FDD Talk: Brightway Insurance 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 Brightway Insurance franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Brightway Insurance franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Brightway Insurance franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Brightway Insurance outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Brightway Insurance’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 annualized premium (i.e. the amount of premium customers pay for policies in one year) for the 142 Brightway Insurance locations that were open for more than 12 months as of December 31, 2018

• 2018 “sales velocity” (i.e. new business commission revenue during the 2018 calendar year compared with total commission revenue from the 2017 calendar year) for the top 25%, bottom 25%, and all Brightway Insurance locations that were open for more than 24 months as of December 31, 2018

• 2018 average revenue, compensation expense, marketing expense, rent, other operating expense, and pre-tax operating profit for the 61 Brightway Insurance locations that were open for 5 full years as of December 31, 2018

• average commissions paid to Brightway Insurance during the calendar years ranging from 2010 to 2018, broken down by Brightway Insurance location, before taking into account the percentage of commissions retained by Brightway Insurance

• average commissions paid to Associate Agency Owners (AAOs) during the calendar years ranging from 2010 to 2018, after taking into account the percentage of commissions retained by Brightway Insurance

• 2018 new business policies sold and new business annualized premiums, per Brightway Insurance location and per producer (separately stated)

• 2018 average commission percentage retained by Brightway Insurance for the 142 Brightway Insurance locations open more than 12 months as of December 31, 2018

Section I – Background Information

17 Things You Need to Know About the Brightway Insurance Franchise

Launches Online Assessment Tool to Help Franchise Owners Recruit Rockstar Agents

1.  In late August 2019, Brightway Insurance introduced a new tool to franchise owners that takes its support to the next level. The tool, called The Predictive Index, will change the way Brightway franchisees recruit in 21 states across the U.S.

2.  According to Scott Pollard, Brightway’s director of agency development and carrier relations, “The Predictive Index is a powerful tool that well-known brands are using to hire the right people and to increase revenue. We’re thrilled to offer the tool to our franchisees to help them assess talent and benchmark candidates against the most successful Agents in the Brightway system at no cost to them. We believe it will be a game-changer that will help our franchisees grow their sales teams and business faster than ever before.”

3.  Prior to introducing The Predictive Index to all franchisees, the company piloted it among a small sample of franchisees who were actively hiring. Here’s what the franchisees had to say:

• Kara Turnage, owner of a Brightway Insurance franchise in Magnolia, Texas, said, “I recently opened my Brightway Agency and used The Predictive Index to determine which candidate I should interview. It gave me insights that resumes don’t. I’ve been really pleased with my choice and will turn to The Predictive Index in the future to select top talent.”

• Rachel Davidson, owner of a Brightway Insurance franchise in Dothan, Alabama, said, “In my recent season of employee transition, The Predictive Index was a helpful tool in the process of getting to know the applicants. The assessment I did on myself was eerily accurate, and it was interesting matching myself to the two candidates that we asked to complete the assessment. I plan to use it moving forward, comparing and contrasting personality types, potential strengths and weaknesses.”

4.  Through the new Predictive Index program, Brightway provides each franchise owner with a unique link to The Predictive Index assessment and a business card they can pass out to drive potential candidates to take the online assessment. Candidates can also find the link on the Careers page of the franchisee’s website.

5.  When a candidate completes the online assessment, the franchisee and the candidate receive the results online. The franchise owner can review the candidate’s results and how the candidate compares to Brightway’s top Agents, and use the results to determine if the candidate is a good fit for the sales team. Furthermore, The Predictive Index provides franchisees with suggested interview questions based on each candidate’s survey responses.

6.  Mike Zani, CEO of The Predictive Index, said, “It’s so gratifying to see a vaunted company like Brightway joining the ranks of forward-thinking companies using The Predictive Index to align their people strategies with their business strategies.”

Reaches $600 Million in Annualized Written Premium

7.  In mid-July 2019, Brightway Insurance reached $600 million in annualized written premium, a major milestone for the company, which started franchising in 2008 and finished that year with $38 million in premium.

8.  Michael Miller, co-founder and CEO of Brightway Insurance, said, “Nearly 11 years ago, we looked at the industry and started asking, ‘What should be?’ and from there built a model that delivers a world class experience to our customers and a comprehensive system of support that helps our franchise owners achieve success. We continue to learn, grow, challenge ourselves and improve every day, and I can’t wait to see what the future holds for the company and our business partners.”

9.  In addition to achieving the $600 million milestone, Brightway also celebrated other recent achievements recognized by the Jacksonville Business Journal:

• Ranking No. 1 for the eighth year in a row on the list of top Independent Insurance Agencies in Northeast Florida;

• Landing on the list of fastest-growing companies in Northeast Florida for the 11th consecutive year;

• Earning the title as one of the Best Places to Work in Northeast Florida for the second year in a row.

10.  Miller added, “Not only are entrepreneurs realizing their dreams of business ownership through Brightway, but because of our success and growth, we’ve created jobs in Jacksonville. Today, we employ about 250 people in a variety of positions at our Jacksonville headquarters.”

Agencies in Florida Collect Donations to Aid the Bahamas’ Hurricane Recovery

11.  In early September 2019, in the wake of the devastation left by Hurricane Dorian in the Bahamas, several Brightway Insurance Agencies in Florida acted quickly to offer up offices as collection sites to aid in recovery efforts.

12.  Hurricane Dorian pummeled the Bahamas with high winds and flooding rains for over 48 hours, leaving the islands in complete ruins and survivors of the category 5 storm in desperate need of supplies. Brightway Insurance provided a list of its locations assisting the Hurricane Dorian relief efforts and ways everyone could help.

13.  Brightway enterprise owner Josh Hite – who owns Brightway locations in Boynton Beach and Lake Worth where donations were being collected – said, “We were very fortunate to not have been directly impacted by Hurricane Dorian. Unfortunately, our neighbors in the Bahamas have been devastated, and it is going to be a very long process for recovery. We are going to do everything we can to help the Bahamas by engaging the local community to come together and help support the victims of Hurricane Dorian.”

Company History

14.  Brightway Insurance traces its history back to 2003 when brothers David Miller and Michael Miller purchased the Jennings Insurance Agency. The company started out with one office and three employees, but eventually grew large enough that the Millers formed the Miller Insurance Group.

15.  The Millers changed the company’s name to Brightway Insurance in 2007 and started official franchise operations the following year. By the end of 2008, Brightway Insurance had 38 franchised locations and $36 million in annualized written premium.

16.  When they started Brightway Insurance, the Millers had a goal of growing it into a $10 million business in 10 years. The Millers far surpassed their goal by 2018 and had grown the company to 170 locations and $541 million in annual written premium.

Entrepreneur’s Franchise 500

17.  Brightway Insurance ranked No. 254 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Brightway Insurance franchise costs, based on Item 7 of the company’s 2019 FDD.

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

• Please click here for detailed information on Brightway Insurance’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  116
• Outlets at the End of the Year:  134
• Net Change:  +18

2017

• Outlets at the Start of the Year:  134
• Outlets at the End of the Year:  152
• Net Change:  +18

2018

• Outlets at the Start of the Year:  152
• Outlets at the End of the Year:  178
• Net Change:  +26

Company-Owned

2016

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2017

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  1
• Net Change:  -1

2018

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• As of December 31, 2018, Brightway Insurance had 178 franchised Brightway Locations. The data presented in the tables below sets forth the financial performance of certain subsets of the 142 Brightway Locations that commenced operations prior to December 31, 2017 and were open and operating for the entire 2018 calendar year (the “Included Locations”).

• In Item 19, Brightway Insurance has excluded all Brightway Locations that were not open and operating for the entire 2018 year, as well as the Brightway-owned home office location.

Part 1 – Summary of Current Annualized Premium by Location (2018)

• The information presented below shows the Annualized Premium of the 142 Included Locations for the 2018 calendar year. The 142 Included Locations in Part 1 were open for more than 12 months as of December 31, 2018.

• Part 1 provides a snapshot of the size of the book of business associated with each of the Included Locations, which is a commonly-referenced metric used in the insurance industry to determine agency size.

• Part 1 also includes the average “Tenure” of the Included Locations in each subset, which is the number of 12-month periods for which a Brightway Location had received commissions as of the end of the 2018 calendar year.

• “Annualized Premium” is defined as the amount of premium customers pay for policies in one year; if a policy is issued in a six-month term, the premium amount is doubled.

Annualized Premium for 2018 Calendar Year

Over $20M