Joint Corp (JYNT) Earnings Call Transcript: 2014 Q3 Results

Tony Brenner

Thank you very much.

John Richards

Thanks, Tony.

Operator

Thank you. Our next question comes from [unintelligible – 00:14:15]. Your line’s open. Please go ahead.

SECOND ANALYST

Yes. The first question is just basically how would you suggest we think about these sold but unopened franchises yet. From a timing perspective, if there’s 250 or roughly, how many per year do you think we’ll see open over the next three or four years out of that pool?

John Richards

Well, I think in general, we expect to open the franchises essentially on the pace we have up to this point. They continue to open at a fairly healthy clip in the range of about 75 per year. We expect that to continue as we in effect deplete down that pipeline that we currently have. So in round figures, I think 75 is a pretty good number for franchise openings in general as we move forward. David, do you have any stand on that?

David Orwasher

No, I think that’s about right, John. We’re going to try to keep taking that pipeline open and moving it forward. But I think those numbers are solid.

SECONDANALYST

As a quick follow on to that,is it possible that you could buy back some sold but not opened franchises? Is that part of the possible expansion strategy for corporate stores?

John Richards

Yes, it is a potential. It’s dependent on the overall portfolio mix and the players involved. But we are looking at this from an organized strategy of staged opening in remarks that we talked about earlier, in the question that we responded. And we will be consistent within that strategy to try to get those units opened in accordance with those schedules.

SECONDANALYST

And then from a simplistic perspective, if you open your first units in the first quarter and you open some more obviously second, third, throughout the year, at what point do you think you kind of get a lot more confidence on the model at a corporate level just really starting to execute? Can you tell that after a couple of quarters? Do you have to see it a year?

John Richards

I think that it takes about a year to see the unit begin to mature and to pay back its initial investment. Something in that range as we mentioned earlier in the comments and I think that our feeling based on a substantial sort of proven efforts ofour existing franchise base where we have really quite a large sort of database, if you will, of experience out there. We have a pretty good sense of what happens when units are properly located and put in the ground on the right bases. That experience has been pretty consistent. So we don’t have any reason to believe that our corporate units won’t perform at least as well if not better.