FDD Talk: What You Need to Know About the Homewatch CareGivers Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Homewatch CareGivers franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Homewatch CareGivers franchise, based on Item 7 of the company’s 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Homewatch CareGivers franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Homewatch CareGivers’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average, median, high, and low gross revenue for the 86 franchisees who operated 173 territories/outlets who reported gross revenue greater than $0 for all 12 months of calendar year 2016 and did not purchase their franchise from an existing business in the last 3 years

• gross revenue growth between calendar years 2015 and 2016 for all 92 franchisees, which operated 181 territories/outlets, in business and reporting revenue as of December 31, 2016

• number and percentage of franchisees with 2016 gross revenue of $1 million or more, $1.5 million or more, and $2 million or more, respectively

• 2016 average percentage of gross revenue by service line (personal care, companion care, nurse/other)

• 2016 average number of clients per month and percentage of gross revenue by hours of care (24 hour care, 12-23 hour care, 3-11 hour care, 2 or less hour care)

• 2016 cost of goods sold percentage and operating expenses percentage for all 27 franchisees using the financial aggregation and benchmarking vendor, Qvinci, who had completed their financials for the period of October 2015 to September 2016, were in business for at least 2 years (based on their first reported month with gross revenue greater than $0), and were active as of February 28, 2017

Section I – Background Information

12 Things You Need to Know About the Homewatch CareGivers Franchise

Franchisor Acquired by Authority Brands, LLC backed by PNC Riverarch Capital

1.  In mid-September, Homewatch International, the franchisor of Homewatch CareGivers, announced that it had been acquired by Authority Brands, LLC backed by PNC Riverarch Capital. PNC Riverarch Capital is a private equity firm interested in helping facilitate Homewatch International’s growth and expanding its international reach.

2.  Julie R. Smith, chief executive officer of Homewatch International, said, “In PNC Riverarch Capital we have found a private equity partner that brings exceptional business experience that will truly elevate our brand and further our mission of providing quality in home care internationally. This acquisition will take Homewatch International to the next phase of growth as we endeavor to improve our market share and strengthen our position within the continuum of care.”

3.  Homewatch International says that PNC Riverarch Capital brings the needed experience, capital, and investment portfolio to take its operations to the next level.

Launches Proprietary Software Platform

4.  One of the newest ways that Homewatch CareGivers has improved its services is the use of a proprietary software platform called Homewatch CareGivers Care+, which launched in late 2017. The new platform allows Homewatch CareGivers franchisees to measure points of contact along both emotional and physical needs.

5.  With Care+, caregivers and other professionals can schedule appointments as well as keep track of a variety of specialized tasks to establish which ones are completed. It also provides an effective snapshot of the care protocols, and easily generates reports to meet state insurance requirements and to share with family members and referral sources.

6.  In addition to the above features, Care+ also features tools that aid in screening for adult independent living, risk assessment, and also for dementia.

Continuing “Growth Spurt”

7.  At the end of summer, president and COO of Homewatch CareGivers Julie Smith talked about the company’s recent growth and her vision to both support current franchisees and expand. Smith says that overcoming the “taboo” of running a successful business and offering a service that aims to take care of others is part of the philosophy she brought with her to the company in 2015.

8.  Since Smith joined Homewatch CareGivers, the company has grown more rapidly. At the time of the interview, seven new locations opened and 15 new franchisees purchased Homewatch CareGivers offices. Smith hopes the company will open 30 to 40 new locations by the end of 2018.

9.  Homewatch CareGivers is also looking to further expand its international presence in Canada, Latin America, Australia, and England.

Company History

10.  Homewatch CareGivers was founded in 1980 by Paul Sauer in Denver, Colorado. Sauer wanted to provide high quality in-home care services so people could continue to live safely and comfortably in their homes. Over the next decade, Sauer continued to open additional Homewatch CareGivers locations in the Denver Metro area and in 1996, the first franchised location was opened in Boulder, Colorado.

11.  In 2002, the company began to franchise nationally and established a Franchise Support Center. Today, there are over 200 locations in the U.S., Canada, Chile, Columbia, Costa Rica, Guatemala, and Mexico.

Entrepreneur’s Franchise 500

12.  Homewatch CareGivers has appeared on Entrepreneur’s annual Franchise 500 list almost every year during the past 10 years, except in 2017 and 2018. The brand’s highest rank was No. 149 in 2013, while its lowest rank was No. 227 in 2007.

Section II – Estimated Costs

• Please click here for detailed estimates of Homewatch CareGivers franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Homewatch CareGivers’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

• All of the charts below contain results of operations during calendar year 2016 as reported by Homewatch CareGivers franchisees located in the United States.

• In 2016, 111 domestic franchisees (208 territories) attended training or were operational for at least one month.

• For consideration in Item 19, the following were excluded:

• 13 franchisees (19 territories) that closed during 2016.

• 4 franchisees (5 territories) that did not report any Gross Revenue during 2016.

• 2 franchisees (3 territories) that were transferred and the above count includes both the buyers and sellers.

• This results in 92 franchisees (181 territories) that are included as the basis for all charts in Item 19.

Part 1 – Gross Revenue of Franchisees

• Part 1 below presents the actual, average twelve-month Gross Revenues of all 86 franchisees who operated 173 territories/outlets who reported Gross Revenues greater than $0 for all 12 months of calendar year 2016 and did not purchase their franchise from an existing business in the last 3 years.

• There were 186 territories/outlets operating as of December 31, 2016.

• Gross Revenues includes the revenues from all territories owned by a franchisee and revenue generated from unowned territory as reported by the franchisee.

• Excluded from this Part 1 are 3 franchisees who did not report Gross Revenues greater than $0 for all months of 2016 and 3 franchisees who were parties to a transfer of a franchise within the past 3 years.

2016 Gross Revenues of Homewatch CareGivers Franchisees

Years in Business:  1-2 Years