- Written by Mike Marshall
The franchise world has grown over the past 60 years to encompass nearly every type of business — if you want your taxes done, your sidewalk pressure-washed, your windshield repaired, your house cleaned, your dog walked, or a fast-food burger, franchise owners can do that for you.
Out of all the different franchise types, one franchise sector is growing at an amazing rate right now: the senior care or home-healthcare niche. Of Forbes 2014 Best Franchises list for up to $150,000 investment, three of the top ten are home-health brands: BrightStar, Right at Home, and Synergy HomeCare.
Why is home healthcare franchising on the rise? Here’s a quick snapshot of the unique opportunity in this fast-growing sector:
- Lower investment. While it can cost $500,000 or more to open a fast-food franchise, most home-healthcare franchises cost $150,000 or less to start up, a feature that attracted Right at Home Seattle franchisee Ben Solomon, who owns two area territories and is buying a third. The investment is primarily for hiring marketing, recruiting and training staff, and for office space.
- High revenue. From that relatively low investment, home-health franchises can drive a lot of volume, especially after the first year’s ramp-up making connections with key referrers such as elder-law attorneys and social workers. Territories are usually large. Industry research firm Home Care Pulse found median franchise home-health revenue was nearly $2 million. What’s more, franchise owners brought in substantially more than independent operators, Home Care found, giving their businesses a resource advantage over the competition.
- Growing demand. Demand is forecast to grow sharply, thanks to the aging of baby boomers. The number of people over age 60 is set to triple to 2 billion by 2050, the UN estimates.
- International opportunity. Most US franchises are just beginning to look overseas at opportunities, with Right at Home being one of the leaders — it recently became the first US home-healthcare franchise to enter China. But the rest of the world is aging, too, to there is still plenty of growth opportunity in new markets.
- Help with red tape. Mom-and-pop home healthcare operators struggle to keep up as national, state and local laws evolve. For instance, my home base of Seattle is currently debating a possible $15-an-hour minimum wage law. Independents are also hard-pressed to obtain insurance to cover their workers’ activities in clients’ homes. By contrast, franchises become well-known to insurers, smoothing the way for policies, says Right at Home CEO Allen Hager. National chains also have the money to do lobbying and advocate for favorable laws — most recently, against the proposed federal minimum wage increase.
- Chance to do good. Seattle Right at Home franchisee Solomon says helping seniors stay in their own homes affordably is more than a business — it’s a community service. “I feel great doing this,” he says.
With home-health franchises booming, how can you spot the best one? Ask lots of questions. Franchise contracts vary widely, so read carefully. Solomon said the contract “is like a marriage.” Most franchise contract terms are at least 10 years.
Not all chains are created a like — for instance; Right at Home provides skilled nursing services, while many other franchise chains do not.
One great way to learn about a franchise opportunity is to ask current franchise owners how satisfied they are with their business.