What is the minimum purchase price Brightstar Care will pay for the Agency's business?
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, if Brightstar Care elects to purchase the Agency's business and related goodwill, the minimum purchase price they will pay is determined by a formula. The purchase price will be the greater of two calculations: either one-and-one-half (1.5) multiplied by the Agency's Adjusted EBITDA during the twelve full calendar months immediately preceding the termination or expiration of the agreement, or 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 Brightstar Care as part of the purchase.
Adjusted EBITDA is defined as EBITDA (net income before interest, taxes, depreciation, and amortization) with several adjustments. These adjustments include considerations for nonrecurring revenue or expense activities, profit from short-term business opportunities from National Account participation or local contracts not expected to continue longer than twelve months (with specific rules for short-term staffing), add-backs for owner discretionary expenses and compensation offset by fair-market replacement costs, client price adjustments not fully reflected in trailing results, business expense activities not fully reflected in trailing results, and expenses that would have been incurred had the Agency been in full compliance with the Franchise Agreement before termination or expiration.
This means that even if the Adjusted EBITDA calculation yields a low value, Brightstar Care guarantees a minimum payment of $1,000 per active client that is successfully transferred to them. This provides a baseline valuation for the business based on its active client base at the time of termination or expiration. A prospective franchisee should carefully consider how the definition of 'Adjusted EBITDA' and 'active client' could impact the final purchase price, and should seek clarification from Brightstar Care on any ambiguous aspects of these definitions.