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 2021 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 2021 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 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of BrightStar Care’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average revenue, displayed by quartile, earned by BrightStar franchisees for their first agency only

• 2020 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, 2020, for agencies opened 12 months or longer as of December 31, 2020

• 2020 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, 2020

• 2020 average weekly hours worked per employee, number of employees per week, and number of clients per week for full year 2020

• 2020 average mix of business for all franchised agencies in operation in 2020

• 2020 average revenue by payer source for all franchised agencies in operation in 2020

• 2020 total, average, high, and low national account revenues contributed to the system by the national accounts program for all franchised agencies for the 2020 fiscal year

Section I – Background Information

19 Things You Need to Know About the BrightStar Care Franchise

Joins Alliance to Redefine Care in Home

1.  In late April 2021, BrightStar Care announced that it has joined Moving Health Home, a coalition of pioneering healthcare companies aiming to change how policymakers think about home as a site of clinical service. BrightStar Care joins founder members Amazon Care, Landmark Health, Signify Health, Dispatch Health, Elara Caring, Intermountain Healthcare, Home Instead, Ascension, and Amwell in the coalition’s efforts to define what home care looks like in the future.

2.  Formed in March 2021, Moving Health Home members are working to change federal and state policy to enable the home to be a clinical site of care. The pandemic has put into sharper focus the urgent need for safe and reliable in-home care. But this more modern way of approaching holistic care needs is not accessible to millions of Americans. Moving Health Home will advocate for increased access to high-quality home-based services and will also push for permanent flexibility to transfer or treat patients in their home when it is found clinically appropriate.

3.  Krista Drobac, founder of Moving Health Home, said, “Based on evidence, we know that it is possible for Americans to receive health care in their homes, and we want to ensure that we work with leaders in the health care industry that can support our mission to change the culture around institutional care. We are excited to welcome BrightStar Care to the coalition as we believe their reputation and experience with home care will move our mission forward.”

4.  Shelly Sun, founder and CEO of BrightStar Care, said, “The future of healthcare is in the home, and BrightStar Care is honored to be a part of a coalition that is set to change how our country approaches access to clinical care. The pandemic showed us how important it is to keep the most vulnerable safe at home, and we are proud to be joining Moving Health Home’s mission to explore opportunities to further advance a national conversation around increasing access to home-based care services.”

5.  BrightStar Care is uniquely positioned within the coalition to share home care best practices and expertise from its 2.8 million care encounters annually to help ensure the needs of senior and long-term care patients are represented in conversations with policymakers. The brand will also draw on almost 2 decades of home care experience and a network of over 340 locations in key discussions regarding site of service flexibility for clinical care.

7.  There are over 4.7 million Americans who rely on home care services, with the number set to grow rapidly as the U.S. population ages. Understanding this, BrightStar Care has long been advocating for home care to be recognized as an important part of the healthcare system. The importance of these efforts has been highlighted during the pandemic as the home has become the preferred setting for delivering care.

8.  BrightStar Care’s commitment to quality is evidenced by the Joint Commission accreditation of all of its agencies and its approach to managing outcomes and change of condition to ensure that home-bound patients can safely age at home while receiving the highest quality of care possible.

9.  BrightStar Care is passionate about being at the forefront of changing the home-care model and will continue to champion the higher standard of care through aligning itself with like-minded organizations. BrightStar Care is already working with health systems, post-acute care networks, and other leading healthcare organizations to provide the homecare and staffing capabilities needed for innovative programs such as Hospital at Home and SNF Alternatives.

10.  The company’s existing partnership experience and extensive knowledge of the home care industry will complement the other members of the Moving Health Home coalition and its ongoing efforts to improve quality of care for home-bound patients.

Appoints New Vice President of Talent Management

11.  At the end of February 2021, BrightStar Care named Russ Nykaza as vice president of talent management. Nykaza joined BrightStar Care with more than 25 years of experience in the human resources field and a proven track record of driving brand growth.

12.  “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,” noted Nykaza, the former vice president of human resources at ATI Physical Therapy. “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.”

13.  Nykaza continued, “I’m looking forward to putting programs in place to provide the support our owners need in their efforts to identify and attract the right talent – talent that reflects the commitment and qualities of the BrightStar Care brand. We will leverage existing platforms as well as introduce new ones to provide increased visibility into staff utilization and availability. The goal is for heightened engagement levels throughout the employee life cycle with a focus on improving retention.”

14.  As vice president of talent management, Nykaza will ensure that franchisees are receiving the support they need when it comes to recruiting and retaining their staff members. Nykaza will forge new relationships that provide franchisees the opportunity to share their stories as business owners while giving transparency to programs and strategies that will benefit the brand’s overarching goals. He will also develop strategies on a regional level to help franchisees succeed within their local market.

15.  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 who 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.”

Company History

16.  BrightStar Care was founded in 2002 by Shelly Sun and her husband in Gurnee, Illinois. Sun wanted to start her own home healthcare company after she and her family struggled to find quality care for her grandmother, Grandma Pat, in 2001. After Grandma Pat passed away, Sun thought more about what she originally wanted out of homecare for her grandmother. Sun was looking for a company that offered 24/7 service and the full range of non-medical and medical care. She felt that other families felt the same and set out to start a homecare company that met those needs.

17.  After successfully running the first BrightStar Care location for a few years, Sun toyed with the idea of expanding the company through franchising. After careful validation of the business model at two other company-owned locations, BrightStar Care opened its first franchise location in 2006.

18.  Over the next decade, BrightStar Care grew around the United States and Canada. By 2018, there were over 329 BrightStar Care locations in North America. To further fuel its growth, BrightStar Care acquired Iowa-based HomeChoice Senior Care in 2018. Today, BrightStar Care is one of the largest homecare franchises in North America and Shelly Sun continues to serve as the company’s CEO.

Entrepreneur’s Franchise 500

19.  BrightStar Care ranked No. 155 on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of BrightStar Care franchise costs, based on Item 7 of the company’s 2021 FDD.

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

• 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 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

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

2020

• Outlets at the Start of the Year:  313
• Outlets at the End of the Year:  329
• Net Change:  +16

Company-Owned

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

2020

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  3
• Net Change:  -3

Section V – Financial Performance Representations (Item 19, 2021 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.

2020 Average Revenue for Franchisees Open 12 Months or Longer

• System:  $2,152,771
• Quartile 1:  $4,436,359
• Quartile 2:  $1,955,063
• Quartile 3:  $1,393,547
• Quartile 4:  $821,721

2020 Average Revenue for Franchisees Open 24 Months or Longer

• System:  $2,236,391
• Quartile 1:  $4,528,809
• Quartile 2:  $2,002,230
• Quartile 3:  $1,459,065
• Quartile 4:  $931,936

First Year Average Revenue:  $396,166

Second Year Average Revenue:  $929,110

Third Year Average Revenue:  $1,189,392

Fourth Year Average Revenue:  $1,415,263

Fifth Year Average Revenue:  $1,611,924

Sixth Year Average Revenue:  $1,733,662

Seventh Year Average Revenue:  $1,823,832

Eighth Year Average Revenue:  $1,912,071

Ninth Year Average Revenue:  $2,026,719

Tenth Year Average Revenue:  $2,221,120

Eleventh Year Average Revenue:  $2,517,602

Twelfth Year Average Revenue:  $2,709,605

Thirteenth Year Average Revenue:  $3,271,832

Fourteenth Year Average Revenue:  $2,217,543

Part 2 – Franchisee Margins (First Agencies Only)

• The following section identifies the Gross Margin Percentage of BrightStar Care franchisees. Gross Margin Percentage is defined as Gross Margin divided by Revenues. Gross Margin is defined as Revenues less Cost of Goods Sold. Cost of Goods Sold includes all direct and indirect costs related to field employees including payroll, payroll taxes, benefits, screening costs, workers’ comp insurance, crime bond costs, professional and general liability insurance.

• BrightStar uses a 20% average load onto known payroll costs to estimate COGS. The 20% is based on the franchise system average estimates.

• The information contained below includes information 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, 2020, for agencies opened 12 months or longer as of December 31, 2020.

• Average Gross Margin Percentage:  43.2%
• Median Gross Margin Percentage:  42.5%
• High Margin:  72.5%
• Low Margin:  17.6%
• Number of Agencies:  177
• Number and Percentage of Agencies That Attained or Exceeded Average Amount:  79 (45%)

Part 3 – Data Analysis of Client and Employee Statistics (First Agency Only)

A.  Hours Billed Per Client Per Week

• The information below reflects the average, median, high, and low hours billed per client per week during calendar year 2020 for all franchisee first agencies, including all resale agencies, open and operating for at least 12 months, as of December 31, 2020.

• Average Hours Billed Per Week:  28.6
• Median Hours Billed Per Week:  26.3
• High Per Week:  82.6
• Low Per Week:  5.4
• Number of Agencies:  173
• Number and Percentage of Agencies That Attained or Exceeded Average Amount:  78 (45%)

B.  Number of Clients and Employees Serviced Per Agency

• The information below reflects the average weekly hours worked per employee; average number of employees worked per week; and average number of clients per week for full year 2020.

• The information below contains information for all franchised first agencies for all ongoing clients for agencies open and operating 12 months or longer as of December 31, 2020.

Average Weekly Revenue:  $0 to $5,000

• Average Weekly Hours Per Employee:  17.2
• Average Weekly Employees:  4.5
• Average Weekly Customer Count:  4.4

Average Weekly Revenue:  $5,000 to $10,000

• Average Weekly Hours Per Employee:  15.7
• Average Weekly Employees:  11.6
• Average Weekly Customer Count:  12.2

Average Weekly Revenue:  $10,000 to $20,000

• Average Weekly Hours Per Employee:  19.5
• Average Weekly Employees:  25.1
• Average Weekly Customer Count:  27.3

Average Weekly Revenue:  $20,000 to $30,000

• Average Weekly Hours Per Employee:  22.7
• Average Weekly Employees:  33.6
• Average Weekly Customer Count:  29.6

Average Weekly Revenue:  $30,000 to $40,000

• Average Weekly Hours Per Employee:  23.8
• Average Weekly Employees:  47.5
• Average Weekly Customer Count:  44.4

Average Weekly Revenue:  $40,000 to $50,000

• Average Weekly Hours Per Employee:  24.3
• Average Weekly Employees:  62.3
• Average Weekly Customer Count:  54.5

Average Weekly Revenue:  $50,000 to $60,000

• Average Weekly Hours Per Employee:  24.6
• Average Weekly Employees:  65.6
• Average Weekly Customer Count:  54.1

Average Weekly Revenue:  $60,000 to $75,000

• Average Weekly Hours Per Employee:  25.3
• Average Weekly Employees:  76.9
• Average Weekly Customer Count:  69.1

Average Weekly Revenue:  Over $75,000

• Average Weekly Hours Per Employee:  26.3
• Average Weekly Employees:  116.3
• Average Weekly Customer Count:  100.2

Part 4 – Franchisee Mix of Business

• The section below provides information for the 2020 fiscal year by line of business and includes billed revenue from the ABS operating system for all franchised agencies in operation in 2020, regardless of whether (i) the agency was the franchisee’s first, second, or subsequent BrightStar agency, or (ii) the agency operated during the entire 12-month period.

• The franchisee’s mix of business consists of 4 lines of business: Personal Care, Companion Care/Child Care, Skilled Services, and Staffing.

• Personal Care services are primarily provided by specially-trained Certified Nursing Assistants and Home Health Aides. They help patients with activities of daily living and other medical healthcare needs under the direct supervision of a Registered Nurse (RN) or a Licensed Practical Nurse (LPN).

• Companion Care/Child Care services are primarily provided by caregivers who provide care and comfort and basic chores such as medication reminders, lite housekeeping, errands, and meal prep like Certified Nursing Assistants, but without the medical assistance.

• Skilled Services are medical services provided by skilled professionals like nurses, physical therapists, or other licensed medical professionals. This type of care usually allows care providers to administer only what has been prescribed by the patient’s doctor.

• Staffing includes a variety of staffing done either in a facility or in a patient’s home under a staffing contract where a third party is directing the plan of care. There are various types of staffing, including but not limited to per diem/shift, direct placement, visit, companion care, personal care, and skilled care.

• Number of Agencies:  327
• Personal Care:  50.9%
• Skilled Services:  31.0%
• Companion Care/Child Care:  5.8%
• Subtotal:  87.7%
• Staffing:  12.3%
• Total:  100.00%

Part 5 – Payer Sources

• The table below provides information for the 2020 fiscal year by payer source. The table below includes all franchised agencies in operation during 2020, regardless of whether: (i) the agency was the franchisee’s first, second, or subsequent BrightStar agency, and (ii) the agency operated during the entire 12-month period.

• Self Pay – Private Individual:  46.5%
• National Account:  12.9%
• Medicaid:  10.4%
• Local Contract Amount:  9.8%
• Self Pay – Business/Facility:  6.8%
• Veterans Administration:  3.8%
• Long-Term Care Insurance:  2.0%
• Other:  7.8%
• Total:  100.0%

Part 6 – National Accounts

• Beginning in August 2007, BrightStar made a concerted effort to seek out and establish contracts that were national in scope to increase the Revenues of its franchisees (“National Account Contracts”).

• Total System-Wide National Accounts Revenue (all locations open as of December 31, 2020):  $129,823,377
• Average Revenue Per First Location:  $498,428
• Median Revenue:  $281,047
• High Revenue Per First Location:  $7,933,801
• Low Revenue Per First Location:  $730
• Number and Percentage of First Franchisee Agencies That Attained or Exceeded Average:  45 (25.4%)
• Average Margin of National Accounts:  50.3%
• Median Margin of National Accounts:  47.9%

Key Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️