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

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

• 2020 annualized premium (i.e. the amount of premium customers pay for policies in one year) and total commission revenue for the 163 Associate Agency Owners (AAOs) operating the 180 Brightway Insurance locations that were open for more than 12 months as of December 31, 2020

• 2020 average number of new business policies and new business annualized premiums generated by 314 producers of the 173 Brightway Insurance locations that met Brightway’s then-current staffing requirements

• 2020 average agency revenues, compensation expense, other operating expense, and pre-tax operating profit for the 56 Brightway Insurance locations that were open for 5 full years as of December 31, 2020

• average annual commissions paid to AAOs during the calendar years ranging from 2010 to 2020, after taking into account the percentage of commissions retained by Brightway Insurance

Section I – Background Information

18 Things You Need to Know About the Brightway Insurance Franchise

Reaches Two Major Milestones

1.  At the end of May 2021, Brightway Insurance celebrated two milestones as Brightway’s book size topped $800 million in annualized written premium and the number of franchises surpassed 300. Brightway uses these numbers as key performance indicators to measure business size and growth.

2.  Michael Miller, president and CEO of Brightway Insurance, said, “Together with our Agency Owners, we’ve created an Agency that can meet each customer’s unique insurance needs regardless of how they change throughout their lifetimes. Brightway is always going to provide customers with a better package of policies, a single toll-free number for Service and local, expert counsel who answers all their needs. Our ongoing success is a result of our people’s dedication to serving our customers for life and our shared commitment to winning outcomes for everyone involved.”

3.  As a result of this commitment, Brightway is now among the most recognized insurance franchising and distribution companies in the country and has grown from:

• 38 franchised locations in one state in 2008 to 307 locations in 25 states today; 49% of locations are outside of Florida;
• 155 people in the Brightway system in 2008 to nearly 1,200 today;
• 19,057 customers in 2008 to more than 325,000 today;
• $36 million in annualized written premium in 2008 to $800 million today.

4.  Brightway is approaching its 13-year anniversary in August and since its inception, the company has built a comprehensive business support platform, including after-the-sale service that empowers Agents to focus on providing expert counsel to their customers and growing their business.

5.  Matthew Schor, owner of Brightway, The Schor Family Agency in Long Beach, New York, said, “Brightway gives me access to the best carriers in the nation and with their after-the-sale service model, I get to focus on growing my agency while they handle the servicing needs of my customers. Brightway also offers world-class agent support to help me handle my day-to-day operations. I get the benefit of running my own agency and being my own boss with the security of always having people I can turn to when I need help.”

Announces Majority Investment from GrowthCurve Capital to Accelerate Growth

6.  In mid-December 2021, Brightway Insurance announced the completion of a majority investment from GrowthCurve Capital to accelerate the company’s growth trajectory. The partnership with GrowthCurve will enable Brightway to continue its national expansion strategy and invest in its technology platform to further enhance its strong value proposition to customers, franchisees, and carrier partners.

7.  Michael Miller, co-founder of Brightway Insurance, said, “On behalf of my brother David and I, we are thrilled to take the next step in our journey and partner with GrowthCurve Capital. Our goal has always been to ensure the company – and everyone associated with it – reaches its potential. We strongly believe that GrowthCurve is the right partner for Brightway to create a Win, Win, Win for franchisees, customers and team members, and take the business to the next level given the firm’s unique model of combining functional expertise with deep investment and industry experience.”

8.  Brothers David and Michael Miller invented the “you sell, we service” model in the insurance agency space and began franchising the concept as Brightway Insurance in 2008. Today, Brightway is the most-recognized insurance franchise system and one of the largest personal lines insurance agencies in the U.S. With more than 331 franchises in 29 states, the company manages nearly $900 million of annualized written premiums.

9.  GrowthCurve Capital is a unique, control-oriented, private equity firm focused on building world-class businesses by leveraging data, analytics, and machine learning, combined with a comprehensive approach to human capital, to accelerate growth and drive value creation.

10.  Under the new partnership, the Millers will continue to hold significant minority ownership of the company. Michael Miller will join David Miller on the board of directors, and together they will work closely with GrowthCurve in setting the strategic vision for Brightway to accelerate the company’s growth.

11.  Effective immediately, Mark Cantin, GrowthCurve’s lead operating executive in insurance distribution, becomes the new president and CEO of Brightway Insurance. Cantin had been working closely with GrowthCurve over the last several months to identify high growth insurance distribution businesses that ultimately resulted in this partnership.

12.  Cantin said, “I’m honored and excited to lead Brightway and help fulfill the vision of it becoming a tech-enabled, turnkey provider for the insurance franchisee of the future, while offering choice, flexibility and a seamless experience for our customers. I have a long history working with the GrowthCurve team and look forward to partnering with them, and David and Michael Miller, in the next phase of the Brightway journey.”

13.  An industry veteran, Cantin brings more than 30 years of experience in both insurance distribution and underwriting to the position. Prior to joining GrowthCurve, Cantin was a member of the executive committee and president of field operations at QBE North America, a division of QBE Insurance Group, one of the 20 largest global insurance and reinsurance companies. Prior to joining QBE, Cantin was chief marketing officer at USI Insurance, one of the largest and fastest growing domestic brokers.

14.  Sumit Rajpal, founder and CEO of GrowthCurve Capital, added, “We have been very impressed with what David, Michael and the Brightway team have built. The company pioneered the franchisor model in the insurance space and has generated attractive outcomes for its franchisees, customers and carrier partners. We seek to accelerate the company’s growth trajectory by leveraging the company’s rich data assets and our expertise in AI, data enablement and digital transformation to introduce new solutions and capabilities to our franchisees and customers and to scale the platform nationally.”

15.  Magnus Helgason, principal at GrowthCurve Capital, said, “We see a tremendous opportunity to deploy technology to further enhance the franchisee and customer experience, including simplifying the insurance sales process to allow franchisees to scale their businesses more quickly.”

Company History

16.  Brightway Insurance was founded in 2003 when brothers David Miller and Michael Miller purchased the Jennings Insurance Agency. The Millers’ business started out small, but eventually they established The Miller Insurance Group. A few years later, the Millers changed the company’s name to Brightway Insurance and started franchising in 2008. At the time, Brightway Insurance had 38 locations in one state.

17.  Over the next decade, Brightway Insurance continued to expand around the United States. By 2018, Brightway Insurance had achieved $541 million in annualized written premium. Today, there are Brightway Insurance locations across 20 states, serving customers in all 50 states.

Entrepreneur’s Franchise 500

18.  Brightway Insurance ranked No. 153 on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Brightway Insurance 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 Brightway Insurance’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:  152
• Outlets at the End of the Year:  179
• Net Change:  +27

2019

• Outlets at the Start of the Year:  179
• Outlets at the End of the Year:  203
• Net Change:  +24

2020

• Outlets at the Start of the Year:  203
• Outlets at the End of the Year:  239
• Net Change:  +36

Company-Owned

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

2020

• 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, 2021 FDD) and Analysis

• As of December 31, 2020, Brightway Insurance had 239 franchised Brightway Locations. The agency level data presented below sets forth the financial performance of certain subsets of the 180 Retail Agency Brightway Locations that commenced operations prior to December 31, 2019 and were open and operating for the entire 2020 calendar year (the “Included Locations”).

• Because only a limited number of Brightway Insurance franchisees were operating Office Agencies in calendar year 2020, Brightway Insurance does not have sufficient data to reasonably present the agency-level financial performance metrics for the Office Agency model.

• Part 2 sets forth the financial performance for individual full-time producers employed by or affiliated with any Brightway Locations that commenced operations prior to December 31, 2019 and were open and operating for the entire 2020 calendar year.

• In addition to excluding all Brightway Locations that were not open and operating for the entire 2020 year and the Brightway-owned home office location, Brightway Insurance also excluded Office Agencies from all agency-level financial performance representations (which excludes only Part 2).

Part 1 – Summary of Annualized Premium by Associate Agency Owners (2020)

• The information presented below shows the Annualized Premium of the 163 Associate Agency Owners (AAOs) operating the 180 Included Locations for the 2020 calendar year. The 180 Included Locations in Part 1 were open for more than 12 months as of December 31, 2020.

• 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 Calendar Year Ending December 31, 2020

Over $25M

• Number of AAOs:  2
• Number of Multi-Unit Location Owners:  1
• Number of Locations:  3

Between $15M and $25M

• Number of AAOs:  5
• Number of Multi-Unit Location Owners:  4
• Number of Locations:  10

Between $10M and $15M

• Number of AAOs:  9
• Number of Multi-Unit Location Owners:  1
• Number of Locations:  12

Between $8M and $10M

• Number of AAOs:  9
• Number of Multi-Unit Location Owners:  7
• Number of Locations:  10

Between $6M and $8M

• Number of AAOs:  12
• Number of Multi-Unit Location Owners:  1
• Number of Locations:  16

Between $4M and $6M

• Number of AAOs:  22
• Number of Multi-Unit Location Owners:  1
• Number of Locations:  24

Between $3M and $4M

• Number of AAOs:  9
• Number of Multi-Unit Location Owners:  0
• Number of Locations:  10

Between $2M and $3M

• Number of AAOs:  22
• Number of Multi-Unit Location Owners:  0
• Number of Locations:  22

Between $1M and $2M

• Number of AAOs:  29
• Number of Multi-Unit Location Owners:  0
• Number of Locations:  29

Under $1M

• Number of AAOs:  44
• Number of Multi-Unit Location Owners:  0
• Number of Locations:  44

Part 1A – Summary of Annual Commission Revenue by AAO (2020)

• The information presented below shows the Annual Commission Revenue of the 163 AAOs operating the 180 Included Locations for the 2020 calendar year. The 180 Included Locations in Table 1A were open for more than 12 months as of December 31, 2020.

• The Annual Commission Revenue 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.

Total Commission Revenue for Calendar Year Ending December 31, 2020

$2.5M to $10M

• Number of Owners:  3
• Number of Multi-Unit Location Owners:  1
• Number of Locations:  4

$1.25M to $2.49M

• Number of Owners:  12
• Number of Multi-Unit Location Owners:  6
• Number of Locations:  20

$500K to $1.25M

• Number of Owners:  35
• Number of Multi-Unit Location Owners:  7
• Number of Locations:  42

$150K to $499K

• Number of Owners:  58
• Number of Multi-Unit Location Owners:  1
• Number of Locations:  59

Under $150K

• Number of Owners:  55
• Number of Multi-Unit Location Owners:  0
• Number of Locations:  55

Part 2 – New Business Policy Production by Producer (2020)

• Part 2 profiles the number of New Business policies and New Business Annualized Premiums generated by Producers of 173 of the Included Locations that meet Brightway’s then-current staffing requirements, which includes the requirement that the Included Location employs at least one Producer that was working full time during the 2020 calendar year.

• Part 2 also includes data for New Business policies and New Business Annualized Premiums generated by Producers of the 9 Office Agency Brightway Locations that meet Brightway’s then-current staffing requirements.

• For the purposes of Item 19, “Producer” is defined as an individual who sells property and casualty insurance in Brightway Locations, including owners.

• Included in Part 2 are 314 Producers who have been in the Brightway System for more than 12 months as of December 31, 2020, and who sold a minimum of 50 policies in 2020. This was done to include only those people who have New Business production as a meaningful part of their jobs.

• Brightway Insurance separately identifies Producers employed by Office Agencies and Retail Agencies.

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

Average

• New Business Policies Sold Per Producer in 2020:  293
• New Business Annualized Premiums Per Producer:  $452,310
• Number of Producers:  314 (302 Retail Agency Producers, 12 Office Agency Producers)

Part 3 – Profitability of Established Brightway Locations (2020)

• Part 3 of this Item sets forth profitability, revenue, and expense information for established Brightway Locations.

• Included in Part 3 are 56 of the Included Locations that were open for five full years as of December 31, 2020. The primary purpose of Part 3 is to show the profitability of mature, tenured Brightway Locations that have been in business five years or more.

Overall Average

Agency Revenues:  $550,501

Operating Expenses

• Compensation Expense:  $201,997
• Other Operating Expense:  $114,856
• Total Agency Operating Expenses (excluding Owner Compensation):  $316,853
• Pre-Tax Operating Profit:  $233,649

• The term “Revenues” means the total commission paid to AAOs during the 2020 calendar year in each subset.

• The term “Compensation Expense” means the total payroll, payroll taxes and pension, and insurance and benefits incurred during the 2020 calendar year by the Brightway Locations in each subset, excluding owner compensation (but including the owner’s taxes, pension, and benefits), divided by the total number of Brightway Locations in each subset.

• The term “Other Operating Expenses” means the total AAO shared expenses, dues and subscriptions, telephone, automation and service agreement expenses, accounting, legal, and finance related expenses, errors and omissions and other insurance expenses and other office expenses (e.g., continuing education, supplies, printing, postage, and miscellaneous) incurred during the 2020 calendar year by the Brightway Locations in each subset, divided by the total number of Brightway Locations in each subset. Other non-operating expenses, such as interest expenses, are not included.

• The term “Pre‐Tax Operating Profit” means revenue minus all expenses (excluding owner compensation).

Part 4 – Annual Commissions Paid to AAO by Location (2010-2020)

• The information below reflects average commissions earned by Brightway Location by Tenure.

• Amounts shown are the commissions paid to AAO during the calendar years ranging from 2010 to 2020, after taking into account the percentage of commissions retained by Brightway.

• “Tenure” is defined as the number of 12-month periods, or Tenure years, in which a Brightway Location received commissions.

• For all information presented in Item 19, Tenure reflects full calendar years of business. Brightway does this to account for the ramp-up when a Brightway Location first commences operation and to normalize results. Therefore, if a store opened in July, that Location’s first full year starts in January of the following year.

• All Brightway Locations included in this chart were open and had operated for at least one full year as of December 31, 2020.

Average

• Tenure – 1 Year:  $68,518
• Tenure – 2 Years:  $118,990
• Tenure – 3 Years:  $165,203
• Tenure – 4 Years:  $218,507
• Tenure: – 5+ Years:  $359,025

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