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 Best Franchises to Own: Why Home Healthcare Is Hot
ENTREPRENEURS – Carol Tice
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.
These three are the cream of a growing crop. While there were just 13 home-health franchise brands in 2000, that’s shot to 56 companies today, industry research firm FRANdata reports. The growth is even more striking by location — currently, the 45 franchise brands that are members of the International Franchise Association operate 6,000 locations, says IFA Educational Foundation president John Reynolds. In 2001, member franchises operated barely more than 300 locations.
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.