Risk Score
Pending analysis
Investment Range
$275,682 - $615,740
Franchise Fee
$31,500
Total US Locations
143
Business Summary
OsteoStrong operates wellness centers that provide customers with health and exercise equipment designed to promote bone and muscle health, including specialized osteogenic loading machines and vibration plates. These centers use the "OsteoStrong" trademarks and a proprietary system covering interior design, operations standards, customer service, marketing, and product offerings like supplements. OsteoStrong targets health-conscious consumers, primarily men and women over 45, who are interested in increasing bone density and muscle strength without medication. The centers operate year-round in commercial retail spaces, typically ranging from 1,100 to 1,800 square feet, often located in shopping malls or medical office complexes.
Corporate History
The OsteoStrong concept was initially founded by Kyle Zagrodzky in July 2011. OsteoStrong Franchising, Inc. itself was formed as a Texas limited liability company in February 2012, later converting to a Delaware corporation on March 31, 2020. The company began offering franchises for its wellness centers, which provide equipment for bone and muscle health, in April 2012. OsteoStrong Franchising, Inc. operates under the ownership of its parent company, Blue Ocean International, Inc. (BOI), which was established in December 2016. The franchise also works closely with affiliates like True Wellness, Inc., which holds the OsteoStrong intellectual property, and Go Figure, Inc., which develops and licenses the essential business management software for OsteoStrong centers.
Financial Overview
Investment Range
$275,682 - $615,740
Franchise Fee (Low)
$31,500
Franchise Fee (High)
$35,000
Royalty %
7%
Marketing %
1%
Equipment Costs (Low)
$168,447
Equipment Costs (High)
$446,155
Working Capital
$43,650
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The Franchise Disclosure Document highlights a special risk regarding OsteoStrong Franchising, Inc.'s financial condition, stating that its financial statements "call into question the franchisor's ability to provide services and support" to franchisees. This is a direct warning to potential franchisees. While the independent auditor's report for December 31, 2023, concluded that there was no significant doubt about OsteoStrong's ability to continue as a going concern due to positive income and cash flows from operations, the company's balance sheets show a negative stockholder's deficit for both 2023 and 2022. Additionally, the unaudited profit and loss statement for January-February 2024 indicates a net operating loss of over $800,000 during that short period. Despite positive net income in the audited statements for 2021-2023, the recurring negative equity and recent operating loss warrant careful consideration by potential investors.
Financing Details
OsteoStrong Franchising, Inc. does not offer any direct or indirect financing to its franchisees. Additionally, it does not guarantee any notes, leases, or other financial obligations that franchisees might incur.
Performance Metrics
Total US Locations
143
Franchised Units
143
Corporate Units
0
Avg Square Footage
1,450
Franchising Since
2012
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
5
Litigation Summary
OsteoStrong Franchising, Inc. has been involved in several legal disputes. Five cases are specifically disclosed, with some being recent or currently ongoing. One significant ongoing case, Sean Simpson, Charla Simpson, OS New Mexico, LLC, and OS Regional Developers Colorado a/k/a OS Regional Developers Colorado, LLC v. OsteoStrong Franchising, LLC et al. (filed June 28, 2019), involves former franchisees and regional developers who sued OsteoStrong. They alleged that OsteoStrong omitted information and made false representations in its Franchise Disclosure Document, breached regional development agreements by excluding them from transactions, wrongfully terminated agreements, and made false statements about them. OsteoStrong counterclaimed, accusing the plaintiffs and other third-party defendants (referred to as "Conspiracy Defendants") of conspiring to spread false and defamatory information to damage the OsteoStrong brand and interfering with its business relationships. While some of the Simpson Parties' claims were dismissed, and some Conspiracy Defendants settled in April/May 2022, the case remains in the discovery phase, with OsteoStrong actively pursuing its counterclaims against the remaining defendants. A related case, John Baird, K&L Wellness, LLC, Bret Kurihara, OS New Mexico, LLC, BNS RD, LLC, Sean Simpson, Charla Simpson, and Mary Jo Mchenry v. OsteoStrong Franchising, LLC, Kyle Zagrodzky, and John Jaquish (filed October 7, 2020), brought by other former franchisees and regional developers, has been consolidated with the Sean Simpson case. These plaintiffs made similar allegations regarding FDD misrepresentations and claimed OsteoStrong's marketing of equipment created an impossibility for them to comply with regulations, asking for the franchise agreements to be voided and seeking damages. A preliminary injunction sought by these plaintiffs was denied in May 2021. In another case, Derek Albrecht and JDG-OS Enterprises, LLC v. OsteoStrong Franchising, LLC et al. (filed January 23, 2020), a former franchise broker and franchisee sued OsteoStrong, alleging misrepresentation concerning support services and exclusivity, FDD omissions, and wrongful termination of a broker agreement. This case was settled on April 11, 2022, with a payment of $67,500 by an insurance carrier to the plaintiffs and was dismissed with prejudice in May 2022. OsteoStrong Franchising, LLC, OsteoStrong International, Inc., Kyle Zagrodzky, and James Youngblood v. Gary Andrew Rhodes, Nichola Taylor, OsteoFit AG, Ronald Berger, and Charles Berger (filed February 11, 2020) involved OsteoStrong suing a former international franchise developer, Gary Rhodes, for trademark infringement, unfair competition, cyberpiracy, and breach of contract. Rhodes counterclaimed, alleging wrongful termination and tortious interference. The claims between OsteoStrong and Rhodes were settled in January 2021, resulting in mutual releases, a $125,000 payment from OsteoStrong's insurance carrier to Rhodes and Taylor, and a permanent injunction against Rhodes. Rhodes was found in contempt multiple times for violating the injunction. Separately, OsteoStrong International terminated a buyback agreement with OsteoFit AG (in which Rhodes was a shareholder) due to Rhodes' conduct. This led to further litigation and an appeal, eventually resolved by OsteoStrong International buying back the master license. Finally, Mark and Karen Partlow and Bio Strength 1 v. OsteoStrong Franchising, LLC, Many Butera, and Kyle Zagrodzky (filed September 25, 2020) saw former franchisees and regional developers accuse OsteoStrong of misrepresentations during the sales process and in its FDD to induce them into agreements. Their claims included common law fraud, fraudulent inducement, and violations of Texas consumer protection laws. This dispute was settled with mutual releases and a $150,000 payment from OsteoStrong's insurance carrier, and the case was dismissed with prejudice in May 2022.
Bankruptcy History
OsteoStrong Franchising, Inc. has no bankruptcy information to disclose.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their OsteoStrong franchise agreement, franchisees must meet several conditions. They need to inform OsteoStrong Franchising, Inc. of their intent to renew between 180 days and 12 months before the current term expires. Franchisees must be in good standing, having complied with all material provisions of their franchise agreement and any other agreements with OsteoStrong or its affiliates throughout the term. All monetary obligations owed to OsteoStrong, its affiliates, and third-party suppliers must be satisfied. Franchisees are also required to renovate and refurbish their center to align with OsteoStrong's then-current image, trade dress, equipment, and furnishings. They must demonstrate the right to possess the center premises or secure an approved alternative site, and comply with current qualification and training requirements. Finally, franchisees must sign OsteoStrong's then-current franchise agreement (which may have different terms, including royalty and advertising fees), execute a personal guaranty and undertaking, sign a general release of claims against OsteoStrong and its affiliates, and pay a renewal fee.
Training & Support Program
Franchisor Assistance
OsteoStrong Franchising, Inc. provides comprehensive support to its franchisees. Before opening, OsteoStrong assists with selecting pre-determined territory options and approves the specific center site. It offers initial training for owners and managers, provides access to digital operation manuals, and offers pre-opening consultation on development, center layout, equipment, employee recruiting and training, purchasing, and inventory control. Ongoing assistance includes continuous consultation and advice on new service and product development, operational management, advertising, marketing, and financial guidance, delivered through center visits, meetings, seminars, conferences, and digital materials. OsteoStrong maintains control over promotional and marketing materials and has a proprietary digital marketing lead generation system that includes social media strategies, pre-sale assistance, online training, coaching, and performance monitoring, which is required for the initial five months and then optional. For technology, franchisees license the proprietary Operations Software from OsteoStrong's affiliate, Go Figure, for membership and business management, which runs on a Windows operating system. Franchisees also license QuickBooks Online software and are required to use specific computer hardware. A monthly Technology and Education Fee covers online systems (email, microsite hosting), intranet development, and software support, including the Spectrum® License Fee for the osteogenic loading equipment. Additional training, both on-site and classroom-based, may be provided at OsteoStrong's discretion, with applicable fees and reimbursement for expenses. Franchisees are expected to comply with all standards communicated through manuals and directives, and OsteoStrong reserves the right to modify system requirements, suppliers, and vendors.
Initial Training Hours
74
Training Location
A designated training center determined by Franchisor, or web-based courses.
Ongoing Support
After opening, OsteoStrong Franchising, Inc. provides several forms of ongoing support. Franchisees receive continuous consultation and advice on new service and product development, instruction on center operation and management, advertising and marketing strategies, and financial and accounting guidance. This support is delivered through center visits by OsteoStrong personnel, meetings, seminars, conferences, and electronic or printed materials. OsteoStrong also communicates information about its approved and designated suppliers to franchisees. Franchisees participate in OsteoStrong's proprietary digital marketing lead generation system, which includes ongoing online training, coaching, and monitoring of system performance. While mandatory for the first five months of operation, participation becomes optional afterward. A monthly Technology and Education Fee contributes to the development and implementation of education and training programs, online systems like email and microsite setup, intranet support, and the Spectrum® Software License Fee, which is crucial for the osteogenic loading equipment. Additional courses, seminars, and training programs are made available as deemed appropriate by OsteoStrong. If requested by the franchisee or if a franchisee fails two consecutive quality inspections, OsteoStrong may provide additional on-site training, for which the franchisee will pay a daily rate plus travel and dining costs.
Franchise Requirements
Ideal Candidate Profile
OsteoStrong Franchising, Inc. seeks franchisees who can ensure their center is supervised by a Center Manager. This manager, who may or may not be an owner, must be approved by OsteoStrong, successfully complete its initial training program, and dedicate full-time effort to the center's day-to-day management, operation, promotion, and growth. If the Center Manager is not an owner, then at least one owner, designated as the "Managing Owner," must oversee the general operations and business activities of the center. Both the Managing Owner and any non-owner Center Manager must complete the initial training program successfully.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Supervisory
Territory Type
Non-Exclusive
Staff Count
3
Territory Size Requirements
OsteoStrong Franchising, Inc. grants franchisees a pre-determined territory that is identified by a map attached to the Franchise Agreement. Franchisees must select their center location from within this specific, pre-defined territory.
Staffing Notes
OsteoStrong Franchising, Inc. requires its centers to be supervised by a Center Manager who must devote their full-time efforts to the center's daily management, operations, promotion, and growth. This individual must be approved by OsteoStrong and successfully complete the initial training program. While it is recommended, the Center Manager is not required to be an owner. If a non-owner serves as the Center Manager, at least one owner, designated as the "Managing Owner," must oversee the general operations and business activities of the center. Both the Managing Owner and the Center Manager are required to complete initial training. Franchisees are responsible for maintaining a competent, trained staff who provide courteous service and comply with dress code standards, including wearing designated uniforms and maintaining a neat appearance. OsteoStrong also requires centers to operate with a minimum number of staff on duty, as specified by the franchisor, and franchisees are responsible for their employees' training.