By Jeff Bevis
When comparing home care ownership options, there are similar but also stark differences between operating as an independent agency and being part of a franchise system. Let’s look at the key similarities and differences.
Considering similarities, there are actually several aspects that the two ownership models in home care have in common:
- A core focus on recruiting and marketing to grow.
- A heavy dependence on their caregiver teams to deliver care, with their caregivers being their biggest asset.
- Key efforts to target their marketing to and build relationships with key referral sources for private pay and third-party payors.
- A fundamental local ownership and presence (with a less frequent scenario of a franchise owner operating multiple markets and living in one of those markets).
When considering differences between independent and franchise ownership, here are some of the primary aspects that set these two ownership models apart:
- An independent agency builds its entire brand, operating system, and all support services (either internal or outsourced) from the ground up, while a franchise buys into an established brand with its own framework and track record of success to evaluate (this is the value of the initial franchise fee noted below).
- A franchise agreement provides the entire structure of the business if you are a franchise owner, creating a framework of what you can and cannot do operating your business.
- With franchising, the owner pays an initial franchise fee upfront to gain specific rights to the use of the brand and the operating system for a defined period.
- The franchise owner pays royalties to the franchisor (owner of the entire system and brand), which are defined as a percentage of revenue on a monthly or bi-weekly basis, as detailed in the franchise agreement.
- The franchise will have its own operating system, and the franchise owner is contractually required to follow it, maintain their compliance with it, and usually little deviation is allowed with changes and updates coming from the franchisor.
- Brand standards are established and designed to give the franchise owner a faster path to growth and profitability.
- Brand awareness is more established with a franchise and is most often a key benefit to franchise owners versus an independent who is “building it on their own.”
- A franchise provides for a defined territory/market area with population and demographic factors to support the size and boundaries.
The home care industry continues to grow at a rapid rate, with our demand for services increasing to serve more of our population. There are advantages and disadvantages to both home care ownership models.
It is not “one size fits all.” It’s a matter of finding the right model, which requires the ownership candidate to review, research, and decide which will work best for them. Successful results are likely with both home care ownership models!
With a business career that has stretched over three decades in franchise and entrepreneurial environments, Jeff has built, rebuilt, or enhanced 7 different brands—-Comfort Keepers, FirstLight Home Care, and Caring Senior Service in home care alone—–across 5 different service industries. He has given key guidance and support to over 900 new entrepreneurs in his career to date. He is currently leading a consulting practice where he works with brands for new growth and transformation. Learn more.
