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

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

• 2019 annualized premium (i.e. the amount of premium customers pay for policies in one year) and annual commission revenue for the 162 Associate Agency Owners (AAOs) operating the 177 Brightway Insurance locations that were open for more than 12 months as of December 31, 2019

• 2019 average number of new business policies and new business annualized premiums generated by 296 producers of the 99 Brightway Insurance locations that met Brightway’s then-current staffing requirements

• 2019 average agency revenues, compensation expense, other operating expense, and pre-tax operating profit for the 64 Brightway Insurance locations that were open for 5 full years as of December 31, 2019

• 2019 average compensation expense, marketing expense, rent, and other operating expenses for the 99 Brightway Insurance locations that met Brightway’s then-current staffing requirements

• average annual commissions paid to AAOs during the calendar years ranging from 2010 to 2019, after taking into account the percentage of commissions retained by Brightway Insurance

• 2019 average new business policies sold and new business annualized premiums by Brightway Insurance location and by employee count

• 2019 average commission percentage retained by Brightway Insurance for the 177 Brightway Insurance locations open more than 12 months as of December 31, 2019

Section I – Background Information

19 Things You Need to Know About the Brightway Insurance Franchise

Opens 200th Store

1.  In late January 2020, Brightway Insurance celebrated its 200th store opening at the company’s annual conference for franchisees held in Orlando. The announcement came on the heels of the company making Entrepreneur’s Franchise 500 list for the seventh time.

2.  Michael Miller, president and CEO of Brightway, said, “When my brother, David, and I started franchising in 2008, we knew we had a great concept, but we had no idea how quickly we’d grow. Our success speaks to our alignment with all of our partners and with whom we are thrilled to celebrate this milestone. Thanks to the great work of our franchisees, their teams and our employees and to our loyal customers, the sky’s the limit. Not only are our franchisees realizing their dreams of business ownership through Brightway, but we’ve also created hundreds of jobs and are always looking for talented individuals to start their insurance careers with us.”

3.  The company employs about 240 people in its Jacksonville-based corporate office. The corporate office provides expertise in areas including Customer Service, Accounting, Marketing, Distribution, Business Analytics, Carrier Appointments, Licensing, Onboarding, Training, Hiring and Retaining personnel. The company’s signature after-the-sale service empowers franchisees to focus on new business sales and provides their customers the personalized service they deserve.

4.  In addition to achieving the 200-store milestone, here are a few other 2019 year-end indicators of the company’s growth and success:

• Locations in 22 states, up from one in 2008;
• $636 million in annualized written premium, up from $36 million at year-end 2008;
• 290,000 customers, up from 19,000 in 2008.

Introduces Flexibility That Will Help New Franchisees Open a Business in a COVID-19 World

5.  In mid-April 2020, Brightway Insurance adapted to the changes brought on by the COVID-19 pandemic by offering flexibility to its franchise contract that will make it easier than ever to get started with franchise ownership during these unprecedented times. “We’re now offering a safe, stay-at-home experience for franchisees to launch their businesses quickly while deferring costs incurred until they are able to open their insurance store,” said Michael Miller, president and CEO of Brightway.

6.  Normally when a new Brightway franchisee opens a retail location, the company requires the store to be in a traditional retail space with a storefront. Franchisees also must have three employees working in the location by the end of the first year in business. Under the agreement available while COVID-19 stay-at-home orders are in place, the company is not requiring the new franchisee to open a retail office space or to staff according to the traditional agreement.

7.  Rather, new franchisees may work from home initially. Once officials lift stay-at-home orders, a franchisee will have 60 days to find a professional office space for the business. When the office space is operational, the franchisee will have 90 days to hire an employee. Providing such flexibility for new franchisees will reduce initial expenses involved with leasing retail office space and outfitting it with furniture and exterior signage. The franchisee will have one year from the time the business moves into the office space to relocate to a fully operational retail space with three employees.

8.  Miller added, “Our cloud-based infrastructure empowers our franchisees to continue to operate and be there for our customers in their greatest hour of need. We’re extremely proud of the recession-proof business opportunity we’ve created where franchisees earn residual income year-over-year as policies renew no matter the economic forecast, and we’re pleased to offer this flexible opportunity for people who want to open a Brightway franchise.”

9.  Brightway’s low-risk, high-reward business opportunities allow people from a wide variety of backgrounds to prosper. In addition to providing holistic business support, Brightway has relationships with hundreds of insurance companies, giving franchisees the ability to offer more choice in insurance brands to consumers. During tough financial times, having options is incredibly important for consumers.

Announces New Agency Ownership Franchise for $5,000 Franchise Fee with Free Second Unit

10.  In late June 2020, Brightway Insurance, one of the largest Personal Lines insurance agencies in the U.S. and one of very few franchises that pay residual income, announced that it was making it easier than ever to open a franchise with the company. Brightway introduced a new path for those seeking a franchise ownership opportunity in the Brightway system, with a new option to join with a $5,000 franchise fee. And, for the $5,000 fee, the franchisee has the right to open their first two locations.

11.  According to Michael Miller, president and CEO of Brightway, “Over the past few months, we took the opportunity to look closely at what we were offering and considered how we could make it easier for people who want to open a Brightway franchise. We believe this new option with a lower franchise fee will open the door for many more people who wish to go into business for themselves. We are thrilled to be able to offer different franchise options, whether it is your goal to operate an Office Agency by yourself or to open five Retail Agencies in different states with large sales teams, we have something for everyone.”

12.  For those who wish to operate a Brightway Agency in a professional office space, they can join the company’s Office Agency model in two ways. With the new $5,000 franchise fee option, a franchise owner would enjoy a commission split of 60% on New Business and 50% on Renewals. For those wishing to earn a higher commission rate on New Business, an Enhanced option is available for an additional $25,000 that will earn franchisees 80% on New Business.

13.  In addition to the two levels of the Office Agency model in which franchisees can work from a professional office space, the company continues to offer their flagship Retail Agency franchise model that features the greatest benefits and revenue potential. The franchise fee for the Retail Agency model is $60,000, and franchisees earn up to 100% New Business commission and 55% commission on Renewals.

14.  Regardless of which model the franchisee chooses, they can open their first two locations for the same franchise fee, and they can hire remote workers in their market to help them grow even faster. Leslie Wright, chief of staff of Brightway, added, “We want to make it as easy as possible for all of our franchisees to add Producers; each Producer an Agency Owner adds can help the owner build wealth faster.”

Company History

15.  Brightway Insurance traces its history back to 2003 when brothers David Miller and Michael Miller purchased the Jennings Insurance Agency. The company initially started out small, but within a few short years it grew large enough for the Millers to form The Miller Insurance Group.

16.  In 2007, the Millers changed the company’s name to Brightway Insurance, which is a national property/casualty insurance retailer selling through a network of franchised independent agencies throughout the country. The following year, the Millers began franchising the Brightway concept and by the end of the year, the company had grown to 38 franchised locations and $36 million in annualized written premium.

17.  Over the next decade, Brightway continued to grow around the United States. In 2018, Brightway’s 10th anniversary, the Millers said that the company had far surpassed their initial goal of turning Brightway into a $10 million business within its first decade – Brightway had $541 million in annualized written premium by 2018.

18.  Today, there are Brightway offices in more than 17 states, serving customers across all 50 states.

Entrepreneur’s Franchise 500

19.  Brightway Insurance ranked No. 190 on Entrepreneur’s 2021 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

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

2019

• Outlets at the Start of the Year:  178
• Outlets at the End of the Year:  203
• Net Change:  +25

Company-Owned

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

2019

• 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, 2020 FDD) and Analysis

• As of December 31, 2019, Brightway Insurance had 203 franchised Brightway Locations. The data presented in the tables below sets forth the financial performance of certain subsets of the 177 Brightway Locations that commenced operations prior to December 31, 2018 and were open and operating for the entire 2019 calendar year (the “Included Locations”).

• Because none of Brightway’s Office Agents were open prior to December 31, 2018, all of the Included Locations are Retail Agencies.

• In addition to excluding all Brightway Locations that were not open and operating for the entire 2019 year, Brightway also excluded the Brightway-owned home office location.

Part 1 – Summary of Annualized Premium by Associate Agency Owners (2019)

• The information presented below shows the Annualized Premium of the 162 Associate Agency Owners (AAOs) operating the 177 Included Locations for the 2019 calendar year. The 177 Included Locations in Part 1 were open for more than 12 months as of December 31, 2019.

• The Annualized Premium of Brightway’s multi-unit owners are combined because the multi-unit owners are permitted to share business across their locations, and the number of multi-unit owners in each subset are shown below.

• 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.

• 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 2019 Calendar Year

Over $27M