Entrepreneur Magazine recently named the senior home care franchise sector one of  the 10 hottest franchise sectors of 2011.  Twenty different senior home care franchise companies made it to their Top 500 Franchise list this year.

Whenever I’m evaluating a franchise opportunity, I always consider the sector or industry first before the franchise company.   A profitable sector will often attract a lot of good franchise companies, and inevitably a few names will rise to the top.   Home Instead Senior Care is the most recognized brand in the industry and ranks highest in the sector.

My comments below are my impressions of the sector in general, but I also highlight a few things unique to Home Instead Senior Care.  Here are my thoughts on this franchise opportunity.

Pros:

1.  Serves a large and growing market due to the nation’s aging demographics

Senior home care franchises, like Home Instead,  offer comprehensive non-medical home care and companionship services for seniors.  Services like these enable seniors to live comfortably in their own homes and relieve some of the burden on their family members for their care.

According to the Home Instead Senior Care website, about 36.8 million people living in the US (or 12.4% of the population) are 65 years and older.  About 80% of seniors have at least one chronic health condition and 50% have at least two.   This staggering statistic is proof that there is a large market for the services that Home Instead provides.

2.  System encourages tailoring services to meet the needs of the community and clients

Home Instead offers 3 main types of services, although they often overlap in scope.  They offer companionship services, personal care (such as eating, grooming, and bathing), and Alzheimer’s and dementia care.

Alzheimer’s and dementia are a growing concern, with nearly 6 million people in the US and Canada affected by these related ailments.  In addition to other specialized programs and training, select Home Instead caregivers undergo special training in a program designed by recognized experts of  The George G. Glenner Alzheimer’s Family Center.

Unlike most other franchise systems where product offerings are strictly defined,  Home Instead allows its franchisees to develop their own unique offerings based on the needs of their clients and the skills of their caregivers.  Home Instead encourages its  franchises to be as flexible as possible with service requests and to tailor their services to fit the circumstances of their clients.

3.  Large home office staff makes it possible to offer a higher level of support and training

The Home Instead corporate office in Omaha, Nebraska has a staff of more than 120 people.  Considering there are 900 Home Instead franchisees worldwide, this is a good ratio and should enable the home office to offer a higher level of support to franchisees.

Home Instead is proud of the fact that they’ve been consistently ranked best in their group by the Franchise Business Review, which bases its reviews exclusively on ratings from franchisees.

Franchisees undergo a full week of training at the corporate office in Omaha and a new business advisor guides them through the opening process — from the signing of the franchise agreement all the way through the first few months of operations.

Franchisees have access to training resources, including web-based tools, for themselves and their caregivers.  They also receive advice and resources to help them attract and keep good caregivers.

Home Instead  provides all new franchisees with 1 year of free public relations services to help them introduce the brand to the local market.

4.   Low total initial investment required

The total initial investment needed to run a Home Stead franchise ranges from $75,000 to $100,000.  Much of this is for the initial franchise fee of $39,000 (US & Canada). This is one of the highest franchisee fees I’ve seen, but considering there are no other major expenses, the total investment still comes in relatively affordable.

Approximately $20,000 is meant for expenses related to setting up the required commercial office space, and around $40,000 to $45,000 is for working capital for the first year.

The monthly royalty is 5% of sales.

The business model and cost structure reminds me a lot of the residential home cleaning business.  The main difference is that caregivers usually stay with a single client at a time, while residential cleaners move from one job to the next throughout the day.

5.   Gives the franchisee an opportunity to make a difference in the lives of seniors

Home Instead is looking for franchisees who are compassionate, amiable, and interested in making a difference in the lives of seniors.   The franchisee must commit to being an owner-operator (absentee ownership is not allowed).   For the right franchisee, owning a Home Instead is not just a business, it’s also an opportunity to serve.

To be clear, this negative is not meant to reflect poorly on Home Instead in particular.  For me,  it’s a potential source of stress that is inherent in this type of service business.

1.  Potential difficulty in finding and keeping good caregivers

The  success of a senior home care franchise really depends on the attitude, reliability, character, and skill of the caregivers employed.  The main job of the franchisee is recruiting, training, and keeping the highest caliber of caregivers available.

Having been an owner of a UPS Store, I know it’s not easy finding the right employees who are punctual, reliable, honest, hard-working, and willing to work for the salary the position pays.  But since I was always at the store, I could make up for the deficiencies or weaknesses of certain employees.  This is not something that a senior home care franchisee can do.

Since a caregiver plays such a critical role in the care of seniors, I can already imagine a lot of scenarios where an unreliable or lazy employee tarnishes the reputation of the business.

This is why it’s absolutely critical to have the right tools in place to help the franchisee find and keep the very best caregivers.  In fairness to Home Instead, they recognize the critical role that caregivers play and so they emphasize the effective hiring, orientation, training and retention of caregivers.

Home Instead Senior Care requires all caregivers to pass several phases of training on everything from in-home safety to specialized Alzheimer’s and dementia care.   They also have a program in place to help keep the best caregivers through recognition and honors.  Finally, Home Instead encourages franchisee to find a good match between every client and their caregiver to foster a higher level of satisfaction.

A  senior home care franchise has a lot of great things going for it, but it’s not without its share of potential headaches.   However, with the right tools and strategies from an experienced franchisor like Home Instead, a franchisee can overcome these concerns and make the business thrive.

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