4 Thoughts on I am thinking of starting a home health business, should I start one from scratch or buy a franchise?
  1. Reply
    alphafactor
    November 23, 2012 at 5:29 pm

    Actually, my best advice to you would be…
    neither.

    But, starting up a home health business might still be a great idea.

    Let me explain…

    Regarding buying into a franchise… the advantages you’re provided with by the franchise, versus the obligations you owe to the franchise… almost invariably tilt heavily towards the franchise.

    I don’t know much about the home health business industry (or registered nursing), but a I am well informed about the aspects of franchising and franchise law as regards more conventional franchises. That’s why I don’t think buying a franchise is a good idea.

    Let me illustrate with an example that shows why buying into a McDonald’s franchise isn’t that hot of an idea.

    If you want to be a McDonald’s franchisee, you need to apply to the franchise-umbrella firm. Before they let you be a franchisee for McDonald’s, they’re gonna want two things. First, they’re gonna want you to pay a $ 55,000 cash franchise purchase fee (sometimes much, much more). Second, they’re gonna want to do a candidate screening on you… you know, make sure that you’re not a disaster waiting to happen or that you’re not notoriously incompetent.

    Then, they’ll spend about 6weeks training you as to how to be a McDonald’s franchise owner. They’ll teach you about the machines, the relevant employee rules, a little bit about the secret sauce, etc.

    After that… you’re COMPLETELY on your own. In addition to having to pay them 15% of your net profits, you’re wholly and solely responsible for running your McDonald’s. It’s up to you to hire and train employees… Up to you to pay rent… Up to you to order raw foodstuffs for converting into McDonald burgers… Up to you to maintain and purchase food processing machines…

    So, even if you’re still in the game at this point and have a nicely running McDonald’s restaurant at your fingertips… McDonald’s only provides you three things in exchange for your $ 50,000 and 15% of net profit:

    1)6weeks of training

    2)brand-name recognition

    3)benefits of their national PR campaigning

    The 6weeks of training isn’t anything special and isn’t worth your $ 50,000. You could become just as informed as to the inner workings of a McDonald’s by working as an assistant manager at a fast food restaurant for six month. But, instead of paying $ 50,000, you’ll actually BE PAID to be the assistant manager.

    The brand-name recognition is helpful, but it’s hardly vital. McDonald’s is a fast-food joint. There’s no status associated with eating there. If anything, there’s actually a little bit of a stigma you get stuck with when your friends find out you’ve been eating McCholesterol burgers at McDonald’s. Sure, the Golden Arches will attract some people… But, people will buy a burger from where ever a burger is available. They don’t care if the restaurant is called McDonald’s, or Burger King, or Captain Eat-A-Lot.

    Even getting attention from the national PR campaign isn’t that helpful. Sure, it might attract some customers, but simply having a restaurant out in the open and ready to sell burgers will be responsible for 95% of the customers that come inside; whether the restaurant is a McDonald’s or not.

    The brand-name recognition and the PR campaign status is not worth 15% of your net profits.

    Now… regarding your home health business… like I said, I don’t know much about the industry. But, I’d wager a fairly nice chunk of change that the ratio of benefits to obligations wouldn’t be terribly different from my McDonald’s example. You’ll hafta fork over 15% or so of your profits and a large upfront cash payment, and will get fairly mundane benefits in return.

    So, does this mean you should go solo instead of a franchise route? YES! BUT…!
    But… going solo is NOT the same thing as starting from scratch!

    Starting from scratch is a terrible idea; persons that launch businesses without the requisite knowledge for properly running a business very frequently experience business failure…

    However, all this means is you need to make sure that when you start your business, that you do NOT start from scratch. In the case of fast food restaurant-ing, I’d recommend to a potential client that they gain the experience they’ll need to own and run a restaurant by first working as an assistant manager for a few months.

    I don’t know what the analogue for a fast food assistant manager would be in the home health business, but I’m sure there is such an analogue out there. Go and be that analogue: the home health business version of an assistant manager. After a few months of doing that, you’ll be prepared to start a solo business — and you won’t be starting from scratch!

    GOOD LUCK AND KEEP AT IT!!

  2. Reply
    [email protected]
    November 23, 2012 at 6:13 pm

    There are many different options out there. Depending on the amount of time you have both are good options. Starting from scratch can be very time consuming and can be a challenge developing a system to build your business. On the other hand buying a franchise the system and guidlines are already in place. All you have to do is follow the franchise directions. The downside though is that franchises can be very expensive. During my journey of finding the answers to those same questions I can across an Unfranchise business. The Unfranchise had all the benifits of a franchise, it is systemizied and uniform, but did not have the disadvantages of franchising like the high costs involved with purchasing one. I urge you to research all of your options and would like to give you more information about the Unfranchise. Expecially because of the field you are in and the direction you want to go this might be a great fit for you.

  3. Reply
    Amy
    November 23, 2012 at 6:55 pm

    Starting a franchise is ridiculously pricey! I do know a home business that has to do with health benefits but it won’t cost like a franchise will. I would really go over your options and do what you think is a good decision. Good luck!

  4. Reply
    mom of 4...
    November 23, 2012 at 7:15 pm

    You answered it, you don’t have experience….neither.

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