Franchising a Home Health Care Business

Franchising a Home Health Care Business

by | Feb 10, 2020 | Blog, For Franchisors

With 74 million baby boomers close to retiring or retired, it is not surprising that home health care is booming. This aging population is looking for alternatives to assisted living or nursing homes and the use of home health aides enable older adults to remain in their homes. According to the Bureau of Labor Statistics, employment of home health aides and personal care aides is projected to grow 36% from 2018 to 2028, much faster than the average for all occupations. 

Home health care is growing globally at approximately 8% annually according to the World Health Organization. Some estimates indicate as much as $9 billion is being generated from franchise companies in the non-medical home care segment in the U.S. The Franchise Times Top 200+ rankings include several well-known franchises such as Home Instead Senior Care, BrightStar Care, Right at Home, Visiting Angels and others. According to a Franchise Business Review survey, senior care service franchisees have the second-highest pre-tax income earnings among all franchise sectors. 

While the time may be ripe to franchise, there are costs and benefits to weigh as with any franchise. If you have a successful home health care business and are considering franchising as a way to expand, consider these issues:

Market size. Your own business may be doing well, but you want to make sure you target franchisees in optimal markets with a high percentage of seniors who have the ability to pay privately or who can access government programs or insurance.

Staffing. Home health care necessarily requires the hiring of a significant number of employees to handle both caregiver and business issues. Franchisees will need to access a good pool of candidates in the area at an affordable price, including some individuals with health care experience. Note also that aides may be considered “employees” rather than “independent contractors,” which means they are subject to wage, hour and other employment laws. These staffing costs represent significant expenses for a franchisee. Franchisees will want to work with an experienced franchisor who can advise them regarding staffing issues.

Licensing. Typically, home health care businesses must have a state license to operate. While the requirements vary from state to state, generally, businesses must register, obtain a permit and pass a state inspection. Some states impose further requirements. For example, some states will only consider an application that includes a Certificate of Need (CON) Application in which the applicant demonstrates that there is a pressing need for a Home Health Care Agency in the local region. In these areas, new franchisees may not be able to obtain a license and franchisors may be limited to selling franchises to those with pre-existing licenses. Franchisors should carefully consider where to focus their expansion efforts if certain localities pose too many challenges for potential franchisees.

The decision whether to franchise your home health care business is complex. There are many factors to consider which apply regardless of the type of franchise as addressed in previous posts. While home health care is a thriving area, it is important to discuss the specifics of your situation with an experienced franchise attorney and business advisor. 

If you have questions about franchising your business, contact Lusthaus Law.

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