Under what circumstances is the Expansion Option Fee refundable for a Brightstar Care franchise?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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 ent
Source: Item 23 — RECEIPTS (FDD pages 118–387)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, the $10,000 Expansion Option Fee is generally non-refundable. The FDD explicitly states that the Expansion Option Fee is not refundable in whole or in part under any circumstance, including if the expansion option lapses. However, there is one specific scenario where the fee provides value to the franchisee.
Specifically, if the franchisee exercises their option to open an additional Brightstar Care Agency in the Expansion Territory during the Option Period, the $10,000 Expansion Option Fee will be credited towards the Initial Franchise Fee due under the Brightstar Franchising, LLC Agency franchise agreement for the Expansion Territory. This means that while the fee itself is not returned, it reduces the amount the franchisee needs to pay upfront when establishing the new agency.
In practical terms, a prospective Brightstar Care franchisee should understand that the Expansion Option Fee is a sunk cost unless they proceed with opening the additional agency within the specified timeframe and under the conditions outlined in the franchise agreement. If the franchisee does not fulfill these requirements, they forfeit the expansion option and the $10,000 fee. This arrangement is fairly typical in franchising, where option fees are used to secure exclusive rights for a limited period, but are non-refundable to compensate the franchisor for holding the territory.