What adjustments are made to EBITDA to calculate 'Adjusted EBITDA' for a Brightstar Care franchise?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
terms (including renewal options) as the lease.
If we (or our designee) elect to purchase the Agency's business and related goodwill under this Section 14.3, the purchase price will be equal to the greater of (a) one-and-one-half (1.5) multiplied by the Agency's Adjusted EBITDA (defined below) during the twelve (12) full calendar months immediately preceding the effective date of termination or expiration of this Agreement and (b) One Thousand Dollars ($1,000) for each active client of the Franchised Business as of the effective date of termination or expiration that is fully and effectively transferred and transitioned to us (or our designee) as part of our purchase.
"Adjusted EBITDA" means EBITDA (i.e., net income before interest, taxes, depreciation and amortization) plus adjustments for (1) nonrecurring related revenue or expense activities, (2) profit attributed to one-time or short-term business opportunities resulting from National Account participation or local contracts where business is not expected to continue for longer than twelve (12) months (shortterm staffing that is other than COVID-specific staffing will not be used as an adjustment unless it represents more than 20% of the Agency's trailing twelve (12)-month revenue, (3) add-backs for owner discretionary expenses and compensation that will not continue offset by fair-market replacement cost for the owner's day-to-day participation, (4) client price adjustments that have not been fully reflected in trailing results, (5) business expense activities that are not fully reflected in trailing results, and (6) expenses that would have been incurred had the Agency been in full compliance with this Agreement before
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 81–92)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, "Adjusted EBITDA" is calculated starting with EBITDA (net income before interest, taxes, depreciation, and amortization). Several adjustments are then made to this figure. These adjustments are relevant if Brightstar Care elects to purchase the Agency's business.
The adjustments include adding back nonrecurring related revenue or expense activities. Also, profit attributed to one-time or short-term business opportunities resulting from National Account participation or local contracts where business is not expected to continue for longer than twelve months is added back. Short-term staffing that is other than COVID-specific staffing will not be used as an adjustment unless it represents more than 20% of the Agency's trailing twelve-month revenue. Adjustments are also made for owner discretionary expenses and compensation that will not continue, offset by fair-market replacement cost for the owner's day-to-day participation.
Client price adjustments that have not been fully reflected in trailing results are also factored in, along with business expense activities not fully reflected in trailing results. Finally, expenses that would have been incurred had the Agency been in full compliance with the Franchise Agreement before termination or expiration are included. These adjustments provide a more accurate representation of the agency's ongoing profitability, excluding temporary or non-recurring factors, and are used to determine the purchase price of the Brightstar Care agency.