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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of BrightStar Care’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average revenue, displayed by quartile, earned by BrightStar franchisees for their first agency only

• 2019 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, 2019, for agencies opened 12 months or longer as of December 31, 2019

• 2019 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 12 months as of December 31, 2019

• 2019 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 24, 2019 through December 15, 2019 for all franchisee first agencies for all ongoing clients for locations open and operating 12 months or longer as of December 31, 2019

• 2019 average mix of business for all franchised agencies in operation in 2019

• 2019 average revenue by payer source for all franchised agencies in operation in 2019

• 2019 total, average, high, and low national account revenues contributed to the system by the national account program for all first agencies from January 1, 2019 through December 31, 2019

Section I – Background Information

23 Things You Need to Know About the BrightStar Care Franchise

Appoints New Chief Strategy Officer to Propel National Growth

1.  In late February 2020, BrightStar Care announced the promotion of Dean Ulizio to the role of chief strategy officer. Ulizio brings with him over 14 years’ experience with BrightStar Care. After joining the leading in-home heath care brand in 2006 as a franchisee in Colorado, Ulizio moved to the Franchise Support Center team in 2010 and led the overhaul of BrightStar Care’s technology at a time when the brand was experiencing rapid growth in sales and new units.

2.  More recently, Ulizio has been serving as BrightStar Care’s executive vice president of global strategic development. During that time, he was tasked with responsibility for new brands, product development, innovation pilots, and growth through acquisitions.

3.  As Ulizio takes on his new role as chief strategy officer, his responsibilities will focus on developing and executing the company’s business strategy, including leading and sustaining strategic initiatives that drive top line growth. His overarching goal will be to continuously improve the BrightStar Care model offered to franchisees, driving quality, efficiency, standardization, and growth.

4.  Shelly Sun, founder and chief executive officer of BrightStar Group Holdings, Inc., said, “Dean comes with a depth of knowledge of the company and its history – making him well-suited for evaluating strategic growth opportunities and nurturing innovation.”

5.  In addition, Ulizio’s role will be imperative for driving strategic growth in BrightStar Senior Living communities and overseeing product development. “BrightStar Care is well positioned to take advantage of today’s powerful healthcare industry trends for increased care in the home and more holistic solutions for people with complex needs,” said Ulizio. “It is an exciting time to be part of this team and have the opportunity to work with our partners to find new and better ways we can deliver the highest quality care to our clients.”

Joins Forces with Franworth to Accelerate PPE Distribution to Franchise Brands

6.  A few weeks after the COVID-19 pandemic hit the United States, BrightStar Care founder and CEO Shelly Sun and her team leveraged resources across the globe and quickly secured necessary PPE to ensure the safety of BrightStar Care clients and franchise employees to continue providing the highest quality of in-home care during the pandemic.

7.  With over $2 million invested in the procurement side of the equation, the BrightStar Care team enlisted the help of Franworth, a franchise-focused growth equity firm led by immediate past International Franchise Association (IFA) Chair David Barr and founder and CEO John Rotche. BrightStar Care leveraged Franworth’s state-of-the-art Fulfillment Division to facilitate and accelerate distribution of crucial PPE materials for its franchise system. Now BrightStar Care and Franworth are offering access to the PPE inventory to the franchise community at cost.

8.  With nearly 340 locations (at the time of the press release in May 2020), each BrightStar Care independently owned and operated agency employs nurses and caregivers who are on the frontline, providing in-home care and ensuring the most vulnerable population can remain safe at home and out of hospitals.

9.  Through the rapid capabilities of the Franworth Fulfillment Division’s proprietary supply chain system, BrightStar Care was able to fill and distribute orders for all franchise owners of essential PPE including N-95 masks, face shields, digital thermometers, disposable gloves, and hand sanitizer bottles. As a result, Franworth’s services enabled BrightStar Care’s independently owned and operated small businesses to continue serving and protecting the safety and well-being of their staff and clients.

10.  Shelly Sun, founder and CEO of BrightStar Care, said, “It’s been a long journey, but we wanted to support the entire franchise community in the fight against this pandemic by making PPE available for everyone regardless of who they are caring for during these times. Partnering with Franworth has made this all possible. We always want to do the right thing, so we have invested more than $2 million in PPE and vetted all sources thoroughly so that our franchisees can instead focus on their business.”

11.  Sun added, “Our goal is to protect BrightStar Care clients and ensure that our offices’ employees can continue providing the highest quality of in-home care during the pandemic. We also want to empower the entire franchise industry to truly make a difference in their local communities, and taking the workload away from them when it comes to sourcing PPE frees them up to do what they do best.”

12.  With PPE supplies in high demand, many businesses are struggling to determine how to prepare for reopening while maintaining the safety of staff and customers as items remain scarce. As leaders within the franchise industry, BrightStar Care and Franworth have expanded their partnership in an effort to help more franchisors gain access to the materials they need, extending PPE at cost to fellow IFA members through the reliable and unparalleled services of Franworth’s Fulfillment Division.

13.  Since the launch of this initiative, BrightStar Care and Franworth have fulfilled PPE orders for more than 100 franchise companies, providing them with the resources they need to reopen their business while following the health and safety guidelines of their local community.

14.  Dan Hannay, president of procurement for Franworth, added, “Limited access to PPE materials is one of the biggest challenges facing businesses today, and we’re proud to be partnering with BrightStar Care and leveraging the capabilities of Franworth’s Fulfillment Division to support the franchising community. We know that our technology and supply chain resources can alleviate some of the burden for franchisors who are trying to support their franchisees through the COVID-19 pandemic. Having an opportunity to make a positive impact on fellow IFA members has been incredibly rewarding and we look forward to helping more brands facilitate their PPE distribution needs and navigate the challenges of these unprecedented times.”

Hires New Vice President of Talent Management

15.  At the beginning of December 2020, BrightStar Care announced Russ Nykaza as the company’s new vice president of talent management. As the former vice president of human resources for ATI Physical Therapy, Nykaza joins BrightStar Care with more than 25 years of experience in the human resources field and has a proven track record of driving brand growth through retention and recruitment efforts.

16.  In his new role at BrightStar Care, Nykaza will continue to drive the brand forward as a leader in the home care space and as an employer of choice. As the vice president of talent management, he will ensure that franchisees are receiving the support they need when it comes to recruiting and retaining their staff members.

17.  Nykaza will forge new relationships that provide franchisees the opportunity to share their stories as business owners while providing transparency on programs and strategies that will benefit the brand’s overarching goals. Nykaza will also develop strategies on a regional level to help franchisees succeed within their local market. BrightStar Care is committed to providing the highest quality of care, and it all starts with hiring and retaining the best caregivers and nurses who are dedicated to excellence.

18.  Prior to working at ATI, Nykaza spent 10 years at US Cellular, where he headed the talent solutions team of a company with 4.7 million customers in 426 markets and 24 states. Nykaza will be a true asset to BrightStar Care as the brand’s focus on recruitment continues to evolve.

19.  Shelly Sun, founder and CEO of BrightStar Care, said, “We are honored to welcome Russ to the BrightStar Care family. As a brand, we always set our sights on leaders that hold a strategic vision for our company’s recruitment needs. I’m confident Russ’ background in talent retention will be beneficial for our franchisees as we continue to grow and focus on our commitment to recruitment. With over 340 locations across the United States, he will hold an essential role in carrying BrightStar Care to the next level.”

20.  Nykaza added, “This past year has shown us that home care will continue to be on the rise as families are thinking of long-term options more than ever before. I am looking forward to utilizing my experience in helping BrightStar Care reach new levels of excellence and build meaningful relationships with the wonderful BrightStar Care franchisees.”

Company History

21.  BrightStar Care was founded in 2002 by Shelly Sun and her husband in Gurnee, Illinois. Sun wanted to start her own senior home care business after she was unsatisfied with the care her Grandma Pat received. After Grandma Pat passed away, Sun spent time reflecting on what she was originally looking for all along – a caring company that offered 24/7 service and the full range of non-medical and medical care. Sun knew that other families were also seeking out high-quality care and she developed the idea for BrightStar Care.

22.  The early success of BrightStar Care led Sun to open an additional location. A few years later, in 2005, Sun began looking into expanding the company through franchising. In 2006, Sun started franchising BrightStar Care. Over the next decade, BrightStar Care expanded around the United States and Canada. By 2018, there were over 329 BrightStar Care locations in North America. That same year, BrightStar Care expanded further by acquiring Iowa-based HomeChoice Senior Care.

Entrepreneur’s Franchise 500

23.  BrightStar Care ranked No. 237 on Entrepreneur’s 2021 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

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

2018

• Outlets at the Start of the Year:  317
• Outlets at the End of the Year:  319
• Net Change:  +2

2019

• Outlets at the Start of the Year:  319
• Outlets at the End of the Year:  313
• Net Change:  -6

Company-Owned

2017

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

2018

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  13
• Net Change:  +9

2019

• Outlets at the Start of the Year:  13
• Outlets at the End of the Year:  6
• Net Change:  -7

Section V – Financial Performance Representations (Item 19, 2020 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.

• 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.

2019 Average Revenue for Franchisees Open 12 Months or Longer