FDD Talk: What You Need to Know About the FirstLight Home Care Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

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

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

• Section II – Estimated initial investment for a FirstLight Home Care franchise, based on Item 7 of the company’s 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a FirstLight Home Care franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of FirstLight Home Care’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average, median, high, and low net revenue and hours worked per week for the 15 franchised FirstLight Home Care businesses that had been operating for 12-23 months; 20 franchised FirstLight Home Care businesses that had been operating for 24-35 months; 14 franchised FirstLight Home Care businesses that had been operating for 36-48 months; and 11 franchised FirstLight Home Care businesses that had been operating for 49-60 months (separately stated)

Section I – Background Information

13 Things You Need to Know About the FirstLight Home Care Franchise

Reports Record Revenues for First Two Quarters of 2017

1.  In early August 2017, FirstLight Home Care announced that it had set new records for its national business growth. For the first and second quarters, the company reported $41 million in gross revenues for franchisees, up 20 percent versus the previous year. FirstLight has been showing steady growth for the last few years with an average of 40-50 percent revenue growth year-over-year. At the time of the press release, FirstLight said its franchisees were on track to exceed $88 million in gross revenues in 2017.

2.  FirstLight also highlighted its other achievements in the first two quarters of 2017. This included opening 16 new locations in nine states since January. At the time, FirstLight said at least 10 more offices were set to open by the end of 2017, with locations awarded to entrepreneurs in California, Florida, Kentucky, Maryland, Minnesota, Missouri, Nebraska, and Nevada.

3.  In addition to FirstLight’s record revenues and new openings, the company was recognized as a top franchise by various publications and organizations, including:

• Franchise Business Review: recognized as one of the Top Low-Cost Franchises and Top Franchises to Own for Women
• International Franchise Association’s VetFran Committee: Five Star Designation
• Franchise Grade: one of the Best Franchises to Own
• Franchise Gator: ranked as one of the Fastest Growing Franchises (top non-medical home care franchise on the list) and Top 100 Franchises
• Entrepreneur: ranked on Franchise 500 list

Appoints New Executive Director of Human Resources

4.  At the end of November 2017, FirstLight Home Care appointed Julie Doyle as its new executive director of human resources, talent acquisition, and client care services. Doyle comes to FirstLight with more than 25 years of experience leading the strategic human resources and talent acquisition function in various industries, including large franchise businesses.

5.  In her new position, Doyle will direct FirstLight’s human resources team and create a strong foundation for the franchise’s recruiting program. This includes overseeing all human resources policies, practices, and procedures, and supporting all franchisees and members of the franchise team.

6.  Doyle said, “One of the main reasons I wanted to be a part of the FirstLight team is the company’s culture of care. The company is focused on its culture throughout the system, and everyone is clear on why they are here. This level of clarity is something you do not always see in an organization.” She added that she wants to ensure that franchisees “cultivate the culture of care in their own business to help attract, retain and develop their caregivers.”

Looking for Franchisees in New Markets

7.  At the beginning of 2018, FirstLight Home Care announced that it had plans to continue its expansion across the United States. The company said that it was looking to open new locations in: Birmingham, Alabama; Gaithersburg, Maryland; Salt Lake City, Utah; Portland, Oregon; Minneapolis and Saint Paul, Minnesota; and Oklahoma City and Norman, Oklahoma. According to Bill McPherson, FirstLight’s executive director of franchise development, these areas were identified as having “an increasing need for high-quality home care services.”

8.  In all of these new markets, FirstLight is also looking for existing home care agency owners who want to be part of a leading non-medical home care franchise. McPherson said, “For local business owners wanting to convert their existing home care business into a FirstLight franchise, there is an easy conversion process. It’s a fantastic way to grow your business without compromising the things you care about. Being part of the FirstLight family gives you access to resources that will enhance the quality of care you provide and help you build your business.”

Company History

9.  FirstLight Home Care was founded in 2009 by Jeff and Devin Bevis in Cincinnati, Ohio. Both Jeff and Devin have franchise development experience, which they brought with them when they started FirstLight Home Care. Jeff is currently the company’s chief executive officer, while Devin serves as the executive director of franchise services.

10.  The leaders of FirstLight are professionals and caregivers with over 105 combined years of experience in operating successful health care and elder care service organizations.

11.  In addition to senior services, FirstLight Home Care offers services for those with disabilities, veteran services, services for busy moms, and recovery and rehabilitation services.

12.  FirstLight Home Care started franchising in 2010 and today, there are over 240 locations that are fully operational or under development across the United States.

Entrepreneur’s Franchise 500

13.  FirstLight Home Care debuted on Entrepreneur’s annual Franchise 500 list in 2014 and has ranked on the list every year since. FirstLight’s highest rank was No. 60 in 2017, while its lowest rank was No. 436 in 2016. The franchise appeared on Entrepreneur’s 2013 Top New Franchises list at No. 25.

Section II – Estimated Costs

• Please click here for detailed estimates of FirstLight Home Care franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on FirstLight Home Care’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

• The tables below describe the “net revenue” and service Hours Per Week (or “HPW”) reported to FirstLight by four sets of franchisees for the 12-month period ended December 31, 2016 (the “Reporting Period”), with:

• one set comprised of 19 franchised FirstLight Home Care businesses who, as of December 31, 2016, had been operating for 12-23 months;
• one set of 21 franchised FirstLight Home Care businesses who, as of December 31, 2016, had been operating for 24-35 months;
• one set of 17 franchised FirstLight Home Care businesses who, as of December 31, 2016, had been operating for 36-48 months; and
• one set of 15 franchised FirstLight Home Care businesses who, as of December 31, 2016, had been operating for 49-60 months.

• These 72 franchised FirstLight Home Care businesses are referred to in this Item 19 as the “Item 19 Businesses.”

• The tables do not include data regarding the 23 FirstLight Home Care businesses that have been operating for 60 months or longer. FirstLight did not include these businesses in this Item 19 because 16 of the 23 FirstLight Home Care businesses in this category were atypical and experienced unusual individual circumstances that impacted their performance or led to a temporary suspension of services.

• These circumstances include the following:  7 FirstLight Home Care businesses experienced significant delay in obtaining state licensure; 5 FirstLight Home Care businesses were operated by individuals who experienced serious medical issues (such as cancer or a major surgery); and 4 FirstLight Home Care businesses were operated by individuals who dissolved their management team (for instance, through divorce) within the first year of operations.

• There were a total of 95 FirstLight Home Care businesses in operation for these periods as of December 31, 2016, and which had been in operation for a minimum of 12 months as of the issuance date of the 2017 Disclosure Document.

• The Item 19 Businesses consist of 72 of the franchised FirstLight Home Care businesses that were in operation during the entire Reporting Period and were not among the 23 FirstLight Home Care businesses that have been operating for 60 months or longer (discussed above).

• FirstLight has not audited the figures below, although it believes them to be reliable. No FirstLight Home Care business closed during the same time period surveyed after being open less than 12 months.

• For purposes of the charts below, “net revenue” means that revenue for the calendar year 2016, on which a franchisee pays royalty fees (which is referred to as “gross revenue” in the Franchise Agreement). This is the total amount of money the franchisee and its owners receive for all goods and services rendered in connection with the Marks, and all other income of any kind derived directly or indirectly in connection with the operation of the Item 19 Business.

• The term Hours Per Week in the charts below refers to the number of hours that home care services were provided to (and billed to) clients each week.

Part 1 – Item 19 Businesses in Operation for 12-23 Months

Net Revenue