What are the components of the single performance obligation that Brightstar Care identifies in its franchise agreements?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
As part of each agreement, the Company identified one performance obligation that requires the Company to provide a combination of the following:
- Intellectual Property (IP) Licenses grant a non-exclusive right to establish and operate a medical staffing and home medical care services business under the trademarks and systems established as part of the BrightStar license during the term of the agreement.
- Marketing Services These services are ongoing local and national advertising programs that are implemented throughout the course of the contract term.
- Continuing Consulting Services These services include the review of plans and equipment and merchandise selection.
The Company determined that the services noted above represent a set of integrated or highly interrelated tasks/services and are, therefore, accounted for as a single-performance obligation of providing the franchise license.
In addition, the Company has also determined the following performance obligation is included in the contracts but is distinct from the above performance obligation:
Pre-Opening Services - These services provide primarily training programs, operating manuals, assistance in site selection, and setting up franchisee records.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 117)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, the company identifies a single performance obligation within its franchise agreements, requiring them to provide a combination of elements. These include granting Intellectual Property (IP) Licenses, which allow franchisees the non-exclusive right to establish and operate a medical staffing and home medical care services business under the BrightStar Care trademarks and systems for the duration of the agreement, typically ten years. Additionally, Brightstar Care provides Marketing Services through ongoing local and national advertising programs throughout the contract term. Finally, Brightstar Care offers Continuing Consulting Services, including the review of plans and equipment and merchandise selection.
Brightstar Care considers these services—Intellectual Property Licenses, Marketing Services, and Continuing Consulting Services—as integrated and highly interrelated. Therefore, they are accounted for as a single performance obligation related to providing the franchise license.
In addition to this primary performance obligation, Brightstar Care also identifies Pre-Opening Services as a distinct performance obligation. These services consist of training programs, operating manuals, assistance in site selection, and setting up franchisee records. This distinction is important for accounting purposes, as the revenue recognition for these services may differ from the primary performance obligation.
For a prospective Brightstar Care franchisee, understanding these performance obligations is crucial. It clarifies what Brightstar Care is contractually obligated to provide in exchange for the franchise fees and ongoing payments. Franchisees should pay close attention to the details of each component to ensure they receive the support and services promised by Brightstar Care.