🍟 4/25/2024 – A Franchise Rocket Ship In Motion (Ellie Mental Health) 🚀

Ellie Mental Health

Fast Facts


  • HQ: Minnesota, MN 
  • Founded in 2015, franchising since 2021
  • Ellie Mental Health is a franchise that specializes in outpatient mental health services

Franchise Fees

  • Royalty: $1,000/month/clinician or 7.5% of collected revenue per clinician (whichever is lower)
  • Brand Fund: $100/month/clinician 
  • Franchise Fee: $60,000

Financial Overview

  • The below table discloses information on 36 franchised Ellie Mental Health clinics that were open and operating for the entire 12-month period ended December 31, 2023.

The Wolf’s Take 🍟

Ellie Mental Health has been on a rocketship growth trajectory.

Founded in 2015 and franchising since just 2021, the brand already has 206 locations open….with 151 of them opening in 2023 🤯.

That’s a rate of just under 3 new locations opening PER WEEK. 

I hope the franchisor team has quality mattresses…because my god they need all the sleep they can get with the work it takes to pull that off.

The Concept

Founders Erin Pash and Kyle Keller launched Ellie in 2015 on a mission to destigmatize mental health. 

Their main way of doing so is via humor, which after a quick look at their website, they look to be doing a great job of that.

The brand comes off as super authentic, unabashed, and…funny lol.

With merch taglines like “I like big cries and I cannot lie”, and CTA’s of “If you’re freaking the ___ out”, their marketing copy is on point.

I’d imagine this helps make prospective patients comfortable with therapists at Ellie, before they even had a conversation with someone there. Generally speaking, many people delay or never get the help they need, as they feel that going to a therapist means there is something seriously wrong with them.

EMH’s vibe is one that normalizes the reality that everyone has shit to deal with.

The franchisor has 23 of their own locations today across Minnesota (a high amount for a franchisor!), and they also took on an investment from Princeton Equity Group in 2022 (no reporting on the full amount, but my Wolf insiders tell me it was around a ~$20M check).

As for the franchise…

The [Franchise] Concept

Given the ridiculously fast growth, it’s interesting to look back at prior FDD’s that led to this. Here’s a summary on the financials from past FDD’s:

2022 FDD

  • Initial investment: $201k – $405k (midpoint of $303k)
  • Item 19 disclosed Revenues of 9 corporate clinics as well as select expenses (they omitted maintenance costs, G&A, insurance, utilities, and “professional services)”. The “revenues minus disclosed expenses” led to juicy numbers after subtracting the select expenses from revenue, sometimes tallying $1.5M. The revenue ranges were $521k – $2.4M on the high end.

Overall, not at all a fan of that disclosure strategy – you have the full data on your own locations – why not show it? 

They had 22 franchise agreements sold but not opened at the end of the year in 2021.

On to 2023…

2023 FDD

  • Initial investment: $279k – $481k (midpoint of $380k, a 20% increase)
  • Item 19 disclosed revenues of 14 affiliate own clinics and select expenses (rent + wages). The revenue range spans $562k per clinic to $3.9M for the highest clinic. 

Again, the disclosure strategy chose to omit info from corporate units.

I’m just going to take a wild guess and say that showing less data allowed sales reps to get “creative” (hint hint nudge nudge) with guiding candidates through due diligence (note that at this stage, the brand had outsourced franchise development to a franchise sales company).

As an aside – the above isn’t to say that Ellie Mental Health isn’t a winning concept for franchisees, but I’m just letting you know how the franchise sales inside baseball works. Nobody wants to talk about it, but that’s how the game gets played sometimes.

At the end of 2022 they had 155 units in development – this was their big growth year.

2024 FDD

  • Initial investment looks to have stabilized at $208k – $508k (midpoint of $358k)
  • Item 19 has a ton of charts that include data from 23 affiliate outlets, and 36 franchised clinics that were operating the entire 12 months of 2023. 

The data included discloses information stats like licensed providers per clinic, new patients per clinic, patient appointments per clinic, no shows/cancellations per clinic…..etc.

It’s a lot to take in.

They do share one chart of average monthly revenue for franchised clinics. When you tally the months up (for some reason they don’t do that for you), you get an average annual revenue of $395k. 

It’s early of course, and ramp up periods are real, but so far the franchised clinics are underperforming the corporate clinics by a good margin.

There were 98 franchise agreements sold but outlets not opened as of the end of 2023.

What to make of all this?

For one, I know this was more detailed than a typical “Wolf’s Take”. But if a brand is going to grow like wildfire, it warrants a much deeper dive IMO. 

Let’s give credit where it’s due – this brand has not only sold units, they got them open as well. That is no easy feat.

They also listed zero terminations or closures in their FDD, which is always a concern when a brand grows this quickly. So again, credit to the franchisor.

It’s too early to know (at least from the FDD) how the franchisees are truly performing. Note that franchisees don’t have to be therapists or health providers to own the business itself.

There is a structure known as an MSO / PC model that allows non-licensed professionals to own a business such as this. I used to work with a pet concept that relied on veterinarians to run the business, and we employed a similar model there.

Anyways – I love the mission of Ellie Mental Health, and their growth has been remarkable.

As always, if you want to get a closer look at this brand for your own interest, franchisees will be your best resource to truly understand the potential of the business!


Quality vs Cost Savings – John Wilson

John Wilson owns a home services holding company. He’s got a ton of battle scars from growing a business, and this is a great lesson that applies to all businesses.
Utilizing a call center may not be relevant for the business you own or are thinking of buying, but choosing to build for quality vs cost savings is a good mentality to develop!

Disclaimer: This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this site constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All Content in this email is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the email constitutes professional and/or financial advice, nor does any information in the email constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content in this email before making any decisions based on such information or other Content.