In this FDD Talk post, you’ll learn the following:

• Section I – Estimated initial investment (franchise costs) for an Ellie Mental Health franchise, based on Item 7 of the company’s 2022 FDD

• Section II – Initial franchise fee, royalty fee, and marketing fee for an Ellie Mental Health franchise, based on Items 5 and 6 of the company’s 2022 FDD

• Section III – Number of franchised and company-owned Ellie Mental Health outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

• Section IV – Background information on the Ellie Mental Health franchise opportunity, including relevant news updates

• Section V – Presentation and analysis of Ellie Mental Health’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• Section VI – Key ratios, comparables, computations, and analyses for the Ellie Mental Health franchise opportunity (exclusive content for Platinum subscribers)

• 2021 actual and average collected revenue, disclosed expenses (rent, salaries and wages, system fee, marketing fee, local marketing spend, technology fee, shared services fee), and total qualified technician months (annualized) for the 9 affiliate-owned Ellie Mental Health clinics that were open the full 12-month period ended December 31, 2021

Section I – Ellie Mental Health Franchise Costs

• Ellie Mental Health franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $60,000
• Outreach Fee:  $6,000
• Initial Supply Package:  $1,500 to $4,500
• Technology Set-Up Fee:  $500
• Lease Deposit and Payments:  $25,333 to $62,667
• Utility Deposits:  $1,000 to $2,500
• Pre-Opening Marketing:  $6,500 to $13,000
• Furniture, Fixtures, and Equipment:  $15,000 to $20,000
• Computers and Office Equipment:  $2,900 to $9,000
• Leasehold Improvements/Buildout:  $15,000 to $75,000
• Architectural and Engineering Services:  $0 to $10,000
• Project Management Services Fee:  $7,500 to $18,325
• Exterior Signage, Interior Signage, and Graphics:  $2,500 to $10,000
• Insurance:  $1,000 to $3,000
• Permits, Licenses, and Accreditation:  $1,000 to $5,000
• Insurance Contract and Credentialing:  $0 to $6,750
• Accounting and Legal Fees:  $10,000 to $20,000
• Accounting Services Vendor Review Fee:  $0 to $250
• Training Expenses:  $1,000 to $3,000
• LMS Library Fee:  $2,500
• Additional Funds for 3 Months:  $41,780 to $72,965
• Total Estimated Ellie Mental Health Franchise Costs:  $201,013 to $404,957

Section II – Ellie Mental Health’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Ellie Mental Health’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $60,000
• System Fee:  $1,000 per month per Qualified Clinician in the prior month, up to 7.5% of Collected Revenue in the prior month
• Marketing Fee:  $50 per month per Qualified Clinician in the prior month
• Local Marketing Spend:  $75 per month per Qualified Clinician in the prior month

Section III – Number of Franchised and Company-Owned Ellie Mental Health Outlets

Franchised

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2021

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Company-Owned

2019

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  4
• Net Change:  +1

2020

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  10
• Net Change:  +6

2021

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  15
• Net Change:  +5

Section IV – Background Information on the Ellie Mental Health Franchise

20 Things You Need to Know About the Ellie Mental Health Franchise

Launches National Franchising

1.  At the beginning of June 2021, Ellie Family Services announced its expansion plans nationwide via the franchise model. Ellie was founded in 2015 by two “millennial” therapists and has taken a creative approach to the delivery of mental health services. Their first location in Saint Paul started with 3 offices and has now grown to 13 locations throughout Minnesota, and is not slowing down.

2.  Co-founder Erin Pash said, “We have always wanted to share the Ellie model with others but weren’t sure how. We also believe in the power of owning something for those who feel passionate about both mental health and entrepreneurship. When looking at all the ways we could grow healthily and with our core values at the forefront, we decided that franchising was the right fit for us.”

3.  Ellie Family Services is currently working with a franchise development organization who is committed to Ellie’s cause. They want to ensure that they find other like-minded folks to join their “Ellie Fam” and bring their unique and successful model to communities who really are looking for a place to connect and belong.

4.  Ellie Family Services utilizes a unique model of care by engaging clients as partners in their services. Clinicians hold the organization’s core values of authenticity, humor, creativity, dedication, compassion, and acceptance at the forefront of the care they provide clients. This is done by constantly innovating by filling gaps in mental health treatment and engaging in creative solutions to serve communities.

5.  The organization has built a Complex Family Systems program and Law Enforcement & First Responders program to provide services to communities who typically have fewer mental health services available to them. Co-founders Erin Pash and Kyle Keller have also written books that are targeted at helping people, “Stop Freaking the %#$@ Out”. Additionally, the organization has a clothing line where 50% of proceeds are donated to non-profits working to support local communities.

6.  At the time of the announcement, Ellie had not set a definitive date for the franchise system launch, but the company has sold numerous franchises since then. Pash added, “We are excited to set the standard of care in mental health services, prioritizing customer service and employee experience, across the country.”

Sells 100 Units in 100 Days

7.  At the beginning of March 2022, Ellie Mental Health announced its plans to continue the brand’s rapid growth across the country. Since signing their first franchisee last fall, Ellie has sold an impressive 125 units, with 100 of them selling in 100 days and the brand continues to have multiple signing calls each week.

8.  The demand for mental health is at its highest right now and continues to trend upward as the stigma around it declines. People want access to mental health clinics and resources, and Ellie is addressing this by growing with franchise partners nationwide. By the end of the year, Ellie Mental Health aims to have 40 franchise locations in over 10 states open and running as well as awarding 300 additional units.

9.  At the time of the announcement, Ellie had 16 clinic locations open in the state of Minnesota. The first franchise location will open in Noblesville, Indiana this July. Shortly after, there will be locations opening in cities across America like Denver, Dallas, Chicago, Atlanta, Baltimore, and many more.

10.  Chris Pash, president and co-founder of Ellie Mental Health, said, “The amount of interest that we have seen has been something we couldn’t have predicted. Interest alone doesn’t make this thing work. The sophistication, personal story, passion and community connection that each franchisee has is what makes this so fun, and what will make this successful. When we started, 100 was an ‘if we get there’ goal. Today we are talking about being able to support 400 or more. At this pace, we will have an additional 250 licenses sold by the end of the year. It really is a humbling feeling, and we couldn’t be more honored that people want to join the Ellie Family!”

Announces Strategic Investment from Princeton Equity Group

11.  In early May 2022, Ellie Mental Health announced that it had received a strategic investment from Princeton Equity Group, a leading franchise and multi-unit private equity firm. Ellie is partnering with Princeton to continue supporting its rapid growth across the United States in both corporate and franchised clinics.

12.  Founded in 2015 by Erin Pash and Kyle Keller, Ellie employs 215 clinicians and serves approximately 20,000 patients on an annual basis across its 20 clinics. In addition, Ellie has over 250 franchise locations in development across 26 states, making it one of the fastest-growing franchise brands in the country. Pash, chief executive officer, and Keller, chief clinical officer, will continue to lead the business in its campaign to build the most accessible mental health platform in the country.

13.  Erin Pash said, “The partnership with Princeton will help facilitate the next chapter of our growth as we rapidly expand our corporate and franchise businesses. This investment could not have come at a more opportune time given the country’s mental health crisis and the inaccessibility of quality mental health treatment.”

14.  Doug Kennealey, co-founder and managing partner of Princeton, said, “We are thrilled to partner with Erin and Kyle to foster continued growth at Ellie. The Ellie team has a track record of delivering superb patient outcomes and improving accessibility for mental health care, which has reached epidemic levels in our country. We look forward to partnering with the entire Ellie team to continue serving patients, clinicians, and franchisees across the country.”

15.  Through this partnership, Princeton will provide Ellie with additional resources to support the expansion of its corporate footprint and rapidly growing franchise system. The combination of Princeton’s multi-unit and franchise knowledge and Ellie’s clinical expertise will help the company to deliver on its mission to provide high-quality mental health services and resources to communities across the country.

Company History

16.  Ellie Mental Health was founded in 2015 by Erin Pash and Kyle Keller in Minnesota. Both Pash and Keller worked as therapists before starting Ellie Mental Health. Through their work, they both realized that the mental health services industry was broken. They wanted to “improve the lives of families by creating and delivering innovative and customized wellness solutions.”

17.  Unlike other counseling and therapy clinics, Ellie Mental Health has harnessed technology for electronic health record systems, virtual and telehealth visits, and even contactless check-ins for patients.

18.  After growing around Minnesota for a few years, Pash and Keller decided to start franchising Ellie Mental Health. They brought in Larkin Hoffman to continue expanding the brand into other markets through franchising. The franchising system was launched in 2021 and Ellie Mental Health has quickly sold numerous franchises across the United States.

19.  Currently, Ellie Mental Health locations are open in Minnesota, but many are set to open in different states soon.

Entrepreneur’s Franchise 500

20.  Ellie Mental Health did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Ellie Mental Health Franchise (Item 19, 2022 FDD)

• As of December 31, 2021, Ellie Mental Health’s affiliate, EFS, owned and operated 15 Ellie Mental Health clinics.

• Of these clinics, Ellie Mental Health’s affiliate’s Chaska, Minnesota clinic is excluded from this Item 19 because it operates under a different model than what Ellie Mental Health offers franchisees. Also excluded from this Item 19 are Ellie Mental Health’s affiliate’s 5 clinics that were not open the full 12-month period ending December 31, 2021 (Brooklyn Center, Minnesota; Grand Rapids, Minnesota; Moorhead, Minnesota; Rochester, Minnesota; and Winona, Minnesota).

• The following chart provides locational and opening information of the 9 clinics that were open the full 12-month period ended December 31, 2021.

• Of these 9 clinics, 5 clinics were also open the full 12-month period ending December 31, 2020.

Bloomington, Minnesota

• Location Type:  Urban
• Opened:  November 2018

2020 Collected Revenues:  $502,705

2021 Collected Revenues:  $699,935

2021 Disclosed Expenses

• Rent:  $26,340
• Salaries and Wages:  $417,062
• System Fee:  $52,495
• Marketing Fee:  $3,600
• Local Marketing Spend:  $5,400
• Technology Fee:  $10,440
• Shared Services Fee:  $50,400
• Total Disclosed Expenses:  $565,737

Total Qualified Clinician Months (Annualized):  72

Brainerd, Minnesota

• Location Type:  Rural
• Opened:  June 2020

2020 Collected Revenues:  $82,475

2021 Collected Revenues:  $521,435

2021 Disclosed Expenses

• Rent:  $29,684
• Salaries and Wages:  $390,940
• System Fee:  $39,108
• Marketing Fee:  $4,000
• Local Marketing Spend:  $6,000
• Technology Fee:  $11,600
• Shared Services Fee:  $56,000
• Total Disclosed Expenses:  $537,331

Total Qualified Clinician Months (Annualized):  80

Burnsville, Minnesota

• The Burnsville, Minnesota clinic was formerly located in Lakeville, Minnesota but relocated in 2020. This clinic is counted as a single continuous location.

• Location Type:  Suburban
• Opened:  September 2017

2020 Collected Revenues:  $418,332

2021 Collected Revenues:  $1,152,654

2021 Disclosed Expenses

• Rent:  $64,423
• Salaries and Wages:  $590,338
• System Fee:  $86,449
• Marketing Fee:  $6,050
• Local Marketing Spend:  $9,075
• Technology Fee:  $17,545
• Shared Services Fee:  $84,700
• Total Disclosed Expenses:  $858,579

Total Qualified Clinician Months (Annualized):  121

Coon Rapids, Minnesota

• Location Type:  Suburban
• Opened:  September 2020

2020 Collected Revenues:  $54,356

2021 Collected Revenues:  $809,747

2021 Disclosed Expenses

• Rent:  $42,822
• Salaries and Wages:  $482,866
• System Fee:  $60,731
• Marketing Fee:  $4,500
• Local Marketing Spend:  $6,750
• Technology Fee:  $13,050
• Shared Services Fee:  $63,000
• Total Disclosed Expenses:  $673,719

Total Qualified Clinician Months (Annualized):  90

Edina, Minnesota

• The Edina, Minnesota clinic opened in December 2020 but did not collect any revenue until February 2021.

• Location Type:  Suburban
• Opened:  December 2020

2020 Collected Revenues:  $0

2021 Collected Revenues:  $1,795,289

2021 Disclosed Expenses

• Rent:  $92,726
• Salaries and Wages:  $934,477
• System Fee:  $134,647
• Marketing Fee:  $9,100
• Local Marketing Spend:  $13,650
• Technology Fee:  $26,390
• Shared Services Fee:  $127,400
• Total Disclosed Expenses:  $1,338,389

Total Qualified Clinician Months (Annualized):  182

Mendota Heights, Minnesota

• Location Type:  Suburban
• Opened:  March 2020

2020 Collected Revenues:  $1,485,478

2021 Collected Revenues:  $2,452,394

2021 Disclosed Expenses

• Rent:  $192,000
• Salaries and Wages:  $1,301,015
• System Fee:  $183,930
• Marketing Fee:  $9,900
• Local Marketing Spend:  $14,850
• Technology Fee:  $28,710
• Shared Services Fee:  $138,600
• Total Disclosed Expenses:  $1,869,005

Total Qualified Clinician Months (Annualized):  198

Minneapolis, Minnesota

• Location Type:  Urban
• Opened:  July 2019

2020 Collected Revenues:  $1,475,683

2021 Collected Revenues:  $1,711,728

2021 Disclosed Expenses

• Rent:  $100,917
• Salaries and Wages:  $1,100,072
• System Fee:  $128,380
• Marketing Fee:  $9,850
• Local Marketing Spend:  $14,775
• Technology Fee:  $28,565
• Shared Services Fee:  $137,900
• Total Disclosed Expenses:  $1,520,459

Total Qualified Clinician Months (Annualized):  197

St. Paul, Minnesota

• Location Type:  Urban
• Opened:  November 2015

2020 Collected Revenues:  $1,830,364

2021 Collected Revenues:  $1,893,690

2021 Disclosed Expenses

• Rent:  $147,598
• Salaries and Wages:  $1,111,740
• System Fee:  $142,027
• Marketing Fee:  $10,150
• Local Marketing Spend:  $15,225
• Technology Fee:  $29,435
• Shared Services Fee:  $142,100
• Total Disclosed Expenses:  $1,598,274

Total Qualified Clinician Months (Annualized):  203

Woodbury, Minnesota

• Location Type:  Suburban
• Opened:  September 2018

2020 Collected Revenues:  $1,176,997

2021 Collected Revenues:  $1,888,628

2021 Disclosed Expenses

• Rent:  $99,121
• Salaries and Wages:  $1,005,046
• System Fee:  $141,647
• Marketing Fee:  $7,550
• Local Marketing Spend:  $11,325
• Technology Fee:  $21,895
• Shared Services Fee:  $105,700
• Total Disclosed Expenses:  $1,392,284

Total Qualified Clinician Months (Annualized):  151

Average

2020 Collected Revenues (for the 5 clinics that were open the full 12-month period ending December 31, 2020):  $1,080,816

2021 Collected Revenues (for the 9 clinics that were open the full 12-month period ending December 31, 2021):  $1,436,167 (100.0%)

2021 Disclosed Expenses

• Rent:  $88,403 (6.2%)
• Salaries and Wages:  $814,840 (56.7%)
• System Fee:  $107,713 (7.5%)
• Marketing Fee:  $7,189 (0.5%)
• Local Marketing Spend:  $10,783 (0.8%)
• Technology Fee:  $20,848 (1.5%)
• Shared Services Fee:  $100,644 (7.0%)
• Total Disclosed Expenses:  $1,150,420 (80.1%)

Total Qualified Clinician Months (Annualized):  144

• There were no clinics that permanently closed in 2020 or 2021 after being open for less than 12 months.

• All of these affiliate-owned clinics are located in the Minneapolis/St. Paul, Minnesota metropolitan area (except the Brainerd, Minnesota clinic, which is located about 130 miles from Minneapolis, Minnesota).

• Ellie Mental Health considers an “urban location” to be one that is located in an area with a higher population density and near other commercial businesses. Ellie Mental Health considers a suburban location to be one that is located in an area with a lower population density, but may be near other commercial businesses. Rural locations are outside the Minneapolis/St. Paul, Minnesota metropolitan area.

• These clinics offer counseling and therapy programs, and also sell certain products. These clinics did not offer medication management services during the years reported.

• Ellie Mental Health would expect franchisees to provide these same products and services; however, the actual products and services that you will offer may vary depending on your state licensure. Franchisees may also offer medication management services through Qualified Prescribers, subject to applicable law.

• While these clinics offer a variety of products and services, the term “collected revenue”, as used in this Item 19, means the total amount received from all counseling and therapy products and services taking place by or through the clinic. Because these clinics do not offer medication management services, the term “collected revenue”, as used in this Item 19, does not include any medication management revenue.

• These figures also exclude from collected revenue, sales tax, discounts, allowances, refunds, and any revenue from non-therapy products and services such as sublease rent income.

• Ellie Mental Health has provided this collected revenue information based on unaudited information provided to it by its affiliate. All amounts are rounded to the nearest dollar.

• The financial performance representation presented in this Item 19 should not be considered as the actual, potential, or probable results that you will realize from the operation of your Franchised Business. These figures do not reflect the cost of sales, operating expenses, or other costs or expenses, other than certain Disclosed Expenses, that must be deducted from the collected revenue figures to calculate net income or profit. Likewise, these figures do not include medication management revenues or Disclosed Expenses that would be due if these clinics offered medication management services.

• You will have additional expenses that Ellie Mental Health has not included in this Item 19, such as repair and maintenance costs, office supplies costs, training expenses, finance charges, insurance, taxes, utilities, and professional services. Ellie Mental Health has not included any other expenses incurred by these 9 clinics other than the Disclosed Expenses above.

• “Salaries and Wages” represent the total compensation, including salaries, wages, and benefits, paid by these clinics to Qualified Clinicians, as well as related employment and withholding taxes. As these clinics do not offer medication management services, these figures do not include any compensation that would be payable to Qualified Prescribers or medication management assistants that you would be required to hire if you offer medication management services from your Franchised Business.

• Although these 9 clinics do not pay franchise fees, the Disclosed Expenses include the franchise fees that these clinics would have paid if they were operating as franchised clinics. As these clinics do not offer medication management services, these figures do not include any fees payable based on Qualified Prescribers.

• A Qualified Clinician means a Licensed Provider providing outpatient counseling and therapy products or services, directly or indirectly, at or through the clinic in a given calendar month (whether working part-time or full-time, whether providing services for a full or partial month, and whether retained as an employee or independent contractor).

• However, if a Qualified Clinician provides products or services, directly or indirectly, at or through multiple Ellie Mental Health clinics included in this Item 19, Ellie Mental Health has allocated the Qualified Clinician on a pro-rata basis to each clinic based on the approximate hours worked at each clinic. The Total Qualified Clinician Months (Annualized) information reflects the total number of partial or full calendar months worked by Qualified Clinicians at a particular clinic for the entire 2021 calendar year.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance you’ll earn as much.

Section VI – Ellie Mental Health Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️