Senior Care Provider Advances Less-Captures-More Franchise Formula

Palo Alto, CA — It wasn’t too long ago that the market for senior care services was composed almost entirely of independent mom-and-pop shops owned and run by someone who typically had a medical background — a retired nurse, perhaps, or someone with connections in the medical field.

Then came the franchisors, with offerings tailored to pique the interests of medical and entrepreneurial professionals alike. Today franchisors are estimated to make up roughly 60 percent of the senior care market, and it’s here inside this growing swath of varied franchise formulas that a Silicon Valley franchisor has recently put its own disruptive twist on franchising.

Or maybe not. In the case of Home Care Assistance, of Palo Alto, it seems that the twist is more about what it hasn’t franchised than what it has. Right now, the middle-market firm owns and operates 15 of its 70-plus locations across the United States.

“Even though we are a franchisor, from day one we never thought of ourselves as a franchisor,” says Lily Sarafan, president and COO of the firm, which achieved network-wide revenue of $63 million in 2013 and is now projected to garner $150 million by 2015.

Sarafan’s remark begs the question, Is franchise innovation linked to a multiple personality disorder? Sarafan explains further: “Our goals are really very different from traditional franchisors’ and this has allowed us to achieve a unique concept not just inside the franchising space, but also in the home health care space.”

Home Care Assistance’s different approach was visible from the moment it entered franchising in 2005.

“We decided that we would be the only concept in senior care that would use a hybrid model of developing both franchises and company-owned stores at the same time,” explains Sarafan, who says that Home Care’s approach was also different when it came to its territorial offerings.

Unlike other senior care franchisors, Home Care Assistance franchisees are offered large regional territories that typically start at 500,000 residents. Home Care’s plus-size territories set the franchisor’s offerings apart, says Sarafan, who characterizes the territories of Home Care competitors as “small” and “cookie-cutter.”

“We wanted to give new business owners the opportunity to see the same level of success that we were able to achieve in our corporate stores,” explains Sarafan, who says that if Home Care is unable to find “the right partner” — even if the suitor is well-funded — the franchisor may choose to develop the market itself.

At times, Home Care Assistance has even acquired its own franchisees. “We’ve acquired five franchisees in the past because primarily we wanted the franchise owners to be part of our corporate network. They were strong operators, and we thought that they could benefit from exiting their own businesses and being part of the broader business,” Sarafan explains.

The hybrid mix appears to be working. Home Care Assistance has experienced 25 percent year-over-year growth in network sales for nearly a decade.

“The whole culture of franchising and the ‘us vs. them’ that sometimes exists between franchisor and franchisee just doesn’t exist within our network because our franchisees know that our corporate-owned locations have tested, incubated, and determined what strategies can be successful,” Sarafan asserts.

At the same time, Home Care Assistance’s president says that the firm’s decision to not overpopulate regions with competing franchisees has helped to foster a spirit of collaboration across the firm.

“When our franchisees are on the line, the level of mentorship that they are being provided is amazing … the level of guidance and proprietary information and financial data that is being shared just isn’t encouraged by other models,” says Sarafan, whose network of company-owned stores and franchisees is tasked with offering seniors care 24 hours a day, 7 days a week.

Confides Sarafan: “I don’t know what weekends are anymore.”