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Right at Home Blog

Why buy a Right at Home, home care Franchise?

| Franchise Opportunities

Joining a network of dedicated, passionate local business owners is a safe and rewarding business opportunity. While owning a Right at Home office in your community is demanding, the positive results that come from these businesses, for you, your family, your clients and your staff, make it more than worthwhile.

The foundation of becoming a successful Right at Home franchise owner is a deep passion for looking after people and a commitment to providing high-quality care. We are seeking people, and their partners, who are dedicated to making a real difference in their communities. Check out our guide on how to navigate a Right at Home franchise purchase, the right way.

Before you think about buying a business, it's important to know what's involved and whether you're the right person for the job. Running a business is demanding, so take some time out for self-assessment. You need to be sure you have the necessary finances, acumen and ambition to succeed. Once you've decided you're ready to be in business, you then need to find a business that suits your abilities, finances and goals.

Consider:

  • Your preferred industry/market
  • Your preferred business model
  • Your preferred geographic location
  • Opening hours
  • The amount of working capital you have

How to buy a business

Are you ready to buy a business?

If owning your own business is something you’ve thought about, then it’s important to fully understand what you’d be undertaking. Ask yourself whether you’re ready to be responsible for and manage business decisions under pressure, often with little time. You will also need to be willing to work with your team across departments from sales to customer service, marketing, accounting, human resources, care management and clinical governance.

This may sound daunting but you can be happy in the knowledge that Right at Home will teach and support you along your journey. We have a fantastic record, across nearly 700 global franchises, on mentoring owners to run a top-quality home care business.

Are you willing to become part of a franchise network?

Buying into a franchise network has its benefits but might not be for every personality type or circumstance. When it comes to deciding whether to buy an independent business or a franchise, there are no hard and fast rules.

One of the main benefits of purchasing an independent business is that you have greater control to take your business in the direction you choose. Unlike franchise owners, you have the freedom to implement new ideas or to change your products and services based on your own personal interests or market conditions. You’re also not limited by geographic terms and conditions, giving you greater flexibility to market your products to a wider audience. Franchising, particularly in-home care, requires a set of rules and standards to be met, which may not be the case if you are running an independent business.

Conversely, franchise owners enjoy the security and support that comes from belonging to a much larger organisation. Other benefits include strong brand recognition, group marketing, quality standards, support across all major business disciplines, software and systems, communications support, and training.

What’s more, the proportion of Australia’s population aged 65+ grew from 8% in 1970 to 15% in 2021. The Federal Government Inter-Generation Report (IGR) projects that over the next 40 years, the proportion of the population aged 65+ will almost double to about 25%. By 2030, 8.8% of the population 65+ will have dementia. In mid-2021, there were over 400,000 Australians aged 85+ making up 2% of the population. This group is projected to grow to 7.3% by 2056. The Australian government has rolled out the National Disability Insurance Scheme over the past six years that now helps more than 500,000 people living with a disability. All of this means that the in-home care market is guaranteed to grow for the next 20 years. Despite the ongoing pandemic and recent recession, Right at Home continues consistent growth, remaining insulated from the macroeconomic environment. The demographic data shows just how much potential the in-home care sector really has. It is a huge market worth well over $40 billion annually with 100% government support.


Do your research

What do you know about health care in Australia? What do you know about in-home care and the various providers in Australia? These are just two of the many questions you will need to answer when researching Right at Home or other Home Care companies. 

Successful business owners invest in companies that align with their values and interests. Most of our owners are couples who want to build a business together. Our owners come from all walks of life with diverse backgrounds, but what unites them is the drive to support people in need in their communities. If you have decided to start your own business or purchase an existing business, industry research is vitally important. A deep understanding of the pros and cons and uncertainties associated with business options needs to be achieved before a decision can be made. Make sure you understand all costs involved beyond the asking price or capital investment. Costs can generally be divided into set-up costs (the initial investment you’ll need to establish the business) and running costs (the expenses you’ll incur running the business day-to-day).

As well as learning from the Franchise Support Office, there are other ways to gain insight including:

  • Find out the business’s legal structure by performing a search with the Australian Securities and Investments Commission (ASIC)
  • Perform a credit check
  • Ask friends and family to visit the business and provide you with feedback
  • Ask existing customers/franchise owners what they like about the business and its products or services
  • Talk to suppliers and find out their impressions of dealing with the business
  • Research the business’s competitors and see how they compare to the business you want to purchase
  • Identify industry trends, market trends, risks and opportunities.
  • Visit the business at different times to get an overall feel for how it’s performing
  • Analyse the business’s reputation by checking social media for reviews, discussions and customer feedback
  • Find out what the current and future demand is for the business’s products or services
  • Review costs involved in buying the business and how much working capital you will need including how much you might need to borrow

Do your due diligence

Due diligence is generally conducted after the buyer and seller have agreed to a deal in principle, but before a legally binding contract is signed. You’ll likely need to sign a confidentiality agreement before you can access this important information. You should always perform due diligence with the help of your lawyer, accountant or business advisor, and will often need to complete this activity within a specified time period. In the case of franchising, you need to be able to evaluate the franchise agreement and the legally required disclosure documents.

While conducting due diligence, you’ll need to carefully review all financial matters including:

  • Balance sheets
  • Tax returns
  • Profit and loss statements
  • Stock levels and details about plants, equipment, fixtures, and vehicles
  • In the case of a new franchise, the set-up costs, ongoing fees, and anticipated operating costs need to be established
  • The period to breakeven and the sales needed for breakeven are vital pieces of information

You’ll also need to review all legal matters such as:

  • Intellectual property
  • Trademarks
  • Registered patents
  • Existing contracts and contractual obligations with staff and third parties such as customers and suppliers
  • Any past, current or unsettled lawsuits
  • A history of insolvency on the part of the business, its current owners and its directors

In franchising, there is no better way to discern a business opportunity than speaking to as many existing franchise owners as possible. In many cases, speaking to those who have left the network is as important as speaking to those within it.

Who makes the offer?

In most cases, when investigating the purchase of a business, or the creation of a new business, or the purchase of a franchise, the contract is supplied by the seller. The purchase and sale agreement and or the franchise agreement are vital clues to what the business is like to run and what can be expected.

After you've conducted due diligence and valued the business, it's time to begin negotiations – usually with professional support and business advice. Negotiating the purchase of a business involves making an offer, which is usually followed by the seller's counteroffer, and subsequent bargaining to reach an agreement.

Financing

In our experience, franchisees do not necessarily have to come up with the entire purchase amount themselves.

What Is Business Financing?

For small businesses, finding the right funding model is vitally important. Take money from the wrong source and you may lose part of your company or find yourself locked into repayment terms that impair your growth for many years into the future.

What Is Debt Financing?

Debt financing for your business is something you likely understand better than you think. Do you have a mortgage or a car loan? Both are forms of debt financing. It works the same way for your business. Debt financing comes from a bank or some other lending institution. Although it is possible for private investors to offer it to you, this is not the norm. Here is how it works. When you decide you need a loan, you head to the bank and complete an application. If your business is in the earliest stages of development, the bank will check your personal credit. For businesses that have a more complicated corporate structure or have been in existence for an extended period of time, banks will check other sources. Along with your business credit history, the bank will want to examine your books and likely complete other due diligence. Before applying, make sure all business records are complete and organised. If the bank approves your loan request, it will set up payment terms, including interest. If the process sounds a lot like the process you have gone through numerous times to receive a bank loan, you are right.

Advantages of Debt Financing
  • The lending institution has no control over how you run your company, and it has no ownership.
  • Once you pay back the loan, your relationship with the lender ends. That is especially important as your business becomes more valuable.
  • The interest you pay on debt financing is tax deductible as a business expense.
  • The monthly payment, as well as the breakdown of the payments, is a known expense that can be accurately included in your forecasting models.
Disadvantages of Debt Financing
  • Adding a debt payment to your monthly expenses assumes that you will always have the capital inflow to meet all business expenses, including the debt payment. For small or early-stage companies that is often far from certain.
  • Small business lending can be slowed substantially during recessions. In tougher times for the economy, it can be difficult to receive debt financing unless you are overwhelmingly qualified.
  • During economic downturns, it can be much harder for small businesses to qualify for debt financing.

What Is Equity Financing?

Equity Financing comes from investors, often called “venture capitalists” or “angel investors”.

A venture capitalist is usually a firm rather than an individual. The firm has partners, teams of lawyers, accountants, and investment advisors who perform due diligence on any potential investment. Venture capital firms often deal in large investments ($3 million or more), and so the process is slow and the deal is often complex.
Angel investors are normally wealthy individuals who want to invest a smaller amount of money into a single product instead of building a business. They are perfect for somebody such as the software developer who needs a capital infusion to fund the development of their product. Angel investors move fast and want simple terms.
Equity financing uses an investor, not a lender; if you end up in bankruptcy, you do not owe anything to the investor, who, as a part owner of the business, simply loses their investment.

Advantages of Equity Financing
  • The biggest advantage is that you do not have to pay back the money. If your business enters bankruptcy, your investor or investors are not creditors. They are partial owners in your company and, because of that, their money is lost along with your company.
  • You do not have to make monthly payments, so there is often more liquid cash on hand for operating expenses.
  • Investors understand that it takes time to build a business. You will get the money you need without the pressure of having to see your product or business thriving within a short amount of time.
Disadvantages of Equity Financing
  • How do you feel about having a new partner? When you raise equity financing, it involves giving up ownership of a portion of your company. The larger and riskier the investment, the more of a stake the investor will want. You might have to give up 50% or more of your company. Unless you later construct a deal to buy the investor’s stake, that partner will take 50% of your profits indefinitely.
  • You will also have to consult with your investors before making decisions. Your company is no longer solely yours, and if an investor has more than 50% of your company, you have a boss to whom you must answer.

Funding from Family and Friends

If your funding needs are relatively small, you may want to first pursue less formal means of financing. Family and friends who believe in your business can offer simple and advantageous repayment terms in exchange for setting up a lending model like some of the more formal models. For example, you could offer them stock in your company or pay them back just as you would a debt financing deal, in which you make regular payments with interest.

Signing the contract

If you're satisfied with the due diligence report, have the necessary finance available and are ready to sign the contract, you must consider how to structure the purchase.

The most common structures include:

  • Sole trader
  • Partnership
  • Company
  • Trust

The structure you choose must be defined by key considerations, including:

  • Financial risk of the business
  • Personal financial exposure
  • Requirements from outside partners or investors
  • Expansion plans
  • Federal and state tax efficiency

It is very important that you decide on the correct legal structure for your business before you sign the contract. Asset transfers attract taxes, such as stamp duties and capital gains. Make sure you don’t need to re-structure your business soon after you have signed the contract, as this will attract unwanted taxes and additional professional fees. Seek professional advice before deciding on the ideal structure.

What to include in the purchase contract

  • Price: This will usually be a break-up of the purchase price, allocating specific amounts to goodwill, plant, equipment, stock, etc. You should seek accounting advice regarding allocations of assets, as this has serious taxation implications. You should determine exactly what aspects of the business you're interested in buying. For example, the business manufactures an item and sells it in a store. You'd need to determine if you want to buy both parts of the business.
  • Type of purchase: You need to determine if you want to make an offer for the business's assets, its shares, or both.
  • Payment method: What you will pay, how and when.
  • Seller's involvement after purchase: This might include providing you with training so you can continue operations in a seamless manner.
  • Restraint of trade covenant: This protects you from loss of business through the seller's opening of a competing business within a reasonable proximity.
  • Any other conditions: This might include the things you and the seller each agree to do before settlement and arrangements for current employees.

In addition to the basics of price and purchase, contracts should address contingencies such as:

  • Whether the purchase is subject to finance approval by a bank or other financial institution
  • Your defaulting on instalment payments
  • The seller providing inaccurate or false financial information
  • The seller having more liabilities than were known at the time of purchase
  • The seller not owning some of the claimed assets
  • Material changes in the business occurring before the transaction is closed
  • The seller opening a competing business in a location too close to the business they've just sold you

Most of these provisions work to protect you, the buyer since the seller knows what they're selling and the amount to be received. You'll want to limit your risks as much as the seller is prepared to allow.

Contact us today

Buying a Right at Home franchise isn’t something you take lightly. Investing in our home care network takes time, training and lots of hard work. The good news is that you will be guided by a team of franchise veterans who are dedicated to making your local franchise a success. Are you ready to strike out on your own? Give us a call on 1300 363 802 or send us an email at info@rightathome.com.au.

We’re the right people, with the right approach.


Keep up to date with COVID 19 information on the following links:

Australian Government Department of Health

Victorian Health and Human Services

NSW Health

Queensland Health

ACT Health

WA Department of Health

Tasmanian Department of Health

Northern Territory Department of Health

SA Health

Founded in 1995, Right at Home offers in-home companionship and personal care, and assistance to seniors (elderly and aged care), and any adult who needs our care at home including adults living with a disability who want to continue to live independently or age in their home. Right at Home is your local expert for issues related to caring for your loved ones and is dedicated to keeping you informed about home care. With no admin or subscription fees Right at Home allows you to get more care from your package or budget.

Right at Home is a 'My Aged Care' government-approved, home care provider for levels 1-4 and offers flexible in-home care services such as nursing care, after hospital care, post-operative care, respite caredementia and Alzheimer's care. Right at Home also offers assistance with daily living and personal care such as grooming, hygiene, transport, shopping, meal prep, domestic services and social support, so your loved one can enjoy a more independent, vibrant life. Our nurses and caregivers are screened, highly trained, and insured prior to entering your home so you can trust us with the caregiving while you focus on your loved one.

To find out more, please give us a call on 1300 363 802 or visit our website.

Right at Home Offices in Australia: Sydney Lower North Shore; Sydney Upper North Shore; Sydney Central and Eastern Suburbs; Sydney Northern Beaches; Sydney Norwest; Sydney The Hills; Padstow St George; Macarthur Penrith; Newcastle; Hunter & Port Stephens; Southern NSW; Toowoomba- Darling Downs; Sunshine Coast and Gympie; Mackay; Central Queensland; Townsville; Far North Queensland; Gold Coast South; Gold Coast North; Northern Rivers; Brisbane Bayside; Brisbane South; Brisbane North; Brisbane West; Perth Midland; Perth Northern Suburbs; Perth West Coast: Kalgoorlie Wheatbelt; Moreton Bay Region; Sydney Inner West; Sydney Ryde; Greater Logan

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