FDD Talk: The BrightStar Care Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the BrightStar Care franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a BrightStar Care franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of BrightStar Care’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average revenue, displayed by quartile, earned by BrightStar franchisees for their first location only

• 2015 average, median, high, and low gross margin percentage 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 locations open 3 months or longer as of December 31, 2015

• 2015 average, high, and low hours billed per client per week for all franchisee first locations, including all resale locations, open and operating for at least 3 months as of December 31, 2015

• 2015 average weekly hours worked per employee; average, high, and low number of clients and number of employees per week during the four pay periods running from November 29, 2015 through December 20, 2015 for all franchisee first locations for all ongoing clients for locations open and operating 3 months or longer as of December 31, 2015

• 2015 average mix of business for all Agencies in operation in 2015

• 2015 average and median months to break-even for all first location Agencies open at least 12 months as of December 31, 2015

• 2015 total, average, high, and low national account revenues contributed to the system by the national account program for all locations from January 1, 2015 through December 31, 2015

Section I – Background Information

Desire for Quality Home Care Leads to Successful Family Business

BrightStar Care was founded in 2002 by Shelly Sun and her husband J.D. Sun. The couple started BrightStar Care after they could not find quality home care for a loved one. The Suns, who had previous experience as franchisees for two hotel chains, decided that they would start their own home care service that would include services not only for the elderly, but for adults and children as well.

In addition to home care and child care services, BrightStar provides medical staffing services for individuals, families, and healthcare facilities.

Three years after opening the first BrightStar location, the Suns decided to franchise the brand in 2005. The first franchised location opened a year later in 2006. Today, BrightStar Care has over 300 locations throughout the United States and Canada.

BrightStar Care Expands Into Canada

In late August 2016, BrightStar announced that the company would be opening its first international location in Canada at the end of September. BrightStar opened its first Canadian location in North York, Toronto. The company has plans to open 65 locations across all 10 of Canada’s provinces within the next five years.

Master franchisee Michael Shneer owns and operates the first Canadian BrightStar Care location and in the coming years will open the additional planned locations through sub-franchising. According to Shneer, there is already great interest in the BrightStar brand.

BrightStar Opens 300th Location

BrightStar Care closed out 2016 by opening its 300th location in its home city of Chicago. The 300th location was opened by Gary Ratkiewicz, a former corporate executive for two publicly traded companies, who shares CEO Shelly Sun’s desire to provide quality care for loved ones.

Sun says it’s hard to believe that BrightStar Care has opened its 300th location within a decade after opening its first franchised location in 2006. Within the last 10 years, BrightStar has had a lot of success including providing 70 million hours of service to more than 250,000 families, reaching nearly $400 million in revenue, employing more than 100,000 nurses and caregivers, and expanding to 38 states and Canada.

BrightStar Invests Millions Into New Technology

CEO Shelly Sun said in an interview with Home Health Care News in early January 2017, that BrightStar Care has invested $4 million into developing a mobile strategy. The mobile strategy will allow BrightStar’s caregivers and nurses to take patient information and enter it at the point-of-care to be reviewed later by the company to see how BrightStar impacts the quality of patient care and to review costs.

Sun also says that BrightStar will invest an additional $3 to $5 million this year to further develop the new technology. BrightStar is developing a proprietary tech system to ensure that its competitors won’t have access to any innovations the company comes up with.

Consistently Ranked in the Top 200 of Entrepreneur’s Franchise 500

BrightStar Care has ranked in the top 200 of Entrepreneur’s Franchise 500 every year during the last decade. For 2017, BrightStar Care has earned spot No. 69, the company’s highest rank to date. This is up from 2016’s rank of No. 177, which happens to be the lowest rank BrighStar has received in the last ten years.

Section II – Estimated Costs

• Please click here for detailed estimates of BrightStar Care franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis