Franchising – The biggest boom yet

Franchising – The biggest boom yet

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First, a little look at the facts. According to Treasury’s figures, the percentage of the population that is older than 65 is expected to climb to 25 per cent by 2042, to 6.2 million.

Moreover, according to the Productivity Commission older people are relatively wealthy compared to the rest of the population. Its research has found that baby boomers have an average net worth of around $381,000, while this figure for all Australians is a much more modest $292,500.

On top of this, the Productivity Commission says older people prefer home help than being looked after in an assisted care facility and, as the population ages, more people will become frail and will require more complex care.

So if you’re a business like Home Instead Senior Care, you’re probably on a pretty good wicket. This is especially the case given the aged-care services market is effectively being deregulated from next year, giving businesses such as this one a massive opportunity.

Founders and husband-and-wife team Martin and Sarah Warner identified the potential in the aged-care market 11 years ago, when the pair ran separate business consultancies, Martin in franchising and Sarah consulting to governments on aged care. They both also have experience looking after their elderly parents.

But the light bulb moment happened when they saw an advertisement to be the master franchisor for Home Instead Senior Care in Australia. They acquired the franchise and set up shop.

“We started with a small office with two desks, two computers, two filing cabinets, two phones and a small meeting room. We had no idea this concept would work because it was very different and we didn’t want to get involved in the government system of care. We wanted to provide the care that we believed was important, focused on relationships first, and task second,” says Martin.

So the Warners adapted the franchise system for the Australian market, creating their own training program. “We train from scratch. We’re looking for the quality of the caregiver,” he adds.

The next step was to introduce the business to people within the industry including hospitals, doctors, nurses and allied health professionals.

“The biggest challenge we faced was that the industry said, ‘Well, why would anyone be interested in purchasing care services from you, because the government pays for it all?'” says Martin.

“We identified pretty quickly that isn’t the case. The government funds a very large amount of care throughout Australia, but there’s still a lot of people who, even though they may be on a government package and get government support, need more. The type of services we provide is also different, and not only because it’s based on relationships and understanding the person as a whole. We can provide very flexible care 24 hours a day, seven days a week. We can also provide just two hours a day or two hours a month. Whatever people want, we’ll provide the services,” he adds.

The Warners took a considered approach to market entry. They ran a pilot office for two years and adapted systems so that the business could be easily franchised.

“We opened our first franchise office two years after we opened. That started to work, and on it went from there. We now have 32 franchises, covering 25 offices around the country,” says Martin.

The federal government’s more recent support for the consumer-directed care model has also helped support the business.

“It’s exactly what we’ve been doing for the last 10 years. Now when consumers receive government funding they can choose the provider rather than being told which provider to have. They have the authority to change their services. The big opportunity for us is making sure we are ready when this government system changes completely on 1 March next year,” he says, adding that the real game changer is the edict that consumers must be able to see where their funding goes.

“As of 2017, [consumers can] just click their fingers and they can go to another provider whenever they want.”

Nevertheless, the Warners are expecting the benefits to their business to accrue gradually. “Once people get to understand what they can do they’ll quickly start to learn. These things aren’t going to happen on the first of March, but over the coming year, I think that people will be much more aware of the opportunity to change. Families will start demanding a higher quality of care. I think it’s going to be as simple as that.”

One of the challenges the Warners will need to face will be having the right carers to meet growing demand for their services. Martin says while finding carers is not easy, it’s a central part of what he does.

“It’s not like an add-on to our business. We have a whole training program and recruitment process in place. When we open a new office, we would quite easily get 150 people applying for a position.”

As for the future, he says a sale to a big healthcare provider such as Bupa isn’t on the radar in the short term.

Says Martin: “We’ve hardly scratched the surface, to be honest. We’re very passionate and we have no exit strategy at this stage although we will in due course. In terms of the future of the business, we will continue to grow at a very fast rate, doubling every three years. The big opportunity for us is to open up offices in areas we can’t get to because they are dominated by government funding and it’s a closed market. In the future it won’t be a closed market and anyone can come to us in that new paradigm.”

Home Instead Senior Care is just one example of a business that will do well as the population ages. If you’re looking for a sector in which to open a business that has the potential to generate extremely good returns it’s hard to go past aged care.

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