Starting a Home Health Business: Independently Owned or Franchise?

by | Aug 7, 2018

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According to Pew Research Center, about 10,000 Baby Boomers turn 65 years old every day.  With that, the need for home health businesses has greatly increased, as has their popularity.  But which home care business is best to venture into, a franchise or independent business? Here are the pros and cons of each.

 

Independent Businesses

Pros:

Independent businesses are just that – businesses that are independently owned and not part of an outside entity like a franchise. The benefits of opening an independent home health agency are mainly circled around control. Because there is a lack of protocols set by an outside business, independent business owners are free to make their own decisions (with the exception of state/federal requirements).  For example, there are no limits to marketing tactics, prices, or business locations. In addition, even though starting a business is costly, there are no upfront franchise fees to be paid. Independent home care businesses allow owners to have an entrepreneurial mindset.

Cons:

Despite these benefits, there are also some challenges with opening an independent home health business that franchises avoid. Specifically, franchises already have resources that independent businesses do not, such as financial resources. Furthermore, the high amount of control in an independent business comes with great risk, both at the financial and human level.

 

Franchising

Pros:

Joining a home health franchise is similar to joining a fast food franchise – you have some control over your specific location, but are a part of a much larger organization.  Unlike an independent business, the benefits of joining a franchise revolve around support. Franchises provide a large amount of financial and administrative support to their franchisees.  In the case of home care, one of the specific benefits include a pre-existing relationship with suppliers, meaning pricing models have already been agreed upon. Moreover, training is in the hands of the franchise, so your caregivers will always be in compliance without your assistance. Finally, franchises provide marketing materials and brand recognition, which increases the likelihood of obtaining more customers.

Cons:

However, franchising has drawbacks that independent business avoid.  For instance, the initial cost of joining a franchise is high due to franchise fees.  Additionally, you are limited in marketing materials as well as the region in which you can open your franchise location.  This restricts the potential for reaching a large amount of customers.

 

If you are considering to open a home health agency but are unsure of the type, ask yourself:

  • Do I fully understand the risks of both an independent business and a franchise?
    • Having a complete understanding of the risks of each type of business is crucial, regardless of which you decide to open.
  • Do I prefer entrepreneurship and freedom, or support and pre-existing brand recognition?
    • If you prefer entrepreneurship and freedom, opening an independently owned home care business may be for you.  However, if you prefer support and pre-existing brand recognition, a franchise may be a better option.
  • Am I looking to open my business in a specific area only?  Do I have a preference on a specific area in general?
    • If you are looking to open your business in a specific area, an independent business may be preferable as the choice in location may be limited in a franchise.  If you do not have a preference on general location, a franchise could be beneficial.
  • Is having a business partner important to me or do I prefer working alone?
    • If having a business partner is important to you, a franchise may be a good option.  If you prefer to work alone, an independent business is a matching option.

 

Opening either type of business has its benefits and drawbacks, but both have the same, rewarding goal – providing quality care to those that need it.  Regardless of the type you choose, both will be fulfilling and meaningful.

 

For further reading on independent and franchise home care businesses, click here.

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