FDD Talk 2.0: BrightStar Care’s Royalty Fees, Minimum Royalty Requirements, and Unit Growth (2012 FDD)

(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 4

Other Fees Under the Franchise Agreement

• Royalty fees are based on a percentage of Net Billings. “Net Billings” is defined as the aggregate of all revenues and other income from whatever source derived (whether in the form of cash, credit, agreements to pay, or other consideration, and whether or not payment is received at the time of sale or any of these amounts prove uncollectible), which arise from or are derived by you or by any other person from business conducted by, or originated from the Agency. Net Billings also include all proceeds from any business interruption insurance.

• Excluded from Net Billings are: (i) sales taxes and other taxes separately stated that you collect from clients and pay to taxing authorities; (ii) refunds and credits made in good faith to arms’ length clients in accordance with the company’s standards and specifications for issuing such refunds or credits; and (iii) the discount value of any coupon, voucher, or other allowance that the company authorizes at the time you redeem the client’s coupon, voucher, or other allowance.

• All Royalties will be collected via EFT 28 days after the end of your weekly billing period.

BrightStar Care’s Royalty/Continuing Fee schedule for Protected Territories up to 400,000 in population is as follows:

• 5% of Net Billings generated from non-National Accounts; and 6% of Net Billings generated from National Accounts

• Your total annual royalty payments must exceed the following minimums (each a “Minimum Royalty Payment”): (a) $15,000 during your first 12 months of operation following your Agency’s Minimum Start Date; (b) $37,500 during your second 12 months of operation following your Agency’s Minimum Start Date; (c) $50,000 during your third 12 months of operation following your Agency’s Minimum Start Date; (d) $60,000 during your fourth 12 months of operation following your Agency’s Minimum Start Date; and (e) a 10% compounded annual increase in the Minimum Royalty Payment thereafter (Year 5 – $66,000; Year 6 – $72,600; Year 7 – $79,860; Year 8 – $87,846; Year 9 – $96,630; Year 10 – $106,293).

BrightStar Care’s Royalty/Continuing Fee schedule for Protected Territories between 400,001 and 600,000 in population is as follows:

• 5% of Net Billings generated from non-National Accounts; and 6% of Net Billings generated from National Accounts

• Your total annual royalty payments must exceed the following minimums (each a “Minimum Royalty Payment”): (a) $15,000 during your first 12 months of operation following your Agency’s Minimum Start Date; (b) $37,500 during your second 12 months of operation following your Agency’s Minimum Start Date; (c) $75,000 during your third 12 months of operation following your Agency’s Minimum Start Date; (d) $95,000 during your fourth 12 months of operation following your Agency’s Minimum Start Date; and (e) a 10% compounded annual increase in the Minimum Royalty Payment thereafter (Year 5 – $104,500; Year 6 – $114,950; Year 7 – $126,445; Year 8 – $139,090; Year 9 – $152,998; Year 10 – $168,298).