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Understanding Your Competition – Home Care Franchises

By Stephen Tweed

Who are your biggest competitors?  How do you know?  How will understanding your competitors help you grow your business?

Last month, I wrote to you about “Your New Biggest Competitor” – Affiliated home care agencies. These are private pay in-home personal care agencies that are affiliated with a home health agency, hospice, hospital system, or senior living community.

Today I want to turn your attention to another major competitor, and one that is most often mentioned in our conversations with CEOs of independent companies – Franchises.  What is a franchise.  Well … let’s look the definition:

franchise is a type of license that a party (franchisee) acquires to allow them to have access to a franchisor’s proprietary knowledge, processes and trademarks in order to allow the party to sell a product or provide a service under the business’s name.

In the case of home care,  a franchisor develops their own proprietary processes and knowledge to provide in-home care services.  They provide that knowledge in exchange for an up-front fee for training and start-up, and then a monthly fee based on a % of revenue. Each franchise location is locally owned and operated.

Understanding Franchising in Home Care

Every couple of years, I engage a researcher to help me update our information and data about the franchise companies serving the home care industry.  We just completed that information update and we learned some interesting new facts about this sector of home care:

  • There are currently 65 companies offering franchises in the home care space
  • They operate a total of 7616 locations in the US and around the world
  • There are 18 franchise companies that have more than 100 locations
  • There are 9 companies that have from 50 to 100 locations
  • There are 18 companies that have between 10 and 49 locations
  • Since 2013, six franchise companies have closed their doors

The largest home care franchisor is Home Instead Senior Care, with 1077 locations around the world.  Just over 600 of those locations are in the US, and the rest are in other countries.

Other companies in the top ten are:

  • Comfort Keepers
  • Home Helpers
  • Visiting Angels
  • Interim Healthcare and HomeStyle Services
  • Right At Home
  • Synergy
  • BrightStar
  • Senior Helpers
  • Seniors Helping Seniors

As you may recall from other articles I have written,  there are three sectors of home care than we follow;  independents, franchises, and affiliated companies.  In terms of numbers of agencies, it is impossible to determine the exact number of agencies in each category because there are still 20 states that do not license in-home personal care.  However, in our research we have come up with some estimates for each category.

The largest number of agencies are the independents. These are local, privately owned companies owned by an individual, a couple, or partners.  Next are the franchises, and the smallest number are the affiliated agencies. However, we are seeing rapid growth in all three sectors and it’s difficult to keep up.

We also know from our friends at Home Care Pulse, and from our own research, that the largest agencies in terms of dollars of revenue are the affiliated companies, followed by the independents.  The franchise locations tend to be the smallest. In 2014, the median sized franchise generated $1,295,772 compared to $1,543,659 for all independents and franchises combined.  Our most recent data for affiliated home care agencies showed median revenue at $2,292,018.  While the affiliated agencies tend to be larger in volume, they are generally much less profitable and many of them are money losers for their owners.

What Does This Mean for You?

As the owner or CEO of a home care business, you have three primary duties;  grow your business, build your team, and get ready for the future.  To grow you business, you need to create distinction. You need to find new ways to make your agency different from your competitors.

Today, home care in many markets has become a commodity where consumers see all agencies as the same.  Look at brochures and web sites, and many agencies provide the same list of services, and the same list of benefits.  Part of the reason that the growth of home care agencies has slowed over the past four years is because of the increasing competition from new agencies.  While the agencies in the top 5% have continued to grow their revenue, many smaller agencies have reported very low growth in total revenue, and many have reported declining sales.  Many agency owners we talk with say that their major source of competition is from the franchises.  That’s because the franchises tend to be more visible in the local market.  As we discussed in the last article, affiliated agencies are actually taking more market share but the operate under the radar because they already have connections with referral sources.

There is also a huge number of new independent agencies being formed. While they may be small and just getting started, each new agency that picks up ten or twenty clients makes it that much more difficult for you to grow.

How will you create distinction?  

Our research shows there are five ways to set your agency apart. The Home Care Benchmarking Study from Home Care Pulse suggests that the number one way is “caregiver quality”.  We’ve identified the follow sources of distinction:

  • Caregiver Quality
  • Exceptional Customer Experiences and Word of Mouth Marketing
  • Brand Awareness
  • Specialized Programs
  • Lowest Price

What do you think? Which of those is your primary source of distinction? Or is your agency just like everyone else, trying to scrape out that next client referral?

Stay tuned and we’ll share more information in future articles about our research into this area.  You can also learn about how the home care companies in the Top 5% have done it by attending one of our Home Care Field Trips. Spend a day inside one of these top tier companies as the CEO and COO share their experiences and insights.

Attend a Home Care Field Trip to a Top 5% Company.  

We’ve got two home care field trips coming up this fall, visiting companies that are providing in excess of 8,000 hours per week of private pay home care services.  Click Here to learn more.

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