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Franchising Homecare: 5 Challenges and Opportunities

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With rapidly-ageing populations in the West, the demand for homecare services is increasing. But it this a sector to franchise in? Edward ‘Ned’ Levitt assesses the market

1. The shrinking labour pool

Homecare businesses are high touch businesses and labour intensive. Finding, training, motivating and monitoring the performance of personal care workers are more difficult in this type of business than in many others. Of course, this means that a franchisor who has figured how to overcome these challenges for their franchisees will go to the head of the pack and be more successful.

2. Brand vulnerability

Establishing and protecting the system’s brand is absolutely key to the growth of a successful franchise system. The margin for error is narrower or broader depending upon the nature of the business being franchised.

It is hard to imagine a business that is more vulnerable to workforce mistakes or bad conduct than the frontline personal care workers in homecare businesses.

For homecare franchisors, this could result in an early demise or lend itself to a competitive edge depending upon the resources deployed in developing and supporting the quality of personal care, which is always promised, but not always delivered.

3. Managing expectations and resources

Those experienced in the homecare industry know that growing such businesses is a slow process. It takes time to create brand awareness and to establish relationships for referrals.

As a result, homecare franchise systems need a longer timeframe to attract and nurture quality franchisees through the longer and leaner startup phase than other franchise systems. Everyone, from the franchisor to each franchisee, has to possess a great deal of patience and sufficient working capital to survive the early years of development.

Is there anything about
a homecare business that makes it
more or less franchisable than any
other business? The answers are yes,
no and it depends

4. Government regulation

There is a greater concern in this industry than others about the possibility of changes in government policies and regulations. After all, the sector relies on relatively low wages for a workforce, that is often not highly skilled, to help some of the most needy and dependent citizens. Some examples are the recent increases in minimum wage requirements and the maximum hours of work per week for personal care workers.

5. Market changes

The market changes for homecare businesses can be frequent and substantial. For example, with the population rapidly ageing, homecare businesses may find that the need for personal care workers, who can work with clients with advanced dementia, suddenly increases.

Homecare businesses that opted not to provide medical or quasimedical services to their clients might find that their client base is getting smaller or that competitors, who do provide such services, are winning over their client base.

6. Sources of revenue

Private pay services may become less lucrative, as the population grows older and sicker and less able to cover the costs. It is expected that there will continue to be more and more insurance providers for long term needs. This is good in the short run, but may lead to the insurance companies gaining enough leverage to exert downward pressure on fees charged for homecare services. Of course, governments may decide to fund more homecare services, but then legislate to control their costs.

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