5 Successful Senior Care Franchises

NEW YORK (MainStreet) -- It used to be that for elderly people who did not have family to care for them, the only option was living in a nursing home once they were unable to live independently.

No longer. Successful franchises are cropping up as entrepreneurs react to a growing demographic: people living longer who are not necessarily ill, but do need help with basic living functions such as cooking, cleaning, taking medication and personal hygiene. The entrepreneurs' work enables senior adults to stay in their homes longer.

The need for senior care services and products (medical and nonmedical) will become even more pressing in years to come. Not only are baby boomers' parents living longer; as they age into their own sunset years, they too will need these services. And this age group has money to spend.

According to census data compiled by Home Instead Senior Care, an estimated 36.8 million people, or 12.4% of the U.S. population, are 65 and older, a figure expected to double by 2026. Those older than 85 are projected to roughly double from 4.7 million in 2003 to 9.6 million in 2030.

In-home care is also seen by some as a way to reduce exponentially rising costs associated with health care. Private home care is more cost effective than nursing homes or assisted-living facilities, according to the National Private Duty Association, a trade organization for private medical and nonmedical home care companies.

According to data collected by the NPDA:

  • The average annual cost of one nursing home resident is $69,715.
  • The average annual cost of one assisted-living facility resident is $36,372.
  • In contrast, 20 hours a week of home care services costs about $18,000.

"The underlying challenge all the policymakers are trying to figure out is we've got all this aging population that will need care that the government will have to pay for. The challenge is there's really not an effective way of reducing the cost of the care," says Right at Home's founder and CEO, Allen Hager.

"You have to find a way to take care of people at less cost. A service like Right at Home, where we send caregivers for the basic activities -- if that's not neglected then they have a lot better chance of reducing the amount of time they have in the hospital," Hager says. "We know the big trend will be more in-home care services."

Right now, some 90% of elder services are out-of-pocket expenses to the client or their family. As consumers get more comfortable with long-term care insurance policies and insurance companies get more comfortable with approving in-home care expenses, that dynamic will change, experts say.

Here are five in-home senior care franchises doing extremely well:

1. Home Instead Senior Care
Franchises open: 940; another 25 franchises will open worldwide this year
Revenue last year: $786 million, up 12.5% over 2009; $894 million expected this year
Nonmedical care
Lori and Paul Hogan founded Home Instead in 1994 to provide nonmedical in-home care services for seniors.

The company is the largest senior care franchise, according to FranchiseHelp, a resource for entrepreneurship and franchise opportunities. It operates more than 900 franchises in the U.S. and internationally, with more than 65,000 caregivers in its network.

The caregivers provide basic support services -- personal care, medication reminders, meal preparation, light housekeeping, errands, incidental transportation and shopping -- to allow seniors to live in their own homes as long as possible.

Home Instead expects that its domestic unit base will continue to grow by 10% per year. Internationally, annual revenue growth is jumping by 30%. The company expects that to continue as master franchise rights are awarded in multiple developed countries, it says.

"Our goal is to change the face of aging," says Tim Connelly, Home Instead's director of franchise development. "Our opportunity is to help not only those clients who don't have any family, but the family caregivers as well, so the seniors can stay in their home."

An all-in investment for a new Home Instead franchise is between $100,000 and $120,000. Franchisees are responsibly for hiring and training caregivers as well as doing the networking within each of their territories.

"We go to great lengths to find the right people," Connelly says. "My job is the vetting of new franchisees. I turn away three times more people than we will actually award a franchise to. We are in it to help seniors."

2. Comfort Keepers
Franchises open: approximately 617 in the U.S. and internationally
Revenue last year: up 6.7% from 2009; three-year sales growth of 32%
Nonmedical care
Comfort Keepers was launched in 1997 by a registered nurse, Kris Clum, and her husband Jerry. She was already working in home care but realized her patients needed help with everyday activities.

In 2009, Comfort Keepers was acquired by Sodexo, a Paris-based provider of food and facilities management.

The all-in investment to establish a Comfort Keepers franchise is between $61,000 and $89,000, according to the website.

3. Right at Home
Franchises open: 220; another 20 locations domestically to open this year
Revenue last year: $173 million, up 27% from 2009
Medical and nonmedical care
Right at Home's founder and CEO, Allen Hager, created the business in 1995 after seeing firsthand the need for quality in-home care for seniors.

Hager had been working in hospital administration and noticed patients coming back repeatedly after being discharged. He sensed disconnect between the care they got in the hospital and the quality of care once they returned home. He decided to offer a solution, the company says.

Right at Home's franchisees hire professional caregivers to deliver three levels of client assistance: companionship, including cooking, cleaning and running errands; personal care; and light skilled nursing, which is typically help administering medications.

Nearly 30% of its franchisees exceeded $1 million in sales last year, and the highest-earning franchisee completed $9.4 million in sales (he owns two territories), the company says.

The company says average revenue per office rose 28.3% last year, and that even established offices are growing in the double digits. Right at Home says that established offices at least nine years old are growing an average 16.4%.

Franchisees spend between $75,000 and $100,000 to start a franchise. They are responsible for hiring qualified caregivers and marketing services, including to hospitals, doctors and physical therapists.

4. BrightStar Care
Franchises open: 180; 220 franchises are expected to open in the U.S. and internationally by 2013
Revenue last year: $100 million, up 50% from the beginning of 2009
Medical care, nonmedical care and child care
J.D. and Shelly Sun founded BrightStar in 2002 after their own poor experience with caregivers. The company likely got its fame after it was featured on Undercover Boss on CBS in April.

The company provides what it calls a "full continuum of home care" that includes adult and elder care services, child care and medical staffing services for individuals, families and health care facilities, the company says.

The company provides "every service available at nursing facilities in the comfort of an elderly person's own home. They can assist with everything from companionship to toileting and hygiene assistance to in-home blood draws," according to an interview with executives on Franchise Gator, an online resource of franchises for sale.

"BrightStar is one of the most talked-about and successful franchises as far as their franchisees' satisfaction as well as units sold. They're more than just senior care," says Franchise Gator's general manager, Farrah Kennedy.

BrightStar looks for franchisees with strong management experience or marketing and sales experience. Medical expertise isn't required. Franchisees spend between $95,000 and $163,000 for startup, according to the company website.

5. CareMinders Home Care
Franchises open: approximately 35
Revenue last year: N/A
Medical and nonmedical care
CareMinders launched in 2004 after its president and co-founder, Gary Kneller, saw an opportunity in home care after his own experience with cancer and dealing with his aging parents.

Kneller was looking for a company that could offer a long-term relationship with the client and help in various life and medical stages, according to the website.

The CareMinders business model is a bit different than some of its competitors; it offers a range of professional and companionship services in the home and, when permitted, in "nursing homes, hospitals, assisted care facilities and other medical settings," it says.

An all-in investment to establish a CareMinders franchise is between $75,000 and $124,000, according to the website.

-- Written by Laurie Kulikowski in New York.

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