Under what circumstances will Brightstar Care require a franchisee to pay termination damages?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
ion or expiration of this Agreement, you will remove all signage bearing the Licensed Marks and, upon our request, deliver the fascia for such signs to us. We or our designated agent may enter upon the Premises at any time to make such changes at your sole risk and expense and without liability to you for trespass or compensation.
14.2 Termination Damages
If we terminate this Agreement before its scheduled expiration date due to any of your defaults (including your abandonment of the Agency), or if you terminate this Agreement without cause before its scheduled expiration date (which also will be considered your default under this
Agreement), you must pay us within fifteen (15) days after the effective date of this Agreement's termination, in addition to the other amounts specified in Section 14.1.3 above, termination damages equal to the greater of either
Source: Item 22 — CONTRACTS (FDD pages 117–118)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, termination damages may be imposed on a franchisee under specific circumstances. If Brightstar Care terminates the Franchise Agreement before its scheduled expiration date due to any default by the franchisee, including abandonment of the agency, the franchisee will be required to pay termination damages. Similarly, if a franchisee terminates the agreement without cause before its scheduled expiration date, this will also be considered a default, triggering the obligation to pay termination damages.
The amount of termination damages is determined by a formula. The franchisee must pay Brightstar Care within fifteen days after the termination date, in addition to any other outstanding amounts owed as specified in Section 14.1.3. The termination damages will be equal to the greater of either $150,000 or a calculated amount. This calculated amount is derived from the agency's Net Billings during the 12 months preceding the termination date, multiplied by three, and then multiplied again by 5.25%.
However, there is an exception to this calculation. If the termination date falls within the last three years of the franchise term, the termination damages will instead be equal to the product of the agency's Net Billings during the 12 months before termination, multiplied by 5.25%. This alternative calculation could result in a lower termination damage amount compared to the standard formula, depending on the agency's recent financial performance. Prospective franchisees should carefully consider these termination damage clauses and seek legal counsel to fully understand the potential financial implications of early termination.