As home care franchising continues to grow rapidly in the United States, Visiting Angels is setting the standard as the overall top performer, according to a recently released industry report.
The number of home care franchise locations increased 47% between 2010 and 2013, with net growth of 1,757 locations, according to the 2015 report from FranchiseKnowHow, LLC and FranchiseGrade.com. The organizations analyzed 61 home care franchise systems for the industry update report, which the companies announced Wednesday.
This growth can be attributed to a number of factors, including that home care has a “straightforward franchise model,” the report explains. Many franchisors allow franchisees to operate out of their home, and they provide franchisees with software for tasks such as scheduling. The upfront investment that a franchisee needs to make for equipment and other necessities also is low compared to other types of franchises.
“The growth is not just in the number of franchisees but franchise systems that are coming on the scene,” FranchiseGrade.com CEO Jeff Lefler tells Home Health Care News. “I think more of the smaller home care companies that may have been in existence a while are considering franchising their business as a model for growth.”
The expansion trend also has been noted in previous annual home care reports prepared by FranchiseKnowHow. This marks the first year that FranchiseGrade.com contributed, and the market research and data collection company’s trademarked Franchise Performance Index (FPI) was used to rank the top 10 franchises:
The FPI is based on variables that affect franchise performance, including franchisee turnover rates, litigation history, franchisee satisfaction survey results and lending data.
Visiting Angels is proud of its ranking, stated Dan Drennen, vice president and general manager at franchisor Living Assistance Services, Inc. said in an emailed statement to HHCN. He credited the Visiting Angels franchisees for the distinction.
A number of the top performing franchises also are among the largest based on the number of U.S. locations. Comfort Keepers ranked No. 1 on that list, with 648 outlets as of 2013, according to Lefler. Home Instead Senior Care, Visiting Angels, Right at Home and Home Helpers rounded out the top five.
While these all had more than 300 outlets, the majority of the home care franchises analyzed for the report were far smaller, Lefler says. Nearly half had 15 or fewer outlets.
The average minimum initial home care franchising fee is $37,736 and the average minimum franchise investment is $91,729, according to franchise disclosure documents analyzed for the report. The average royalty is 6%.
“In contrast to a number of franchise concepts home care franchises have a fairly straightforward franchise program without a load of add-on expenses and costs that their franchisees incur,” the report states.
The required investment typically is greater for franchises that provide more intensive services such as skilled nursing care, according to the report. However, the majority of franchised locations do not offer skilled care but focus on housekeeping, companion care and similar services.
The vast majority of clients served by home care franchises are paying out of pocket rather than through Medicare or Medicaid, which helps these businesses maintain steadier cash flow than providers that are paid through the government programs, the report notes. Franchised home care also has been growing thanks to an increase in the number of seniors with the financial ability to pay for care our of pocket; the number of high income seniors has increased significantly, from 17.4% of the senior population in 1975 to 31.4% in 2010, according to the report.
Lefler says there is “quite a range” in terms of what support a franchisor will offer a franchisee. However, there is some reason to believe that home care outperforms other types of franchises in this area. Home care organizations grabbed three of the top five spots in a recent Franchise Business Review ranking of franchisor support.
Written by Tim Mullaney