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Is caring for the elderly a profitable business?

The Wall Street Journal has an interesting article profiling an in-home elderly care franchisee.

Home Instead and the other senior-care franchisees pay caregivers somewhere between $8 and $12 an hour and charge clients about twice that amount. In the highly competitive Chicago market, the Melingers charge clients $18 an hour, with a minimum of two or three hours a day, or $180 a day for 24-hour care. They also provide a “rise and shine” or “tuck in” service, for $200 to $280 a week.

The Melingers declined to reveal just how lucrative their business is, but FranchiseHelp, a consulting firm in Elmsford, N.Y., provides some guidelines for similar businesses. In 2002, for example, a franchisee of Homewatch Caregivers in Denver, with 60 workers, took in gross revenues of $1,265,324 and paid out $1,141,578 in expenses that included royalties and the franchisee’s salary, leaving a profit of $123,746.

Their isn’t inventory to deal with, which is very nice. But that time is otherwise spent on finding and hiring responsible people they trust enough to send into an elderly person’s home. The franchisee said almost 1/2 the people don’t even show up for the their interviews and many quit after a few days. Ugh!

If you can maintain a steady staff, you can easily open a 2nd conierge style business, which we discussed perviously.

I’m neutral on elderly care franchises right now because they are heavily commonditized business (the market controls the fee level, it’s hard to charge more than $18/hr with all the competition). I am also hesitant when so much depends on finding qualified low wage employees that must work independently (unlike a retail location where managers can monitor what you do).

About Ryan Knoll

Attorney and advisor with an interest in franchising. Feel free to email me comments and questions on the "Contact Us" page.
2 comments
Franchisee
Franchisee

Hi i am really happy to visit this site.

Al
Al

Your clientel die off! That sucks!

Trackbacks

  1. […] As a follow up to the previous post Is caring for the elderly a profitable business?, I’ve been looking at a few other elderly care franchises.  My preliminary favorite is Comfort Keepers. All the non-medical elderly care franchises have roughly a $25K franchise fee and 5% royalties. But, Comfort Keepers sets itself apart with its strong brand recognition, blanket coverage of the United States and internationally, and smart online marketing. Why not buy into a system with the largest network of referrals and strongest brand recognition?  With social and demographic trending in a favorable direction, and heavy referrals from its web site, and barring any show stoppers from their franchise agreement, I’d lean towards buying it. | Permanent link […]

  2. Comfort Keepers a keeper?

    Franchise Pundit: As a follow up to the previous post Is caring for the elderly a profitable business?, IÂ’ve been looking at a few other elderly care franchises.  My preliminary favorite is Comfort Keepers. All the non-medical elderly care franch…