FDD Talk: BrightStar Care Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk 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 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a BrightStar Care franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned BrightStar Care outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of BrightStar Care’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average revenue, displayed by quartile, earned by BrightStar franchisees for their first agency only

• 2017 average, median, high, and low gross margin percentage for all agencies opened by franchisees as their first agency (regardless of how long the agencies were in operation during the particular year), including all resale agencies, for the full year as of December 31, 2017, for agencies opened 3 months or longer as of December 31, 2017

• 2017 average, high, and low hours billed per client per week for all franchisee first agencies, including all resale locations, open and operating for at least 3 months as of December 31, 2017

• 2017 average weekly hours worked per employee, number of employees per week, and number of clients per week during the four pay periods running from November 26, 2017 through December 17, 2017 for all franchisee first agencies for all ongoing clients for locations open and operating 3 months or longer as of December 31, 2017

• 2017 average mix of business for all agencies in operation in 2017

• 2017 total, average, high, and low national account revenues contributed to the system by the national account program for all first agencies from January 1, 2017 through December 31, 2017

Section I – Background Information

15 Things You Need to Know About the BrightStar Care Franchise

Continues Nationwide Expansion with Acquisition of Iowa-Based HomeChoice Senior Care

1.  At the beginning of April 2018, BrightStar Care said that it was expanding its nationwide presence even further starting with the acquisition of Iowa’s top home care agency, HomeChoice Senior Care. As of April 1st, HomeChoice Senior Care joins BrightStar Care and will offer the same higher standard of care that the senior care franchise provides to clients across the country.

2.  Led by its executive director Koleene Herlocker, HomeChoice Senior Care was founded in 2009 and quickly became the go-to service provider of reliable non-medical care, housekeeping, and full, 24-hour assistance in Cedar Rapids, Iowa City, Des Moines, and surrounding communities.

3.  Prior to working with HomeChoice Senior Care, Herlocker owned and operated several Sylvan Learning Centers across Iowa. After her career at Sylvan, Herlocker transitioned to a consultant for small- to medium-sized businesses throughout the United States until she became owner and executive director of HomeChoice Senior Care in 2009.

4.  Herlocker said, “Because of my background with Sylvan Learning Centers, I was very well aware of the advantages to being part of a franchise system. We have been approached multiple times about the potential of selling to franchise networks, but frankly none of them offered us anything that we couldn’t produce and create on our own until BrightStar Care. We’ve always excelled at adopting new ideas, policies and procedures to enhance service for our clients and we are excited to move forward with BrightStar Care as it is a huge opportunity for our team as well as current and future clients.”

5.  Now operating as BrightStar Care, HomeChoice Senior Care will continue to deliver the same commitment to person-centered care at the highest professional standards Iowa residents have counted on since 2009. With the new partnership, clients will now have access to the same caregivers and office staff overseeing clients and each plan of care plus BrightStar Care’s national resources, skilled nursing services, and the same accreditation as the country’s best hospitals and nursing homes.

6.  Partnerships with independent providers like HomeChoice are part of BrightStar Care’s overall strategy to enter new markets by converting existing agencies to a BrightStar Care.

7.  Shelly Sun, founder and CEO of BrightStar Care, said, “With Koleene and her team, we found the perfect partners in Iowa: respected, caring, dedicated people who share our passion for person-centered care at the highest professional standards. This partnership puts BrightStar in three important cities, Cedar Rapids, Iowa City and Des Moines, where we can combine the best of our business with the best of HomeChoice Senior Care’s model.”

Appoints New Vice President of Franchise Development

8.  In late October 2018, BrightStar Care announced a key addition to its senior leadership team as Pete First was appointed as the new vice president of franchise development. With extensive experience in the franchise industry, coupled with his goal of expanding the brand to new, untapped markets across the country, First will be primarily responsible for BrightStar Care’s domestic franchise development.

9.  Prior to joining BrightStar Care, First spent 14 years at Winmark Corporation, the franchisor for brands such as Play It Again Sports, Once Upon A Child, Plato’s Closet, Style Encore, and Music Go Round. During his tenure at Winmark, First awarded dozens of new franchise agreements annually and helped build the system to over 1,200 locations across North America.

10.  With his expertise in growing franchise brands, First plans to immediately step in and assist in achieving BrightStar Care’s goal to develop the brand through strategic and targeted growth. In his new position, First’s day-to-day responsibilities will include providing leadership, strategy, and direction to the franchise sales team in addition to putting systems in place that will improve the overall franchise sales process.

11.  First’s growth goals include adding successful franchisees to the brand in an effort to rapidly expand to new and currently underserved markets. First added, “BrightStar Care franchisees and their caregivers make a difference in the lives of their clients every day. I look forward to working with the BrightStar team to further expand the brand and provide an opportunity for our franchisees to serve new clients across the country.”

12.  Shelly Sun, CEO and founder of BrightStar Care, said, “Pete has a rich history in franchising and he is a crucial addition to our Senior Leadership Team as he brings with him decades of experience and knowledge that will be pivotal in driving BrightStar Care’s expansion strategy in the years to come.”

Company History

13.  BrightStar Care was founded in 2002 by Shelly Sun and her husband J.D. Sun in Gurnee, Illinois. The Suns wanted to offer higher-quality home care services for seniors as they personally needed help caring for an aging loved one, but didn’t know where to look for quality care. After this experience, the Suns wanted BrightStar Care to be more dependable, more supportive, and more complete than other senior home care services.

14.  The Suns started franchising the BrightStar Care concept in 2005 and spent the next few years expanding across the United States. As franchises began to sell, Shelly Sun, who is the CEO of BrightStar Care, set about building scalable operations and infrastructure, including a centralized technology function and custom software for franchisees. Today, there are BrightStar Care locations across the United States serving over 20,000 families.

Entrepreneur’s Franchise 500

15.  BrightStar Care ranked No. 184 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of BrightStar Care franchise costs, based on Item 7 of the company’s 2018 FDD.

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

• Please click here for detailed information on BrightStar Care’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  265
• Outlets at the End of the Year:  289
• Net Change:  +24

2016

• Outlets at the Start of the Year:  289
• Outlets at the End of the Year:  305
• Net Change:  +16

2017

• Outlets at the Start of the Year:  305
• Outlets at the End of the Year:  317
• Net Change:  +12

Company-Owned

2015

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

2016

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

2017

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

Part 1 – Franchisee Revenue (First Agency Only)

• In some instances, franchisees operate more than one BrightStar agency. Parts 1-3 include financial information only for the franchisee’s first agency.

• Information only for first agencies is presented in certain sections of BrightStar’s Item 19 because during the economic downturn of 2008 through 2012, many franchisees were unable to secure the capital needed to follow the full business model in their additional agencies.

• Delays were allowed in securing office locations and personnel to follow the business model in these additional agencies. Where appropriate, BrightStar worked with franchisees to downsize to one agency if they lacked the access to capital required to develop their additional units.

• This section illustrates the average revenue, displayed by quartile, earned by BrightStar franchisees for their first agency only.

• For purposes of this financial performance representation, “Quartile” refers to the relative performance of the BrightStar Agencies. Specifically, “Quartile 1” refers to the top 25% of performing Agencies, “Quartile 2” refers to the next highest 25% of performing Agencies, “Quartile 3” refers to the next highest 25% of performing Agencies, and “Quartile 4” refers to the bottom 25% of performing Agencies.

2017 Average Revenue for Franchisees Open 12 Months or Longer