When franchise owners invest in their businesses, they initially focus on growing their revenue, managing day-to-day operations, and building customer relationships. Oftentimes, family members are involved in helping new owners launch their businesses and achieve their goals. Recognizing the family’s valuable role in these businesses, the Right at Home Business Model includes succession planning education.
In the United States, 90% of all businesses are family-owned, and most business owners hope to pass on their businesses to their children. Yet, according to Harvard Business Review, 70% of family-owned businesses fail to survive in their second generation; only 12% of those that survive are run by third-generation owners. The number one reason these businesses fail after they pass to a family member is due to a lack of a viable succession plan, according to the International Franchise Association.
Succession Planning Creates a Valuable Asset for the Next Generation
Recognizing that most franchise owners hope to earn a good living and build a legacy for future generations, Right at Home emphasizes the importance of succession planning for its franchise owners. As a leading international in-home care and assistance franchise, Right at Home provides in-home care and assistance to seniors and adults with disabilities, including help with shopping, cooking, and other daily activities. In operation since 1995, the Omaha-based company has more than 700 locations throughout the United States and six other countries, making it one of the largest in-home care franchises in the world.
“Not just anyone can fill your shoes when it comes time to retire or sell,” said Jen Chaney, VP of Franchise Development for Right at Home. “That’s why we provide franchise owners with a comprehensive toolkit that includes detailed guidelines, resources, and templates for creating a succession plan.”
Franchise owners have options when they retire, each with its own unique complexities. In addition to leaving their business to a family member, owners could also choose to sell their business to a staff member, a new outside buyer, or sometimes the Franchisor. For smaller companies, transactions are typically less complex; however, multi-unit transfers can be more time-consuming, according to the IFA.
Even if an owner is confident they’d prefer to keep their business in the family, they may employ several family members. They must decide who has the interest and skills to assume ownership. They might also have a non-family co-owner interested in controlling a piece of the business. For that reason, Right at Home suggests that its franchise owners identify potential successors as part of their long-term planning process.
“Family members are often the most logical choice for taking over the business. Once they identify their potential successors, franchise owners should work with them to create a plan for transitioning ownership and control of the business,” Chaney said.
Owning a Right at Home franchise can be a lucrative asset for owners and their children. In fact, locations that were in business for more than 61 months reported average net billings of more than $1.5 million in 2022, according to the company’s 2023 Franchise Disclosure Document.
Franchise owners must determine how much their business is worth to ensure they transfer it at a fair price. This requires taking a hard look at assets and liabilities. Liabilities include all your business debts, including a commercial mortgage or loans. Beyond cash, assets include anything that can be converted to cash, such as real estate, office equipment, or inventory.
“Franchise owners also need to determine the best way to transfer ownership and control of their businesses,” said Chaney. “We recommend that they work with an accountant or an attorney to understand any tax implications and legal considerations involved.”
Each step of the way, the Right at Home Business Model provides guidelines and information to help owners as they’re looking to exit their businesses, ensuring that their location benefits from the continued success for generations to come.
The Right at Home Business Model Is a Family Business Model
Joel Herdzina became part of his family business by happenstance. He watched his mother and aunt successfully launch their Right at Home business in Wichita, Kansas, more than 20 years ago—when he was a college student. After a few years of working as a logistics manager for a trucking company, he felt unfulfilled and started looking for new opportunities. During the Christmas holiday gathering that year, his aunt Jacque announced that she was opening another Right at Home location in Oklahoma and needed help.
“I didn’t know much about it, but I raised my hand,” Herdzina said. “I knew I liked giving back and helping others, so I was ready to give it a try.”
Herdzina became the fourth owner of his aunt’s Edmond, Oklahoma, location in 2012, three years after she opened the site. Today, he works with Jacque’s sisters and his aunts, Dee Horne and Carla Shepherd. The team has since opened two other locations in Norman (2014) and Stillwater (2022), both in Oklahoma. They’ve watched their business grow from quarter to quarter, ultimately achieving Right at Home’s “President’s Circle” distinction.
As the primary licensed administrator, Herdzina is hands-on in the business. He answers intake calls and oversees hiring and training. He enjoys working with his family and values the corporate support that Right at Home brings to the table.
“The current business coach the corporate office assigned to me has been so supportive and fantastic, optimistic, and always available by text, phone, or email—and he wants to get answers for me immediately,” Herdzina said.
His team still needs to formalize its succession plan, but there’s no doubt Right at Home has greatly impacted their family. And the family will have the tools they need to make the right decision.
“One day, we’ll have to consider, ‘How much longer do we want to do this? Do I want to continue? Do we want to sell it together?'” Herdzina said. “We don’t have a clearly mapped plan yet, but we will. We are 11 years in now—still working together and doing great!”
Following the Right at Home Business Model into the Future
Founded in 1995 by former hospital administrator Allen Hager, Right at Home provides in-home care services that help seniors and adults with disabilities to live independently in their homes for as long as possible. As the population ages, more families will be looking for in-home care. If joining a franchise that provides care and companionship to seniors and adults with disabilities aligns with your mission, here are some financial requirements you’ll need to fulfill if you decide to join Right at Home, according to the company’s 2023 Financial Disclosure Document.
- Total startup investment: $88,719 to $157,669, including franchise fee
- Franchise fee: $49,500 or $37,125 for honorably discharged veterans
- Minimum Liquid Assets to be considered for a franchise: $150,000
- Royalties: 5% of revenue
Franchisees serve specific territories and do not compete with one another. Each territory is defined by zip codes which include at least 15,000 people aged 65 and older.
Like most franchises, Right at Home doesn’t offer any forward-looking projections for how much franchisees can expect to make, but they do provide the latest sales performance of their current franchisees. According to information published in the company’s 2023 Franchise Disclosure Document (FDD), which reports results for locations operating between January 1, 2022, through December 31, 2022, 353 Right at Home franchises open for one year or more reported an average net billings of $1,445,283.61 (remember, the amount billed, or total revenue earned, is different from the profit realized).
As with any business venture, you should carefully conduct your due diligence to consider the franchise business model and opportunities: weigh your options, look at all the costs, and talk to current franchise owners to validate your understanding of the business. You must also consider the time and money you will invest in your business and your long-term personal and financial goals.
Owning a Right at Home franchise can empower you to build wealth in your life and for future generations. To learn more and receive a free Right at Home franchise kit, call 866-350-9770 or visit rightathomefranchise.com.