Home Care: The Tailwind, the Trap, and the Part Discovery Day Skips

The Zorzee Report | Issue #1 | Home Care Series, Part 1 of 4

I sat through a handful of home care franchise pitches last year. Each one spent the first ten to fifteen minutes on the same thing: the aging population. Twelve thousand Americans turn 65 every day. The home care market is $155.9 billion and growing at 8% per year through 2030, per IBISWorld. The Bureau of Labor Statistics projects home health and personal care aide jobs will grow 17% between 2024 and 2034, three times the average across all occupations. Beautiful slides. Real numbers.

Then I opened the FDD.

The caregiver turnover rate in home care hit 75% in 2024. Three out of four people on your payroll will leave within the year. That number wasn’t in the presentation. It wasn’t on any slide. It was in a PHI National workforce report. It just never made it onto a slide.

I’m not going to do that to you.

This is Part 1 of a four-part series on home care franchises. The next three issues cover individual brands: two private pay models and one Medicare-certified medical franchise.

This issue is the category context you need before you evaluate any of them. It’s the presentation the franchisor won’t give you at Discovery Day, because some of these numbers make the pitch harder to land.

When someone tells you to buy a home care franchise, they’re describing one of two completely different businesses that happen to share a name. Getting confused about which one you’re looking at will cost you somewhere between $95,000 and $312,000, depending on how long the confusion lasts.

Private pay, non-medical home care. A caregiver goes to a senior’s home and helps with daily living: bathing, dressing, meals, transportation, companionship. No physician’s order. No nursing license. The family pays directly at $23 to $58 per hour depending on geography. Revenue arrives within days of service. You can be up and running in weeks.

Medicare-certified skilled home health care. A physician orders the care. Your staff are RNs, physical therapists, occupational therapists. You bill Medicare, Medicaid, or commercial insurance. You deliver care today and collect 30 to 60 days later, after a claims cycle that would test the patience of a medieval saint. And before you see that first payment, state licensing alone takes 6 to 18 months.

A corporate professional who wants to replace income within 12 months is evaluating a fundamentally different proposition than a healthcare executive with existing Medicare credentials.

I’ve watched smart people spend three weeks evaluating a franchise before discovering the licensing timeline made their entire short-term income replacement plan impossible. Three weeks. Dozens of hours. One phone call on Day 1 would have answered the question.

That phone call belongs in week one. Not week three.

Forget territory size. Forget brand recognition. Forget the royalty rate for a moment.

Caregiver payroll as a percentage of gross revenue. That’s the number. This one. It determines whether you have a business or an expensive way to employ other people. It tells you what’s left after your largest operating expense, and whether that remainder is enough to pay royalties, fund marketing, hire an office manager, cover insurance, and eventually write yourself a check.

Across the home care industry, caregiver payroll runs between 53 and 75% of revenue.

Let me make that concrete with two brands I break down later in this series.

At $1,000,000 in annual gross revenue, the first brand runs a 53.6% labor cost. That is $536,000 to caregivers, leaving $464,000 to run the business and pay yourself. The second brand runs 66%. That is $660,000 out the door, leaving $340,000.

Same revenue. Same industry. Same demographic tailwind. A $124,000 difference in what is left, driven by one number most buyers never ask about before they sign. Push that labor cost high enough and you’re not building a business, but rather financing other people's careers with your savings account.

What creates that structural difference, the reason one brand runs at 53.6% and another at 67%, is the central question of Issue 3.

The question that belongs in your first serious conversation with any home care franchisor: what is the average caregiver payroll as a percentage of revenue across your system, and what explains that number?

The answer lives in Item 19 of the Franchise Disclosure Document. If they have one. Not all of them do. That silence tells you something.

Quick note for those new to FDD analysis: franchisors are permitted but not required to disclose financial performance data about their existing locations. When they include it, they report it in Item 19. When they leave it out, they don’t have to explain why. I treat the absence of Item 19 the same way I treat a job candidate who refuses to provide references. It’s information. Issue 4 in this series covers a brand that doesn’t include it. We’ll talk about what that means.

Here’s the most expensive assumption I hear from buyers evaluating home care: the demographics do the selling for you.

The logic sounds clean. The population is aging. Aging people need care. The nearest available provider gets the business. Open the doors. The phones ring.

Loud and clear for the people in the back…

The phones won’t ring unless you make them.

Clients come from referral networks. Hospital discharge planners. Primary care physicians. Elder care attorneys. Geriatric care managers. Assisted living facilities. These are professionals who send families to agencies they trust when a patient transitions home from a hospital stay, or when a family recognizes their parent can no longer manage independently.

The word “trust” in that sentence is doing all the work.

These referral sources have been burned by agencies that overpromised and underdelivered. They’ve sent families to operators who didn’t return calls, who sent caregivers who didn’t show up, who handled sensitive situations with all the grace of a parking meter. Their professional reputation is on the line every time they make a referral.

They don’t send business to the new agency down the street because the aging population is growing. They send business to the agency that earned the referral through months of showing up, following through, and delivering care that didn’t embarrass them.

Your first 12 to 24 months in private pay home care are a relationship-building exercise. You’re in doctors’ offices, hospital discharge departments, elder care attorney conferences, senior centers. You’re building credibility with people who’ve watched dozens of agencies come and go. The franchise system gives you the training, the brand, and the operational infrastructure. Building the referral relationships that generate billable hours? That’s the operator’s work.

The operators who spend Year 1 focused on care delivery and not on referral relationships arrive at Year 2 to a phone that doesn’t ring.

Before going deep on each brand in the next three issues, one comparison sets the context for everything that follows.

From Item 7, total investment range. Private pay non-medical: $95,400 to $170,800. Private pay peer model: $89,000 to $142,000. Medicare-certified skilled care: $157,650 to $312,750. The spread tells you what kind of operation you are funding before you open the door.

Entry cost is the number everybody asks about first. It is the wrong number to lead with. What matters more is the labor math once you are open.

The peer model brand's Item 19 survey shows average caregiver payroll at 53.6% of gross sales across 60 full-time operators. The standard private pay brand's affiliate data shows 65 to 67%, trending up year over year. The Medicare-certified brand does not include an Item 19 at all.

The roughly 12-point gap between 53.6% and 66% on a $1,000,000 revenue base is $124,000 in annual gross profit. What produces it is not what most buyers would guess. It is a structural design decision about who the caregiver is, and it rewires the economics of the entire model. That is the story in Issue 3.

The absent Item 19 in the Medicare brand is the subject of Issue 4. When a franchisor asks you to invest $157,000 to $312,000 and chooses to not disclose what its existing owners earn, that is information. We’ll talk about what it means.

One pattern holds across every brand in this series, and across every home care FDD I’ve read in seven years: the operators who build the referral network in the first two years are the ones who are still around in Year 5. Revenue growth, referral depth, and caregiver retention all track back to one variable: how much of the operator’s time went into relationship-building early.

The performance split between full-time and part-time operators in home care is the sharpest I’ve seen in any service franchise category. In one brand covered later in this series, full-time operators average $1.2 million in annual revenue. Part-time operators average $363,000. That’s an $837,000 gap. Same brand. Same system. Same territory rules. The difference is who showed up every day and who treated it like a side hustle.

The tailwind is real. I’m not disputing that. The population is aging. Home care isn’t discretionary. This category has structural durability that most consumer service franchises can’t touch. But the tailwind creates the conditions for revenue. It doesn’t deliver it. Demographics do not write checks. Referral networks do. Building that network takes time, presence, and the kind of relationship capital that doesn’t appear on a balance sheet.

The next issue covers the first private pay brand in this series. Their 2025 FDD includes four years of financial performance data for the corporate affiliate, plus individual revenue data for every franchisee who operated in 2024. Two operators who signed in the same quarter, holding the same number of territories, show 2024 revenues that are $1.2 million apart.

The FDD doesn’t explain why.

The numbers do.

If the home care category is pulling you in, or if you’ve already started conversations with a brand and want a second set of eyes on the FDD before you go deeper: that’s what I do. I’ve read every home care FDD covered in this series. I can tell you in 15 minutes whether the numbers support what you’re being told. My consulting costs you nothing. Book the 15-minute Zorzee Clarity Call.

Grab the free Zorzee 5 Signals Audit: the 16-page framework I run on every brand I cover. Litigation History, Royalty Burden, Unit Economics, System Validation, Term and Exit. Same framework Zorzee applies to every brand in this series.

Upgrade to Zorzee Report Pro for $9 a month, founding rate locked for life. Pro adds the Signal Tracker, the Monthly Inversion Brief, the Owner Brief, and 10% off everything in the Zorzee Files. The free briefs stay free regardless.

Evaluating a franchise and want an objective take? My consulting costs you nothing. Think of me like a real estate agent for franchises: I only get paid if you decide to buy, and only from the brand you choose. Book the Zorzee Clarity Call.

Already own a franchise, or deep into the validation process and the numbers aren’t matching what you were told? Books Brothers does a free 15-minute Cash Flow Audit. See how it works at booksbrothers.co.