For Healthsource Chiropractic, what is the significance of the statement that 'Written substantiation of the data used in preparing the following financial performance representation will be made available to you upon reasonable request'?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
Written substantiation of the data used in preparing the following financial performance representation will be made available to you upon reasonable request.
This historic financial representation is divided into four main parts: (1) Gross Revenues for Qualifying Units, including a year over year comparison of 2024 vs. 2023; (2) 2024 Gross Profit (with Gross Revenues) for the Participating Franchisees; (3) 2024 Conversion Percentage and Patient Visit Average; and (4) Case Average and Average Visit Income. The references to a fiscal year mean January 1 through December 31 of the indicated calendar year.
Some Clinic franchises have earned these amounts. Your individual results may differ. There is no assurance that you will earn as much.
Source: Item 19 — (FDD pages 64–71)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, the statement regarding written substantiation is a crucial element of the financial performance representations made by the company. This statement assures prospective franchisees that Healthsource Chiropractic has documentation to support the financial figures presented in Item 19 of the FDD. This substantiation can include financial records, billing software data, and other relevant information used to calculate figures such as Gross Revenues, Gross Profit, Conversion Percentage, Patient Visit Average, Case Average, and Average Visit Income.
For a potential Healthsource Chiropractic franchisee, this means that the franchisor is willing to provide evidence backing up the financial performance data. Upon reasonable request, a franchisee can ask to review the documentation that supports the claims made in the FDD. This allows the franchisee to assess the credibility and reliability of the financial information, which is essential for making an informed investment decision. It is a standard practice in franchising to provide this type of substantiation, as it promotes transparency and helps franchisees understand the basis for the franchisor's financial representations.
However, it's important to note that the FDD also includes a disclaimer stating, "Some Clinic franchises have earned these amounts. Your individual results may differ. There is no assurance that you will earn as much." This highlights the inherent risk in any franchise investment, as past performance is not necessarily indicative of future results. While Healthsource Chiropractic provides data on various performance metrics, such as the average revenue for the 74 Participating Franchisees being $698,724 with a range from $244,788 to $1,643,703, individual outcomes can vary significantly. The FDD also specifies that 41.9% of these franchisees exceeded the average.
Therefore, a prospective franchisee should carefully review the financial performance representations, request and examine the supporting documentation, and consider the disclaimer regarding individual results. Understanding the methodology behind the financial data, such as how "Gross Revenues" are defined and gathered from the HSWorx billing software, is also crucial. By conducting thorough due diligence and seeking professional advice, potential franchisees can make a well-informed decision about investing in a Healthsource Chiropractic franchise.