During the Option Period, what is Brightstar Care prohibited from doing in the Expansion Territory?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
N OPTION AGREEMENT**
EXPANSION OPTION AGREEMENT
| over time at the greater of the actual GMF fees earned or the contract monthly minimum each | |||||||
|---|---|---|---|---|---|---|---|
| month, and marketing expenses are recognized when incurred within the Company’s consolidated | |||||||
| statements of income. | GMF income | was | $13,476,528 | and | $12,833,485 | for the | years ended |
| December 31, 2023 and January 1, 2023, respectively, | and is included | within the consolidated | |||||
| statements of income. | GMF expense | was | $12,493,237 | and | $12,572,362 | for the | years ended |
2. Grant of Expansion Option
Subject to the terms and conditions of this Agreement and the Franchise Agreement, BrightStar grants to you, and you accept, an option to acquire from BrightStar the right to open and operate an additional BrightStar Care Agency in the Expansion Territory. In consideration of your payment of the Expansion Option Fee (defined below), BrightStar agrees that it will not offer or sell the right to open and operate a BrightStar Care Agency in the Expansion Territory to any third party during the Option Period (defined below) of this Agreement.
3. Expansion Option Fee
In consideration for BrightStar granting the expansion option under this Agreement, you agree to pay BrightStar a fee equal to Ten Thousand Dollars ($10,000) (the "Expansion Option Fee"). This sum will be due in full when you sign this Agreement and will be considered fully earned by BrightStar when paid, in consideration of BrightStar granting you the expansion option. The Expansion Option Fee is not refundable in whole or in part under any circumstance, including if the expansion option granted to you under this Agreement lapses. However, if you exercise your option and enter into a BrightStar Franchising, LLC Agency franchise agreement for the Expansion Territory during the Option Period, then BrightStar will credit the Expansion Option Fee you paid BrightStar toward the Initial Franchise Fee payable under the BrightStar Franchising, LLC Agency franchise agreement for the Expansion Territory. If you do not execute a BrightStar Franchising, LLC Agency franchise agreement for the Expansion Territory during the Option Period, then the expansion option granted to you under this Agreement will lapse and you will no longer have the option to acquire from BrightStar the right to open and operate an additional BrightStar Care Agency in the Expansion Territory.
4. Option Period
You may exercise the expansion option granted under this Agreement only within one (1) year following the opening of the Agency (the "Option Period"). BrightStar may, in its sole discretion, extend the Option Period if it determines that you are making sufficient progress toward the requirements you must satisfy in order to exercise your expansion option.
5. Expansion Territory
The Expansion Territory under this Agreement includes the geographic area described on Exhibit A to this Agreement.
6. Rights and Obligations During the Option Period
During the Option Period, you have the non-exclusive right to market and service clients located in the Expansion Territory pursuant to the terms of the Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 118–387)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, if a franchisee pays an Expansion Option Fee of $10,000, Brightstar Care agrees not to offer or sell the right to open and operate a Brightstar Care Agency in the Expansion Territory to any third party during the Option Period. The Option Period lasts for one year following the opening of the agency, but Brightstar Care may extend it if the franchisee is making sufficient progress toward meeting the requirements to exercise the expansion option.
This agreement gives the franchisee the first right to expand their Brightstar Care business into a defined geographic area. The $10,000 Expansion Option Fee is compensation to Brightstar Care for foregoing the opportunity to grant a franchise to someone else in that territory during the Option Period. The fee is considered fully earned by Brightstar Care upon payment and is non-refundable, even if the option lapses. However, if the franchisee exercises their option and enters into a franchise agreement for the Expansion Territory, Brightstar Care will credit the $10,000 towards the Initial Franchise Fee for that new territory.
During the Option Period, the franchisee has the non-exclusive right to market and service clients in the Expansion Territory under the terms of the existing Franchise Agreement. All income generated in the Expansion Territory is considered Net Billings and is subject to the same royalty and continuing fee obligations as the original territory. However, this income, with the exception of revenue from National Account clients, does not count toward the franchisee's Monthly Performance Standards or other Net Billings thresholds under the original Franchise Agreement. Brightstar Care, its affiliates, and other franchisees also retain the right to market and service clients in the Expansion Territory during the Option Period, meaning the expansion territory is not exclusive during the option period.
This arrangement allows a Brightstar Care franchisee to secure the first right to expand into a neighboring territory, but it's important to note that the initial Expansion Option Fee is non-refundable if the franchisee does not ultimately exercise the option. Additionally, the franchisee must meet certain performance and compliance standards to qualify for the expansion. The franchisee should carefully consider their financial situation and growth potential before paying the Expansion Option Fee.