JOINT (JYNT) risk factors, FY2024 10-K

RISKS RELATED TO OPERATING OUR BUSINESS

1. 01The nationwide labor shortage has negatively impacted our ability to recruit chiropractors and other qualified personnel, and the measures we have taken in response have reduced our net revenues
2. 02Inflation has led to increased labor costs and interest rates and may lead to reduced discretionary spending, all of which may negatively impact our business
3. 03New clinics, once opened, may not be profitable, and the increases in average clinic sales and comparable clinic sales that our franchisees have experienced in the past may not be indicative of future results
4. 04Our failure to manage our growth effectively could harm our business and operating results
5. 05Our expansion into new markets may be more costly and difficult than we currently anticipate, which would result in slower growth than we expect
6. 06Opening new clinics in existing markets may negatively affect revenue at existing clinics
7. 07Damage to our reputation or our brand in existing or new markets could negatively impact our business, financial condition and results of operations
8. 08Our marketing programs may not be successful
9. 09We will be subject to risks associated with leasing space subject to long-term non-cancelable leases for clinics that we intend to operate
10. 10Changes in economic conditions and adverse weather and other unforeseen conditions could materially affect our ability to maintain or increase sales at our clinics

RISKS RELATED TO USE OF THE FRANCHISE BUSINESS MODEL

1. 11Our dependence on the success of our franchisees exposes us to risks, including the loss of royalty revenue and harm to our brand
2. 12Our franchisees are independent operators over whom we have limited control
3. 13We are subject to the risk that our franchise agreements may be terminated or not renewed
4. 14Our franchisees may not meet timetables for opening their clinics, which could reduce the royalties we receive
5. 15Our regional developers are independent operators over whom we have limited control
6. 16Our level of debt could impair our financial condition and ability to operate
7. 17We previously identified material weaknesses in our internal control over financial reporting. If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results, prevent fraud, or maintain investor confidence
8. 18Our balance sheet includes intangible assets and goodwill. A decline in the estimated fair value of an intangible asset or a reporting unit could result in an impairment charge recorded in our operating results, which could be material
9. 19Our balance sheet includes a significant number of long-lived assets in our corporate clinics, including operating lease right-of-use assets and property, plant and equipment. A decline in the current and projected cash flows in our corporate clinics could result in impairment charges, which could be material
10. 20Our increased reliance on sources of revenue other than from company-owned or managed clinics exposes us to risks including the loss of revenue and reduction of working capital
11. 21We have experienced net losses and may not achieve or sustain profitability in the future
12. 22Any audit by the IRS with respect to our receipt of an employee retention credit (“ERC”) under The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) could result in additional taxes or costs to our company

RISKS RELATED TO INDUSTRY DYNAMICS AND COMPETITION

1. 23Our clinics and chiropractors compete for patients in a highly competitive environment that may make it more difficult to increase patient volumes and revenues
2. 24Our success is dependent on the chiropractors who control the PCs, or PC owners, with whom we enter into management services agreements, and we may have difficulty locating qualified chiropractors to replace PC owners

RISKS RELATED TO OTHER LEGAL AND REGULATORY MATTERS

1. 25Please see “Part I, Item 1 - Business - Regulatory Environment – Joint Employer Rules” for a detailed description of the background and current status of federal and state “joint employer” laws and regulations
2. 26An increased regulatory focus on the establishment of fair franchise practices could increase our risk of liability in disputes with franchisees and the risk of enforcement actions and penalties
3. 27We conduct business in a heavily regulated industry, and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations
4. 28Our chiropractors are subject to ethical guidelines and operating standards which, if not complied with, could adversely affect our business
5. 29We, along with our affiliated PCs and their chiropractors, are subject to malpractice and other similar claims and may be unable to obtain or maintain adequate insurance against these claims
6. 30Events or rumors relating to our brand names or our ability to defend successfully against intellectual property infringement claims by third parties could significantly impact our business

RISKS RELATED TO INFORMATION TECHNOLOGY, CYBERSECURITY AND DATA PRIVACY

1. 31Our failure to comply with applicable federal and state data privacy and security laws could result in civil or criminal sanctions or damage awards, and the proliferation of such laws increases our costs of compliance
2. 32Our business model depends on proprietary and third-party management information systems that we use to, among other things, track financial and operating performance of our clinics, and any failure to successfully design and maintain these systems or implement new systems could materially harm our operations
3. 33If we fail to properly maintain the integrity of our data or to strategically implement, upgrade or consolidate existing information systems, our reputation and business could be materially adversely affected
4. 34If our security systems are breached, we may face civil liability and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract and retain patients
5. 35We are subject to a number of risks related to credit card and debit card payments we accept
6. 36including loss of investor confidence and negative impacts on our stock price
7. 37Short-selling strategies and negative opinions posted on the internet may drive down the market price of our common stock and could result in class action lawsuits
8. 38Future sales of our common stock may depress our stock price and our share price may decline due to the large number of shares eligible for future sale or exchange
9. 39Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us