What revenue is excluded from the Adjusted EBITDA calculation for a Brightstar Care franchise?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
"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 the effective date of termination or expiration.
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, the Adjusted EBITDA calculation excludes specific types of revenue to provide a more accurate representation of the agency's ongoing profitability. The calculation begins with the net income before interest, taxes, depreciation, and amortization (EBITDA). Then, adjustments are made to this figure.
Specifically, the calculation excludes 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. However, 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. The purpose of these exclusions is to remove revenue streams that are not consistent or reliable, thus giving a clearer picture of the franchise's sustainable earnings potential.
For a prospective Brightstar Care franchisee, this definition of Adjusted EBITDA is important for understanding how the business's financial performance will be evaluated, especially if Brightstar Care decides to purchase the agency. It also affects the purchase price, which is based on a multiple of the Adjusted EBITDA. Franchisees should pay close attention to how these adjustments are applied to ensure a fair valuation of their business.