Franchising Home Health Care

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Contents
Executive Summary ......................................................................................................................... 5
Health Care & the “Graying of America” ................................................................................... 7
   Demand...................................................................................................................................................... 7
   The Structure of the Health Care Industry.............................................................................................. 8
   The Home Health Care Subsector ........................................................................................................ 10
   The History of the Home Health Care Subsector ................................................................................ 10
   Issues Facing the Home Health Care Subsector ................................................................................ 11
      Regulations .................................................................................................................................................................................... 11
      Uncertainty in the Insurance Market ......................................................................................................................................... 12

Franchising in the Home Health Care Subsector .....................................................................13
   Structure of Analysis ................................................................................................................................ 13
   Brand Differentiation and Size ............................................................................................................... 14
Franchise System Growth and Performance ............................................................................17
   Franchise Unit Growth............................................................................................................................. 17
      Unit Continuity ............................................................................................................................................................................... 18
      Discontinued Franchised Units and/or Contracts.................................................................................................................... 20

Unit Financial Performance .........................................................................................................23
   Average Initial Investment ..................................................................................................................... 24
   Unit Revenue per Dollar of Initial Investment ...................................................................................... 25
   SBA Loan Performance Data................................................................................................................. 26
Franchisor Financial Performance ..............................................................................................27
   Total Sales ................................................................................................................................................. 27
   Total Income Before Taxes ..................................................................................................................... 28
   Liquidity ..................................................................................................................................................... 29
   Income Margins ....................................................................................................................................... 30
   Leverage................................................................................................................................................... 31
   Returns....................................................................................................................................................... 32
Franchising-Related Fee Structure .............................................................................................33
   Initial Fee ................................................................................................................................................... 33
   Royalty Fee ............................................................................................................................................... 34
   Marketing Fees......................................................................................................................................... 35
   Agreement Terms and Fees................................................................................................................... 36
Appendix ........................................................................................................................................37




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