Right at Home Franchise: Sales, Costs & Profits (2023)
With an initial investment of $122,000 Right at Home is not only one of the senior care home leading franchise in the US (491 franchises in the US in 2023) but it’s also one of the most affordable.
So if you’re looking to start a senior home care business, you should seriously consider franchising with Right at Home. But is this a profitable business? With average net billings of $1,047,000 per franchise, it does seems like it.
In this article we’re looking at Right at Home and its latest Franchise Disclosure Document to find out how much it (really) costs and how profitable it really is. Let’s dive in!
Key stats
| Franchise fee | $49,500 |
| Royalty fee | 5.0% |
| Marketing fee | 3.5% |
| Investment (mid-point) | $122,000 |
| Average sales | $1,047,000 |
| Sales to investment ratio | 8.6x |
| Payback period | 3-4 years |
| Minimum net worth | $200,000 |
| Minimum liquid capital | $150,000 |
Right at Home Franchise Business Plan
All the stats: startup costs, profits, breakeven, etc.
5-year financial projections built with the FDD
Excellent 4.8/5 based on 70 reviews
About Right at Home
Right at Home is a franchise of in-home care providers headquartered in Omaha, Nebraska, that offers a variety of in-home care services for the elderly, such as companion care, personal care, nursing services and specialty care.
Right at Home was founded by Allen Hager in 1995 to help senior patients live healthily in their homes. It has grown into a leading home care franchise with over 600 locations in eight countries.
Right at Home is a nice business opportunity for franchise owners who want to use their business skills more meaningfully and make a big impact in their local communities.
The franchisor began franchising in 2000 and by 2022 it had 689 locations worldwide, including 491 franchises in the US and 174 international locations.
Right at Home pros and cons
The Pros:
- Quality training: The franchisor offers its franchisees a detailed online and on-site training program to help them get on board quickly and run their clinics successfully. It trains them on administrative and operational aspects of a home care franchise, as well as growth strategies and more.
- Exclusive territory protection: Right at Home allows its franchise to operate in an exclusive territory. It does not license any other franchises in the designated area, giving franchisees an opportunity to grow without internal competition.
- Marketing support: The franchisor helps its franchisees with solid marketing, branding and public relations. In addition, it helps them with their social media postings and strategies, managing their websites, SEO and email marketing.
- Third-party financing: The franchisor has relationships with third-party partners to help franchisees fund their startup costs, franchise fees and ongoing costs.
- Technology and innovation: Right at Home has consistently developed its technology to improve the lives of its owners and clients, such as Right Focus, which helps owners collect business performance data to make future decisions.
The Cons:
- Not a home-based business. A Right at Home franchise cannot be operated from home or in a vehicle. Franchisees must have an established office space, a retail facility or a warehouse to operate from.
- No absentee ownership: The franchise is not a passive investment opportunity. Franchisees must be fully involved in the day-to-day decision-making and operations of their centers.
- Not a part-time business: Franchise owners are required to open full-time for at least 40 hours per week.
Right at Home franchise costs
You would have to invest on average $122,000 to start Right at Home franchised business (and $121,000 if you chose a “conversion franchised business” instead).
The investment covers all the start-up costs you may need to open a in-home care and assistance business. You must pay the franchisor an initial franchise fee of $50,000. In addition to this franchise fee, the investment also covers:
- Formulation costs: rent deposits, leasehold improvements, permits and licenses, signage, furniture and fixtures, etc.
- Equipment: computer hardware and software, other office equipment and supplies, etc.
- Operating costs: real estate, insurance, training, policy and procedure manual, integrity selling training program, professional fees, business premises, additional funds for 3 months, etc.
Here’s the full breakdown of costs per franchised business:
Startup costs (Franchised business)
| Type of Expenditure | Amount |
|---|---|
| Initial franchise fee | $49,500 |
| Formulation costs | $2,900 – $19,300 |
| Equipment | $3,750 – $13,750 |
| Initial Marketing | $750 – $4,350 |
| Operating costs | $30,494 – $69,294 |
| Total | $87,394 – $156,194 |
Startup costs (Conversion franchised business)
| Type of Expenditure | Amount |
|---|---|
| Initial franchise fee | $49,500 |
| Formulation costs | $0 – $12,300 |
| Equipment | $3,450 – $12,800 |
| Initial Marketing | $1,000 – $8,000 |
| Operating costs | $29,294 – $89,594 |
| Total | $83,244 – $159,394 |
Right at Home Franchise Business Plan
All the stats: startup costs, profits, breakeven, etc.
5-year financial projections built with the FDD
Excellent 4.8/5 based on 70 reviews
Right at Home franchise fees
The initial franchise fee for a Right at Home franchise is $49,500
In addition to the initial franchise fee, you must pay to the franchisor a royalty fee of 5.0% of revenues, as well as a variable marketing fee of 3.5% of revenues.
Right at Home franchise sales
On average, a Right at Home franchise makes $1,047,000 in net billings per year.
This number is the median net billings per franchise business for 466 of the 483 franchised businesses that operated in all of 2021 (the average is $1,385,000 instead). Here’s the distribution of revenue per franchise in 2021:
The FDD also gives valuable information when it comes to revenue ramp-up, in other words how much net billings one franchise makes based on how long it has started operating.
For example, on average a franchise that has been operating for more than a year but less than 2 years has net billings of $323,000 whilst a franchise opened more than 5 years ago has net billings of $1,111,000 on average.
| Months in operation | Franchises | Net billings (median) |
|---|---|---|
| 61+ months | 307 | $1,110,708 |
| 49 – 60 months | 19 | $821,997 |
| 37 – 48 months | 4 | $547,395 |
| 25 – 36 months | 11 | $835,995 |
| 13 – 24 months | 11 | $322,803 |
| 12+ months | 352 | $1,047,318 |
Right at Home franchise profits
On average, a Right at Home franchise makes $497,000 in profits per year. This corresponds to a 23% EBITDA margin.
Again here, the Right at Home Franchise Disclosure Document is very detailed. Here’s the profit and loss breakdown as disclosed in the FDD:
| Amount ($) | As % of Sales | Source |
|---|---|---|
| Sales | $2,116,391 | 100% |
| COGS | $(1,197,666) | 57% |
| Gross Profit | $918,725 | 43% |
| Staff | $(227,512) | 11% |
| Facility lease | $(14,600) | 1% |
| Royalty | $(105,820) | 5% |
| Marketing | $(74,074) | 4% |
| EBITDA | $496,720 | 23% |
Is Right at Home a good franchise investment?
If we were to assume a 10% net profit margin to compute payback, we would find that Right at Home has a 3 to 4 years payback, which is excellent.
Indeed, it means that, on average, you would be able to repay investors and creditors (banks) who invested in your franchise in 3 to 4 years only. After that, you can reap the profits of your business.
To calculate payback, we simply divide the average initial investment of $122,000 by the expected annual net profits of the business (10% of net billings here). Of course we assumed a 2-year revenue ramp-up as you wouldn’t reach the average net billings per franchise ($1,047,000) on day one.
Right at Home Franchise Business Plan
All the stats: startup costs, profits, breakeven, etc.
5-year financial projections built with the FDD
Excellent 4.8/5 based on 70 reviews
Disclaimer
Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.
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