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The Drivers of Home Care Franchise Growth


An excerpt from my soon to be released report Home Care Franchise Industry Update 2012

The Drivers of Home Care Franchise Growth

There are three key factors driving the growth of the home care franchising sector.

  • The Market for Home Care Services
  • The Franchise Business Model
  • The Appeal of a Home Care Franchise

The Market for Home Care Services

In order for a franchise to be successful there needs to be a sustainable market that franchisees can tap into. The market ought to be large enough so as to provide each franchisee the opportunity for continued growth. The market for home care services is fueled by the continued aging of the U.S. population and the lower cost of home care compared to institutional care. The population of those 65 and older is projected to represent 14.5% of the total U.S. population by the year 2015 totaling almost 47 million people. Clearly the size and growth of this market will attract more companies to franchise and more individuals will invest in franchises. At least 70 percent of people older than 65 will require some home care services at some point in their lives. However, people of any age may need long-term care. Multiple factors increase the risk of needing long-term care, however, age is a key factor since the longer a person lives, the greater the risk. According to the Bureau of Labor Statistics, HC services are projected to be the 4th fastest growing employers through 2018. Franchisors that provide skilled nursing services will have the advantage of being able to tap into the entire home care market in addition to those 65 and older.

A potential catalyst to increase home care revenues In the future, could be from the Community Living Assistance Services and Support Act, or CLASS Act. This is a program created under the new health-care law to help people with functional or cognitive impairments pay for nonmedical services to help them stay in their homes. The money can also be used to cover nursing home care. Premiums and benefits have yet to be set, but one estimate, by the Congressional Budget Office, suggested a cash benefit averaging $75 a day. Enrollment won't begin until 2012 at the earliest, however, and people will have to pay premiums for at least five years before they're eligible to receive benefits.

The Franchise Business Model

As the franchise home care sector has continued to grow, franchisors have developed business models including operational and financial software that enables their franchisees to operate more effectively. Given the fact that the majority of home care franchisors limit their services to companion and homemaker activities the operational processes including client billing are rather straightforward. The combination of a business model coupled with the non-skilled home care service doesn’t require a franchisee to possess extraordinary business skills.  Most home care franchisors provide proprietary software for their franchisees that includes caregiver scheduling, management and financial control systems. Some like Home Helpers utilize an Intranet program for franchisee Q&A, tips and collaboration with other franchise owners. The structure and tools provided to home care franchisees by a franchisor adds to the attractiveness of a home care franchise.

 The Appeal of a Home Care Franchise

For individuals interested in owning a franchise, the home care sector offers an opportunity at a reasonable investment. Almost 50% of home care franchises allow the franchisee to operate from a home based office. The site requirements for those home care franchises that do require a separate business location are such that the rental costs are reasonable. The investment in a home care franchise ranges from a low of $50,000 to a high of $180,000. The royalty fee for home care franchises, with a few exceptions, is 5% or lower. A home care franchise is an attractive business for a broad universe of people with the proper qualifications. In particular, women interested in owning their own business often find a home care franchise a good business fit. Business people, retired executives, teachers and seniors who are seeking a franchise with a straightforward business format find home care appealing. For certain individuals the satisfaction gained from providing home care services to others are an additional motivating factor.

© 2012 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com


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