer System), with potential for frequent and costly upgrades. This creates dependence on the franchisor's technology choices and exposes franchisees to unpredictable expenses.
- The franchisor has "no responsibility to reimburse" for these costs, placing the financial burden solely on the franchisee.
- The monthly Technology Fee of $1,250, subject to increases, adds a significant recurring cost that could impact profitability.
Potential Mitigations:
- Carefully review Item 7 for full details on Computer System costs and requirements.
- Negotiate with the franchisor for clearer terms regarding technology upgrades and associated costs.
- Budget adequately for ongoing technology expenses, including potential upgrades and increases in the Technology Fee.
FDD Citations:
- Unnumbered Section after Item 20: Details about Computer System requirements and Technology Fee.
FDD Documents by Year
Download and view official Franchise Disclosure Documents
FDD Year: 2024
Uploaded: 8/5/2025
FDD Documents
Access and download Franchise Disclosure Documents by year