A Guide to Due Diligence for Senior Care Franchises

A Guide to Due Diligence for Senior Care Franchises

April 26, 2023 By Rob Cantrell

Purchasing a senior care franchise is a major decision, one that will likely represent one of the biggest commitments you’ll make in your professional life. How you ultimately come to this decision will play a huge role in whether your enterprise rises to success or struggles.

As a result, it is important to include a comprehensive due diligence investigation as part of your decision-making process. Only by taking these necessary steps can you be sure you’re going down the right path for your personal, professional, and financial future. 

Doing Due Diligence for a Senior Care Franchise: Your Sources

Before diving into the due diligence process, you should identify the sources of information you will be working with. Here are three we recommend considering:

  • The franchisor.
    The franchisor itself should be one of your main sources of information through its Franchise Disclosure Document (FDD), a thorough account of everything you need to know about the franchise system, as well as one-on-one conversations with the Franchise Development Team and any interactions you have on Meet the Team Day.
  • Current franchisees.
    It is also a good idea to have a conversation with existing franchisees about their experience. You can ask the franchisor to provide a list of current franchisees who would be open to speaking with you. 
  • Third-party resources.
    You can also gather crucial information about the franchise brand from third-party resources. For example, you can explore franchise rankings conducted by reliable sources such as Entrepreneur magazine. You can also get a feel for the brand by browsing reviews posted by clients of various franchise locations.

Doing Due Diligence For a Senior Care Franchise: Types of Data

To conduct due diligence thoroughly and effectively, you will need to take a hard look at both the quantitative and qualitative characteristics of the senior care franchise. In this context, quantitative refers to hard data about the financial investment, while the qualitative side covers the franchisor-franchisee relationship, the brand’s reputation, initial training and ongoing assistance, and other factors that can’t necessarily be described in numbers.

Here’s a more in-depth look at these two types of information.

Quantitative Due Diligence

You can think of doing quantitative due diligence as taking a hard look at the “money side” of things. This means analyzing how initial investment estimates and ongoing royalty fees compare to revenue expectations. 

You need to know how much money you can expect to bring in as your business grows and whether you will be subject to different fees depending on its income. Other details to nail down are terms for renewal, transfer rights, any mandatory purchases, and other ongoing fees that need to be calculated into the equation. 

Once you have this information at hand, you should be able to determine the true cost of running the senior care franchise, how soon you will earn back your investment, and your take home salary when all is said and done.

Qualitative Due Diligence

While the financial aspect of due diligence is crucial, the qualitative side of things can also have a tremendous impact on your success as a franchisee. In this area, we recommend investigating:

  • The strength of the brand among both potential clients and potential staff members
  • The level of experience held by the corporate team
  • The training program you will participate in as a new franchisee
  • Any ongoing support you can expect to benefit from, both in terms of daily operations and marketing

All in all, the qualitative due diligence process should help you understand how the franchise stands apart from its competitors outside of monetary considerations.

The Final Step of Due Diligence

No matter how much due diligence you do, nothing can outweigh the value of an expert opinion. Because of the complex nature of these contracts and the intricacies of certain franchise systems, it’s always worth making the effort to seek out legal counsel as part of the due diligence process.

If you are looking into purchasing a senior care franchise, opt for a franchise brand that checks all the boxes. Learn more about what makes Senior Helpers such a great choice by scheduling a call with our team or reaching out to us online!