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Steps to Take to Buy a Home Care Franchise
November 15, 2021
No matter what age you are, no one wants to be uprooted from their home. Home care is all about providing a way for aging adults to preserve their independence, dignity and their sense of home. As such, the benefits of starting a home care franchise go beyond financial rewards, allowing you to also have a positive impact on members of your community that paved the way before you.
If you are interested in starting a home care franchise, here are seven steps to follow to give you a general idea of what it takes to run this type of business.
7 Steps to Take to Buy a Home Care Franchise
Like any serious endeavor, starting your own home care franchise shouldn’t be an impulsive decision. Before proceeding, have a clear picture of the steps you will need to take:
1. Be Sure About Your Decision
Owning a senior care franchise, or any other type of franchise for that matter, is not for the faint of heart. The franchisee process is drawn-out and complicated, involving legal, financial and practical concerns that the franchisor, franchisee and any lenders will want to be clear on and comfortable with before partnering in a business. As such, you do not want to enter into the home care business flippantly.
Having a clear sense of motivation and direction will give you confidence going forward and give your franchisors confidence that you are prepared and are venturing into the home care business for the right reasons, which will increase your chances of approval.
Another critical part of being a franchisee to keep in mind is that your business operations will need to fall in line with a pre-existing set of rules and regulations established by the franchise organization. So it may be worthwhile to take a personality test or inventory of your values and inclinations before going forward. Are you reasonably easy-going when it comes to complying with established rules and regulations? Or are you the type of entrepreneur who prefers to blaze their own trails to make space for your creative impulses to thrive?
If you are the former, becoming a franchisee should be an easy adjustment. If you identify more with the latter, franchise ownership could feel stifling or challenging to adjust to. That is not to say there is no room for creativity and innovation in franchise ownership — quite the opposite — but there are more hoops to go through when implementing your ideas. So, you will have to decide if the franchise opportunity is worth the limitations on your creativity or if you will be better off going it alone.
2. Do Your Research
Once you are sure of your decision to pursue a home care franchise ownership, you will want to get familiar with the lay of the land. In many cases, studying the field of franchise ownership may function as an extension of the first step in confirming your decision to venture into this industry.
One handy resource for understanding the franchise ownership industry, in general, is the Federal Trade Commission’s (FTC) Consumer’s Guide to Buying a Franchise. The FTC’s guide contains invaluable information on all of the intricate details involved with franchise ownership that often get lost in the fine print, such as the rules and regulations involved with contractual obligations between franchisor and franchisee, costs of starting up and running a franchise, selecting a franchise to partner with and reading through Franchise Disclosure Documents (FDD).
In addition to general franchise ownership, you will want to familiarize yourself with current trends within the home care industry, as well as the demand and level of competition for home care in your community, to make sure it is a worthy investment. An excellent resource for discerning home care industry trends is the annual benchmarking study published by HomeCare Pulse, which evaluates revenue trends from a sales and marketing perspective and provides various financial insights in a user-friendly format.
Part of your research into the home care industry should involve a general survey of the different home care franchises you have the option of joining in your area. Research the benefits and flaws of each franchise to decide which one will offer you the best chance of success. In doing so, you may want to visit the franchise’s headquarters, find out their fees and speak with other franchisees within a specific organization about their experience and the possibility of shadowing them for a day to get a feel for owning a home care franchise.
Finding out the fees that each franchise requires for becoming a franchisee is an important step, as there are numerous costs that you may not consider, such as training fees, advertising and grand opening marketing costs and general operational expenses.
3. Start the Application Process
After you have chosen a franchise or narrowed your options down to a couple of choices, you can start focusing on the application process. At this stage of the game, a lawyer or accountant may be helpful to get your financial information in order and figure out the legalities of financial disclosure and other required information. To begin the application process, you will need to either contact the franchisor for an application form or get one from their website, like our Franchise Kit at HomeWell, to get you started.
The application form will consist of some preliminary questions intended to determine your qualifications and interest level and screen for candidates that are a good fit. Some of the question topics you can expect to find in the application process include:
- Personal information: They’ll want to know your name, birthdate, phone number — all the standard information you would expect on any application — as well as information about your biographical background and overall character
- Business interests and experience: Franchisors will seek information about your past business engagements with or without partners, involvement in any litigation and what your general interests and passions are within the business world
- Location preference: They may also have questions about the city or territory you would prefer to operate in, as well as any alternatives, if applicable
- Employment history: Like a regular resumé, you’ll include information about where you worked, for how long, your role, what you achieved and salary information
- Education: You’ll also be asked about any completed degrees, relevant training or certificates you have earned
- Financial statement: You should disclose financial information about personal assets, liabilities, net worth, sources of income and other pertinent financial information
- Reasons for applying: There will also be questions about your interest in becoming a franchisee, what you already know of the franchise and what your overall goals and motivations are for applying
After filling out and submitting the application, the franchisor committee will take some time to review the application and get back to you. If you meet their requirements, you should be able to get in touch with a representative for a meeting, who can give you a copy of their FDD, which is a lengthy document that contains 23 items of pertinent information about the franchise. You will be given access to such information as the following when a franchise gives you a copy of their FDD:
- Franchisor’s background — how long they have been in operation, who their competition is, legal requirements unique to the franchise
- Business background of executive staff
- Litigation history
- Bankruptcy history
- Initial fees for opening a new franchise and ongoing costs
- Restrictions on territories, suppliers, demographics and customers
- Advertising and training program
- Contract renewal, termination, transfer and dispute resolution protocol
- Factual claims made by the franchise about sales and revenue
- Growth and owner turnover charts within the franchise system
- Financial statements
There is a lot of information to sift through when reading an FDD and some of it is wrapped up in legal jargon that can be confusing and complex. With that in mind, you may benefit from having an accountant take a look at the financial statements to give you a better idea of the franchise’s financial health, including whether it has steady growth, a firm plan for the future and where they derive the bulk of their income.
The FTC mandates that franchisors must hand over a copy of their FDD at least two weeks before the franchisee signs legally binding agreements and pays initial fees. This should give you some time to clarify your decision or back out if there are too many red flags.
4. Develop a Business Plan
You’ve signed the binding agreements and paid the initial fees. Now it’s time to get to the drawing board and formulate your plan for growing the franchise in your area. Not only will this give you a head start before your franchise opens but more importantly, it will be integral to the proposal you craft to apply for financing. Lenders and investors will want to see that you have a robust and feasible plan in place before they provide you with finances to get your franchise venture off the ground.
Included in your plan should be a strategy for addressing any potential issues unique to your location that could arise, a realistic plan for growth, and achievable goals and milestones you hope to reach within a specific timeframe. Concerning a business plan for a home care franchise, you will want to consider the percentage of older adults in your area who could benefit from home care, as well as the wealth index of that demographic.
5. Apply for Financing
Without financing, there is little chance of successfully getting the franchise up and running. Securing financing is an unavoidable step in the process of buying a home care franchise. Luckily, there are plenty of options when it comes to getting financing, such as a bank loan, small business administration (SBA) loan, rollovers as business start-ups (ROBS) strategy or financing from private investors.
Before you apply for financing — and likely before you craft your business plan — you will want to identify exactly how much capital and financing you require. To do so, you will need a thorough understanding of all the fees required to open your franchise and keep it in operation. If you plan to open a franchise with HomeWell, you can expect fees for the following:
- Initial franchise fee
- Travel and living expenses for training
- Real estate
- Furniture and furnishings
- Computer hardware and software
- Office equipment and supplies
- Marketing materials
- Local and grand opening marketing
- Payroll expenses for hired staff
- Recruiting and training caregivers
- Professional fees for accountants or attorneys
- Miscellaneous costs for opening
- Various licenses and permits
- Funds to get the franchise started
In total, you are looking at between $96,000 and $221,800 to cover those fees. You can find more detailed information on our franchising fees in our brochure, as well as our FDD for successful franchisee candidates.
6. Participate in Training
A few weeks before opening up your franchise, it helps to go through a series of training sessions with the franchisor to understand how to open and operate your business. This communication with the company gives you the support and encouragement you need to make your business a success. Whether you attend in-person or virtual training, you can expect to learn the following:
- Information about the home care franchise industry and the company’s role in providing care to their clients
- The day-to-day responsibilities of each employee and the types of services the company offers
- How to grow the company and build revenue
- Hiring and retaining staff while keeping the whole team motivated
- Collecting and managing finances
After you’ve opened up your business and started on the right foot, you may want to attend a post-opening training to discuss any questions you may have with the franchisor.
7. Get Ready for Opening Day
After months and months of planning, it is finally starting to all come together. You have your location, funding and your feet beneath you as you get ready to open your doors and provide families and older adults in your community with in-home care. However, there are a few things to take care of before that happens.
First, you will need to go through a training and sales onboarding process to ensure you are fully prepared to successfully manage your franchise and provide home care services to your community. This training process will involve information on the overall home care industry, marketing strategies, branding, organizational structure, navigating the complex healthcare system, care management strategies and more. The final stages of training will focus on preparing you for the grand opening so your business will be dressed for success right from day one!
Starting a home care franchise is a rewarding and profitable venture. As more and more older adults prefer to age in place, home care services will continue to become more necessary. HomeWell Care allows older adults to age in place with our broad range of non-medical services. If you are interested in starting a franchise with HomeWell Care, we welcome you to download our Franchise Kit to get you started or you can contact us for more information today!
Take the First Step
Our easy-to-read Franchise Kit is a starter packet for all potential franchise owners which will help you gain a clear understanding of our step-by-step discovery process. You will lean more about the overall investment opportunity, HomeWell’s ongoing training and support and how we address the needs of your specific market. Ultimately, this guide will help you determine if HomeWell is the right fit for you.