Senior Care Franchises: A Good Investment?
Senior care franchising has been on a literal tear over the recent decade. Many brands in senior care have franchised their brands to increase their market coverage and attempt to satisfy the ever-increasing demand from seniors needing assistance with everything in day to day life.
We’ve heard many of the statistics, but they are so interesting it’s worth review again. Baby Boomers are getting older and as they reach age 65, the senior population in the United States is expected to approach 100 million, double the number from four years ago and an amazing 20% of the entire U.S. population. Growth rates in the senior services business segment is annualized at over 8% and the global marketplace for senior services is expected to surpass $300 billion. Yes, that’s “B” as in billion. (Source)
With all of this growth in population comes the need for a wide variety of services and support to help us out as we age. The first wave of franchise expansion in senior care came in the form of in-home senior care. As most of us would agree, we would prefer to age in our own home as opposed to going to a large warehouse like structure nursing home filled with other old folks.
In-home senior care took the franchise marketplace by storm and brands such as Synergy Home Care, Visiting Angels, Senior Helpers and others opened thousands of franchises in markets around the world. This is likely due to the allure of building a business in a seemingly endless-growth market, having a lower initial investment to open the business (many were operated from home), and a business that had no cost of goods and strong residual revenues.
As the in-home senior care market expanded at such a rapid pace, the states began to tighten regulations and the market over-saturated in some areas of the country, this slowed franchise growth in the market segment as the government realized they needed to regulate this massive growth. In-home care businesses have continued to expand, but at a slower pace in 2016 and it seems that the exponential growth has transitioned to other segments with in the senior care market. As the market filters through and the stronger players are positioned for sustainability, the in-home care franchise segment should continue massive growth.
What has now risen to the top of the growth curve in the senior care franchise market is a range of unique services and business models that all serve the same growing population, but in a different format. One interesting segment of growth we have run into as part of Franchise Marketing Systems consulting work is a number of home retrofitting businesses that offer services to seniors to make their home more accessible, safe and live-able as they increase in age. These business models are a derivation of the traditional handyman or light construction services market and through focusing on this burgeoning population base have been able to differentiate and offer enormous value to their clients. It won’t be long before several brands begin to expand through franchising in this model and I for one am excited to see who takes the leadership position in the segment.
The next model we have seen expand recently is the “miniature nursing home model” which has come to market in the form of converted nursing homes which have been born out of reworked residential properties. This market has apparently been around for some time in the form of single instance homes in markets where licensing permitted and generally unorganized home owners have maybe not always legally started small nursing homes from their properties.
With the exponential growth in senior services, more capable and professional entrepreneurs have entered this market segment and one in particular launched a franchise platform under the brand Avendelle Homes. What is particularly attractive about this senior care franchise model is that a real estate investor who is accustomed to investing in rental properties and realizing 6% returns on their investment in a given property, now have the opportunity to invest in the same real estate with some leasehold improvements and see significantly higher returns on their investment AND still own the property.
Regardless of the format, businesses that serve the senior population and offer value to this segment should experience extreme growth through the coming 5-10 years and I’m sure that franchising will continue to play a significant role in distributing these services to new markets and more customers. If I were to invest in a franchise today, I would give serious consideration to anything in the senior market that makes sense and has a good business model in place. There are so many factors playing into your favor today, tomorrow and for the coming years that the market segment is as close to a no-brainer as they come.
Chris Conner is the President of Franchise Marketing Systems and has spent the last decade in the franchise industry working with several hundred different franchise systems in management, franchise sales and franchise development work. His experience ranges across all fields of franchise expertise with a focus in franchise marketing and franchise sales but includes work in franchise strategic planning, franchise research and franchise operations consulting.