SPECIAL REPORT | August 2010 Senior Care and Home Healthcare Franchises Many industries have experienced ﬂat or even negative growth over the “From an investment past few years, yet the senior care / home healthcare sector continues to perform solidly. In fact, senior care has been one of the fastest-growing perspective, owning franchise segments in recent years. In this report we will explore the op- and operating a portunity of investing in a home healthcare franchise, the pros and cons, successful senior understand how the business model works, forecast where we think the care franchise can home healthcare market is going and look at the skills and characteristics it takes to be a successful senior care franchise owner and operator. be very fulﬁlling both emotionally and We will also highlight some of the leading franchise opportunities in the senior care / home healthcare segment and break them down by various ﬁnancially.” metrics. This report is designed to give you a high level look at the senior care franchise sector. For a more detailed assessment of any of the fran- chise companies operating in this sector, we encourage you to purchase one or more of our FBR Franchise Investment Guides which will give you a much more detailed view of each senior care franchise company and how they stack up to the competition. For more information on our guides, please visit www.FranchiseBusinessReview.com/Guides.php Senior Care and Home Healthcare Franchises Researched for this Report Include Accessible Home Healthcare Homewatch CareGivers Always Best Care Senior Services Interim HomeCare BrightStar Healthcare Right at Home ComForcare Senior Services Sarah Adult Day Services Comfort Keepers Senior Helpers FirstLight HomeCare Seniors Helping Seniors Griswold Special Care Spectrum Home Services Home Care Assistance Synergy HomeCare Home Helpers The Senior’s Choice Inc. Home Instead Senior Care Visiting Angels... and 15 other franchises SPECIAL REPORT: SENIOR CARE FRANCHISES | August 2010 | FranchiseBusinessREVIEW Services Like any small business, building a suc- The core services provided by the fran- cessful senior care franchise requires a lot chises in this segment focus primarily of time, commitment and hard work, around non-medical, in-home care for especially in the ﬁrst few years. That said, seniors, such as meal preparation, groom- the potential return on your investment ing, bathing, transportation and compan- is signiﬁcantly higher than many other ionship. Some offer skilled medical care franchise businesses. It is not uncommon including assistance with medications, among the top senior care franchises to Top Senior Care Franchises wound care, physical therapy and other build gross revenues of the business to by Franchisee Satisfaction medical services. A growing number also several million dollars, with gross margins (as of 8/2010) offer full medical stafﬁng solutions for of 30–40%. Compare that to many food ►Home Instead Senior Care nursing homes, hospitals, assisted living and retail franchises which require an facilities, schools, doctor ofﬁces and other initial investment that can easily exceed ►Synergy Homecare healthcare providers. While the primary $500,000 and operate with slim margins ►Visiting Angels focus is on delivering services for seniors, and you will quickly see what makes ►Homewatch most companies provide home healthcare senior care franchises so attractive. CareGivers services to non-seniors as well, including ►Right at Home services for acute illness, long term health Pros ►Brightstar Healthcare conditions, disabilities, hospice services In addition to attractive unit economics, and pediatric care. Throughout this report for the right person, the senior care busi- we use the term senior care and home ness offers relative scheduling ﬂexibil- healthcare interchangeably. ity (once your business is established), limited time requirements on nights and “The potential return Investment weekends (with a good manager/systems From an investment perspective, owning in place), and an opportunity to get out on your investment and operating a successful senior care into your local community and build strong is signiﬁcantly higher franchise can be very fulﬁlling both emo- emotional bonds with clients. Ultimately, it than many other tionally and ﬁnancially. The initial invest- ment required to open a single senior care is this emotional connection to clients and community, as well as a strong internal franchise businesses. franchise ofﬁce averages under $100,000 drive to help people, that generates high It is not uncommon and can be as little as $50,550 with Home Instead Senior Care, which offers satisfaction levels among many senior care franchise operators – regardless of among the top senior one of the lowest initial investments and their business’s ﬁnancial performance. care franchises to the highest yield ratios (Average Unit Rev- Like many service-based franchises, many enue / Average Investment) in the group new franchisees choose to start by work- build overall revenues and has also been ranked best in category ing out of a home ofﬁce, which helps keep of the business to for franchisee satisfaction since 2007. the initial cash requirements low. several million dollars” Top Senior Care Franchises by Yield Ratio1 (as of 12/2009) Franchise Brand Investment $ Avg Unit Rev $ Yield Ratio (Rev/Inv$) Home Instead Senior Care $57,050 $1,114,822 19.5 Griswold Special Care $72,500 $1,226,107 16.9 Interim HealthCare $152,000 $1,565,291 10.3 Visiting Angels $68,160 $661,881 9.7 Right at Home $81,635 $770,101 9.4 1. Yield Ratio is deﬁned as the average initial investment divided by the average unit revenue of a franchise business. This ratio is used to compare the potential return on investment (ROI) of a business. Businesses within a speciﬁc sector typically are valued at a similar multiple of revenue. Therefore, in theory, a higher Yield Ratio would translate into a higher percentage return on your investment. Caution: proﬁtability, market conditions, www.FranchiseBusinessReview.com and other factors will also contribute to the business’s potential ROI. FranchiseBusinessREVIEW | August 2010 | SPECIAL REPORT: SENIOR CARE FRANCHISES Senior Care Franchise Sector Growth by Units and Revenue2 (as of 12/2009) Largest Senior Care Franchises by U.S. Units 4,000 $140M (as of 12/2009) System Revenue Growth 3,750 $130M ►Home Instead .........................585 Unit Growth 3,500 $120M ►Comfort Keepers ....................559 3,250 $110M ►Visiting Angels ........................377 3,000 $100M ►Home Helpers ........................325 2,750 $90M ►Interim HealthCare .................294 2007 2008 2009 ►Senior Helpers........................270 Unit Growth System Revenue Growth ►Right at Home ........................206 2. Unit growth and system revenue growth are aggregate numbers from the 25 largest senior care franchise brands, which represent over 90% of the franchise market segment. System revenue growth numbers are based on the gross revenues of each corporate organization, and not the aggregate ►Homewatch CareGivers .........160 of individual franchise unit gross revenues. The compound annual growth rate (CAGR) for franchise units during this 3 year period was 9.4%. The CAGR for gross system revenue during this same period was 11.6%. ►The Senior’s Choice ...............154 Cons care services is going to grow substantially ►Brightstar Healthcare..............141 The typical challenges facing senior care for the foreseeable future. When you add franchise operators include caregiver hir- in the home healthcare services segment for non-seniors (medical and non-medi- ing and management issues, high turn- Largest Senior Care over, continuous training of staff, on-call cal services provided to clients with acute Franchises by Revenue3 24/7, federal/state/local regulations and care needs, long term health conditions, (as of 12/2009) licensing requirements, high accountability permanent disabilities or terminal ill- ►Home Instead .................. $35.6M and legal responsibility for services. The nesses) the market opportunity increases signiﬁcantly. ►Interim HealthCare .......... $24.1M sector as a whole will face more and more government regulation in the future in an ►Visiting Angels ................... $9.6M The senior care / home health care effort to help keep seniors safe from the ►Comfort Keepers ............... $9.4M industry is highly fragmented, with over unethical practices of businesses out to 35 different franchise brands and many ►Right at Home ................... $8.2M make a quick buck. Additionally, short- more non-franchise businesses competing ages of caregivers and medical staff will ►Brightstar Healthcare......... $7.0M for market share. And while “ﬁrst-mover” continue to drive above-average wage ►Home Helpers ................... $5.3M Interim Healthcare got started over forty increases, putting pressure on business years ago and Homewatch CareGivers ►Senior Helpers................... $5.2M proﬁt margins and pushing the cost of in the early-80’s, many of today’s rapid home healthcare out of reach for many ►Griswold Special Care ....... $4.5M growth senior care opportunities, including Americans. ►Homewatch Brightstar Healthcare, Senior Helpers and CareGivers .... $4.2M Synergy Homecare have been franchis- Market Analysis ing for less than a decade. Non-fran- 3. System revenue numbers list above are based on the gross franchise revenues of each corporate organiza- tion, and not the aggregate of individual franchise unit The senior care industry is a vibrantly gross revenues. The source of these numbers is the chise brands in the sector include public audited ﬁnancial statements of each organization, as growing, multi-billion dollar segment of published in their 2010 franchise disclosure document. company giants like Sunrise Senior Living During 2009, Griswold Special Care consolidated the U.S. Economy. Interim HealthCare several corporate entities, which dramatically increased (NYSE: SRZ) and National Healthcare Cor- their overall corporate gross revenues which were President and CEO Kathleen Gilmartin reported. The number above is our best estimate of true poration (AMEX: NHC), yet that vast major- gross revenues from 2009 franchise operations. told us “the industry has nowhere to go ity of senior care services are provided by but up over the next 10–15 years” and we “mom and pop” business owners or family strongly agree. According to recent census members themselves. data, there are over 40 million seniors liv- ing in the U.S. (age 65+) and this number Among senior care franchise companies is expected to double over the next 20-25 speciﬁcally, we expect to see some con- years. Combined with the fact that the solidation (mergers / acquisitions) among average life expectancy is continuing to the smaller regional brands in an effort to increase, logically, the demand for senior gain national brand awareness and www.FranchiseBusinessReview.com SPECIAL REPORT: SENIOR CARE FRANCHISES | August 2010 | FranchiseBusinessREVIEW Fastest Growing Senior Care (Market Analysis continued) Success Attributes Franchises by Growth Rate4 compete with the larger systems. A cau- As stated, the senior care / home health- (Listed by units and 3-year compound annual tion to prospective franchisees: be sure to care business is extremely people depen- growth rates as of 12/2009) fully understand how a merger or acquisi- dent – with small ofﬁces typically manag- ►Brightstar Healthcare tion could effect your situation and make ing 50 or more caregivers and large ofﬁces 141 units | 73% CAGR sure that your franchise agreement clearly exceeding several hundred. Senior care ►Synergy HomeCare addresses this issue. Most of these situa- is also a highly personal business where 95 units | 56% CAGR tions are difﬁcult to predict or plan for, and you commonly get deeply involved with ►Seniors Helping Seniors most franchisees have little or no control your clients and caregivers lives and family 86 units | 51% CAGR over a corporate acquisition. Senior care issues. The business operates 24 hours a ►Accessible Home Health Care franchise company Comfort Keepers, for day / 7 days a week, where caregiver is- 71 units | 46% CAGR example has gone through not one, but sues, service emergencies and even client ►Senior Helpers two acquisitions since 2003 and is cur- death can be frequent occurrences. Suc- 270 units | 43% CAGR rently owned by global behemoth Sodexo, cessful senior care franchisees require a ►Right at Home which is a publicly traded European high level of empathy and people manage- 206 units | 18% CAGR company. An acquisition can provide more ment skills, balanced with strong network- ►Griswold Special Care resources for growth and other advantag- ing, marketing, and operational expertise. 98 units | 14% CAGR es but it can also put shareholder priori- People attracted to the business solely for ►ComForCare Senior Services ties ahead of franchisee priorities – just the potential proﬁt will undoubtedly be dis- 120 units | 9% CAGR something to keep in mind. satisﬁed and fail. ►Homewatch CareGivers 160 units | 8% CAGR We expect to continue to see new fran- ►Visiting Angels Summary chise start-ups entering the market and 377 units | 8% CAGR The senior care and home healthcare competing for the increasing demand for sector offers one of the best franchise 4. Compound Annual Growth Rate (CAGR) is a good services. FirstLight Home Care is one metric to compare similarly-size franchise companies opportunities in the marketplace today. within the same sector. When comparing two franchise recent startup with a very promising man- systems of dramatically different sizes, it is not of much The demand for services is very strong use, as CAGR typically favors the smaller companies. agement team that has signiﬁcant senior For example, if a 200 unit franchise added 20 units in and is forecasted to grow signiﬁcantly. a given year, it would have grown by 10%. If a 50 unit care franchise experience. While young franchise added 20 units in a given year, it would have That said, home healthcare is certainly grown by 40%. Similarly, if a brand new company with and unproven franchise systems present 1 franchise unit were to add 20 units in a given year, it a competitive business sector and those would have grown by 2000%. a higher investment risk to a prospective business operators simply attracted by franchisee candidate, startups typically the potential ﬁnancial opportunity, without have the advantage of offering more ﬂex- Disclaimer laser-like focus on delivering exceptional Franchise Business Review publishes ible terms and larger protected territories information on franchise companies that it care, will struggle to be successful. to their ﬁrst franchisees. Whether or not believes to be reliable but is not guaranteed to be accurate. The past performance of a you consider a startup in your franchise It is important to note that not all senior franchise company cannot guarantee future performance. Investing in any franchise, like opportunity search depends greatly on care franchises are created equal. Many every investment, comes with the potential your comfort with risk and your conﬁdence risk of losing your entire investment. We franchise companies in this sector offer strongly recommend that you perform thor- in your own skills as an entrepreneur and ough due diligence and consult with current only an average or even below average franchise owners, an experienced attorney, business owner. investment opportunity. It is important an accountant and other business profes- sionals before committing to any franchise to do your research and compare brands agreement. side-by-side. For more detailed research Franchise Business Review, its ofﬁcers, employees, partners, and afﬁliates assume and investment guides on speciﬁc senior no responsibility or liability for the accuracy of any information contained herein, nor are care franchises, please visit us online at they liable for any damages arising out of the www.FranchiseBusinessReview.com/Guides.php use of this information. For more research and information on today’s top franchise opportunities, please visit us online at www.FranchiseBusinessReview.com Franchise Business Review | Abistar Group, LLC | 16 Market Square, Suite 3, Portsmouth, NH 03801 | 603.433.2270 www.FranchiseBusinessReview.com
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