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B60/100FDD 2024

BrightStar Care Homes — Litigation & Risk

Health & Wellness - Senior Care · FDD Items 3, 4 & 5

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Moderate — Review

5 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
60 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID

7(a) FOIA data · FY2020–present

SBA Loan Performance

Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.

Total 7(a) loans
2
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$1.6M
Avg loan size
$795K
Participating lenders
1

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Illinois
State whose law governs disputes — relevant if you're not based there

What drove the 60/100 rating

Risk Score Breakdown

  1. 01MEDNet Income not disclosed in Item 19 despite $691K average revenue — unable to validate actual profitability
  2. 02MINORFive active lawsuits/arbitrations (2 settled franchisee suits + 3 franchisor claims for post-termination damages) indicate systemic relationship friction
  3. 03MINOROnly 5 franchised units with 25% YoY growth is minimal scale; small network limits peer support and brand leverage
  4. 04MINORHigh fee-to-revenue ratio: $50K franchise fee + 5% royalty on net billings creates significant upfront and ongoing cost burden
  5. 05HIGHGoing Concern status suggests financial instability at franchisor level, raising questions about support infrastructure sustainability

Severity inferred from FDD text — not a regulatory or legal classification

Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.