Is the Future of Healthcare Franchising in Jeopardy?

PALM DESERT, Calif., August 31, 2022 (Newswire.com) - BrightStar Owners Association (BOA), an independent chapter of the American Association of Franchisees and Dealers (AAFD), announced the recent survey results from its membership regarding the Call Option provision added to new Franchise Agreements by its Franchisor, BrightStar Franchising, LLC (Franchisor), as disclosed in the Franchisor's 2022 Franchise Disclosure Document (FDD).

In the survey conducted by BOA of its membership, representing 71% of all BrightStar Care owners and 78% of annual revenue, 85% of members responded that they oppose the Call Option, 76% said they would have never bought a BrightStar Care franchise with the Call Option in place, and 71% believe the Call Option is unethical. The Call Option gives the Franchisor, at its sole discretion, the right to terminate the franchise agreement and acquire the franchisee's assets at a predetermined price, that may be at less than fair market value and prevent resale in the open market. Over 90% of members believe it will lessen interest from third party buyers and 82% believe the Call Option will lower their eventual sale price. 

BrightStar Care is a home healthcare franchise dedicated to providing both medical and non-medical assistance to families and individuals in need, with over 365 locations throughout the country. Locations are primarily independently owned and operated by franchisees - local entrepreneurs. Recent 2021 reports estimate system wide revenue to be approximately $639 million annually. Brightstar franchisees strongly believe in the model their Franchisor originally built - with the highest level of care provided by a network of local and passionate independent owners.

"The Call Option would impact all current owners and those looking to buy into the system. Initially, it creates a veritable poison pill for current franchisees who might wish to sell their business but will now have to explain to potential buyers that the Franchisor can arbitrarily take over the business, and it may be at less than fair market value," said Mark E. Woodsum, BOA President. "And going forward, as renewal terms approach, the current owners will face the difficult decision of whether to renew their franchises with this unwanted provision. With control over exit timing now in the hands of the Franchisor, both new and current franchisees will face very uncertain futures." Many franchisees in BOA confirm that uncertainty, with 88% agreeing the Call Option inhibits their ability to plan long-term. 

"Simply put, the franchisee has made the investment into the business, provided the sweat equity to build their business and the BrightStar brand in their local market, and if successful, the Franchisor can swoop in and take that successful business at their choosing," said Woodsum.

Media Contact: 
Mark Woodsum, President of BOA
markwoodsum99@gmail.com

Source: BrightStar Owners Association