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Serving seniors is a serious undertaking. The solution requires caring for aging adults and providing them with compassion and care that helps them lead a better and meaningful life.
Caregiving services have been in the spotlight of franchising for some time. Home care, long-term care, and assisted living franchise businesses are rising, with franchisors like Caring Transitions, Home Instead Senior Care, and Golden heart senior care leading the way.
If you want to start a Caregiver service, buying a Home Instead franchise might look like a good idea. At the same time, there are some problems that you may come across while running the franchise then leave you regretting your decision. What a company profile looks like from the outside is not the whole truth. Before deciding to buy a franchise, one should dig deep enough into the company’s financials and reputation.
Reasons Why Not To Buy The Home Instead Franchise
Home Instead is a well-established company, but buying its franchise is profitable and can be a myth for you. Every company has a few drawbacks that they try to hide very well. We have researched all about Home Instead market trends, company policies, and unhappy franchisees’ complaints to determine how profitable it can be and the drawbacks of buying its franchise. So, let us go through the five main identified shortcomings of the Home Instead franchise.
#1 Initial Franchise Investment Cost is too much
Setting up a Home Instead franchise could be heavy to your pockets as it requires a considerable amount of investment. Many new franchisees face challenges in raising capital, getting profit, paying taxes, and administrative tasks. Home Instead has a franchise fee of up to $59,000, with a total initial investment range of $125,000 – $135,000. Ongoing costs paid to Franchisor Home Instead, Inc. include Royalty fee, which is 5% of the franchisee’s gross sales, scaled National Marketing Fund contribution, applicable operating software fees. Setting up a Home Instead franchise requires a significant amount of money, and profits are not suitable for such investment.
#2 Return On Investment Is Not Good
An experienced Home Instead franchise owner can earn $91,000 annually. However, this earning does not reflect the actual income potential of franchisees just starting because all costs also need to be factored, including all expenses for operating a business, including marketing, mortgage payments, and other ongoing costs. You might make better profits on opening a self caregiving service business or acquiring an existing franchise, as it will have low investment and higher ROI.
#3 Effects of Pandemic On Caregiver Providing Companies
Healthcare and elder care services, child care, Hospice Support, Transportation support, Companionship support were hit hard by the pandemic. Parents, relatives, and friends cared for the sick and the dying at home — instead of leaving them to professionals — which caused a steep decline in service requests. It is a sector where the promise of profits meets a harsh reality: caregiving is challenging to succeed in. The decision to buy a franchise at this time is not one you should make lightly.
#4 Lawsuit Charges Against Home Instead is Bad for its Reputation
Home Instead has been facing many legal allegations and accusations.
Home Instead Senior Care in Anne Arundel and Howard counties was accused of illegally engaging in the practice of race-based assignments of its caregiver employees. Such racial discrimination allegations are alarming for the reputation of the company and its other franchises too. Lately, the Winchester Home Instead franchise was sued over an older adult’s death. When a brand allows its franchisees to operate unethically, it tarnishes its image by association. Even if one franchisee does not treat customers well, people will associate the brand’s negative experience with all franchisees. Additionally, it becomes difficult for businesses to convince people that they are different from their subpar franchisees.
#5 Relationships With Their Employees
Some franchises have been accused of not paying or underpaying their staff. It means that customer service has suffered when employees are paid poorly, which only hurts the business in the long run. Also, Home Instead’s R. MacArthur Corporation franchise was sued for sexual harassment of an employee. Such allegations make employees feel unsafe and create a picture of an unhealthy work environment, again making it hard to recruit new franchise owners.
Conclusion
The senior care business is growing significantly, especially in affluent regions. However, it is fraught with risks. It is one of the most sensitive industries and best suited only for those with passion and has all means to provide safety and security to both employees and customers. With time, Home Instead has affected its reputation and lost people’s trust. Buying a franchise requires a lot of capital and time, so before deciding, consider all other aspects like lawsuits, their reputation in your area, and return on investment.
Fransmart has been the leading franchise development company for in-home care services for over 20 years, and we have helped more than 100 franchisees get started. We have a thorough understanding of the industry’s intricacies and can help you get started with your home care franchise while avoiding common pitfalls along the way.
Sources:
https://franchises.homeinstead.com/home-care-franchising-process/learn-about-franchise-ownership/
https://www.eeoc.gov/newsroom/home-instead-senior-care-sued-race-bias