Franchising the Medical Transportation or Home Care Industry?

I am often asked for my opinion about franchising in regards to starting a medical transportation company or home care agency.  Over the years I have even been solicited by venture capitalists inquiring to my level of interest in franchising my Million Dollar Transportation and home care resources.  Needless to say, it’s obvious that I have rejected all such requests.

In short, to be blatantly honest and to the point, I am totally against franchising either of these industries.  Why?  Because it’s just not necessary!  It’s an absolute waste of time, money and effort both up front and especially long-term for business owners!

First, I didn’t build my business in such a manner.  I started with a single vehicle, a cell phone, and systematically built my business using “Controlled Growth” strategies.  Likewise, I teach the same to many of my “newbie” client-providers.  So needless to say, if we didn’t need the “help” of a franchise “opportunities” to build our successful businesses then neither do you!

Second, these franchise “opportunities” require an upfront “Franchise Investment” that typically average no less than $50,000 and are as high as $250,000.  Ironically enough, much of this money goes directly to the pockets of the franchise owners.  These fees don’t include vehicles, assets, or other asset acquisition and capitalization.  This means that on top of the $50,000 – $250,000 fees you still have to come up with the capital invest for vehicles and equipment.  Needless to say, the average entrepreneur can’t afford to waste money only to carry someone else’s business name or logo.

Third, as is common practice with franchises, you’re obligated to pay annual dues on top of the initial franchise fees.  These dues are typically fixed amounts that give you annual permission to continue using and featuring the franchise names, colors, and logos.  Again, just another fee that makes you financially obligated to someone else.

Fourth, as a franchisee, you’re also obligated to paying monthly percentages of your profits to the franchisor.  This amount can vary, but for non-emergency medical transportation and home care franchises such percentages are averaging 5% monthly.  This means that the franchisor is always going to be pick-pocketing you for the life of your business.

In fact, it is these recurring payments that, over the years, have led to multiple business owners contacting our office to help provide guidance on prematurely terminating their franchise agreements.  Especially after your NEMT or home care agency is operational, there really is no need for paying additional fees.  Unlike a fast food restaurant, you don’t need to invest in continuous product.  Hence, a franchise business model for NEMT or home care is antiquated and only makes the franchisor rich.

As a true capitalist, I am all for the franchise business model and concepts – but for retail and restaurants versus NEMT or home care services.

Take McDonald’s for example.  You can go into a McDonald’s in California or in New York and despite these restaurants being separated by thousands of miles you’ll still receive the exact same hamburger offered by the same type of teenage attendant standing behind the cash register.  This is because these types of franchises have outstanding systems, procedures, and training and they have vary little market barriers.

And again, in a fast food restaurant, you need to continuously reorder product, supplies, and equipment – but not in a medical transportation or home care business.  Needless to say, the medical transportation and home care industries are not remotely close in similarity to that of fast food restaurants.

Another reason why I am not an advocate of NEMT or home care franchises is because in working within your local community your service is a centralized business.  You will service the needs of your local hospitals, nursing facilities, doctor offices, dialysis centers and the like.  You’re going to personalize your business to meet the needs of your local community which will lead to stronger friendships and partnerships with area facilities and staff.  You most certainly do NOT need the help and assistance from some “corporate” located hundreds if not thousands of miles away.

Ultimately, I support entrepreneurial freedom, independence, and the ability for each entrepreneur to build their own business according to their own personal vision versus that of a corporate board – a vision that meets the needs of the local community.  I support keeping the “corporate wannabees” out of the pockets of NEMT and home care business owners to encourage increased profit earning potential.

Click Here to learn more about “How to Build a Million Dollar Medical Transportation Community.”