Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2.0: BrightStar Care’s Franchise Margins, Client and Employee Statistics, Mix of Business, and Time to Break-Even (2012 FDD)

by Franchise Chatter on October 12, 2012

in Franchise Earnings, Senior Home Care Franchises

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(Ambrosio’s note:  Welcome to FDD Talk 2.0, a more comprehensive version of our flagship content, featuring not only the Item 19 financial performance representations of select franchises, but their estimated initial investment, unit growth, and other key items of their 2012 FDD as well.)

Highlights of BrightStar Care’s 2012 Franchise Disclosure Document – Part 3

B. Franchisee Margins (First Location Only)

  • The following section identifies the gross margin percentage of BrightStar Care franchisees. Gross Margin percentage is defined as Gross Margin divided by revenues. Gross Margin is defined as Revenue less Cost of Goods Sold. Cost of Goods Sold includes all direct and indirect costs related to field employees including payroll, payroll taxes, benefits, screening costs, workers’ comp insurance, crime bond costs, professional and general liability insurance, 1.5% of revenue for variable marketing costs, and bad debt.
  • BrightStar uses a 20% average load onto known payroll costs to estimate COGS. The 20% is based on the franchise system average estimates. The two items with the largest variability due to state, local, and county statutory differences in addition to unemployment insurance claims experience include: payroll taxes where the company used an average of 11.66% and workers’ comp insurance where the company used an average of 3.28%.
  • The information contained below includes information for all Agencies opened by franchisees as their first location (regardless of how long the Agencies were in operation during the particular year), including all resale locations, for the full year as of December 31, 2011.
  • Number of Agencies:  164
  • Average Gross Margin Percentage:  38.8%
  • Number and Percentage of Agencies That Attained or Exceeded Average Amount:   73 Agencies (45%)
  • High:  72.0%
  • Low:  19.0%

C.  Data Analysis of Client and Employee Statistics (First Location Only)

Hours Billed Per Client Per Week

  • The information below reflects the average, high, and low hours billed per client per week during calendar year 2011 for all franchisee first locations, including all resale locations, open and operating for at least 3 months, as of December 31, 2011.

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