Does the Healthsource Chiropractic continuing franchise fee represent payment for the referral of customers or patients?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to pay us a continuing franchise fee ("Continuing Franchise Fee") equal to seven percent (7%) of the gross revenues (defined below) of the Franchise. The Continuing Franchise Fee will be payable monthly on the day of the month we specify based on the Franchise's gross revenues for the preceding month. The term "gross revenues" shall, for purposes of this Agreement, mean the total of all revenue and receipts derived from the operation of the Franchise, including all amounts received at or away from the site of the Franchise, or through the business the Franchise conducts (such as fees for chiropractic and/or physical therapy care, fees for the sale of any service or product, gift certificate sales, and revenue derived from products sales, whether in cash or by check, credit card, debit card, barter or exchange, or other credit transactions); and excludes only sales taxes collected from customers and paid to the appropriate taxing authority, and any customer refunds and credits the Franchise actually makes. You and we acknowledge and agree that the Continuing Franchise Fee represents compensation paid by you to us for the guidance and assistance we provide and for the use of our Marks, Confidential Information, know-how, access to proprietary so
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic Franchise Disclosure Document, the continuing franchise fee does not represent payment for customer or patient referrals. Healthsource Chiropractic explicitly states that the services they offer to franchisees do not include the referral of customers or patients. This is further reinforced in the context of optional marketing programs, where it is clarified that fees for these programs also do not represent payment for referrals.
Healthsource Chiropractic franchisees pay a continuing franchise fee equal to 7% of gross revenues, which compensates Healthsource Chiropractic for guidance, assistance, the use of their marks, confidential information, and know-how. This fee is separate from any payments for optional marketing services. The FDD also mentions an advertising fee of 2% of gross revenues, which is allocated to an advertising fund managed by Healthsource Chiropractic for the benefit of the franchise system.
This distinction is important for prospective franchisees as it clarifies the value proposition of the franchise. Franchisees are paying for the brand's system, support, and resources, not for a direct stream of referred patients. This arrangement is typical in many franchise systems, where brand recognition and operational support are key components of the franchise agreement. Franchisees should focus on their own marketing efforts and patient acquisition strategies to grow their business, while leveraging the Healthsource Chiropractic brand and system to enhance their practice.
Healthsource Chiropractic franchisees should be aware that the franchisor may offer optional marketing programs for an additional fee. However, participation in these programs is not required, and the fees associated with them do not cover patient referrals. Franchisees should carefully evaluate the potential benefits of these programs before deciding to participate.