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| Real Estate.. |
Helping seniors
Developer brings franchising to assisted living
| High costs have kept franchising away from the senior living industry despite its growth potential. Now a developer hopes to change that. |
Take a look at the stats on higher life expectancies and the aging baby boomer population, and it is easy to see why assisted living facilities represent a hot development niche. In 2000, the U.S. was home to 35 million people who were 65 years of age or older—a 12-percent increase since 1990. Those numbers will continue to increase in the coming years as the large baby boomer population continues to age.
Despite the potential growth market, assisted living is just beginning to take hold in the franchise industry. The chief barrier to entry is the high cost of building and maintaining the facilities. The dominant trend among assisted living properties is to create large complexes with a myriad of amenities ranging from walking trails to swimming pools. Development costs for such facilities can easily reach $30 million—well out of reach for most franchisees.
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Franchisors are starting to bet the projected boom in the elder population will make assisted living facilities a big business opportunity, especially as |
"This is one of the few enterprises in franchising where you can really do well, while doing good," West says. "An owner can profit financially, while serving people and meeting their needs—facilitating a high quality of life and allowing seniors to remain in the community where they have lived for so many years."
Downsizing facilities
One of the biggest roadblocks to franchising assisted-care facilities is that the industry as a whole tends to gravitate toward large real estate developments that take millions to build and operate. As a result, the assisted living industry tends to be dominated by non-profits and public companies rather than individual operators.
"Typically speaking, these residences have been so large and so expensive, that they have outweighed the hotel industry by far in their sheer size," says Cynthia Gartman, president and COO of Country Place Living. Finding franchisees that can accommodate the costs of building and operating such large facilities has been difficult.
West was one of the pioneers in the assisted-living industry, opening his first 200-unit facility about 25 years ago in Wichita, Kansas. "I was told by others that you needed to build a large facility in order to offer the variety of services and amenities that the market desired," West says. But West learned that bigger is not better, particularly when it comes to quality of life for the frail and elderly.
One of the keys to the Country Place Living model is to create a home-like environment. "When forced by land costs or development restrictions to increase the size of the facility, you really have a difficult time accomplishing that residential feel," West says.
Creating a smaller model also could be just the ticket to opening up franchising opportunities within the assisted living industry. Country Place Living offers two concepts for franchising. Country Place Senior Living is an 18-apartment assisted living residence, while Country Place Home Plus is an eight-bedroom group home residence. The eight-unit model requires an initial financial commitment of between $600,000 and $1 million, while the 18-unit model requires
$1.7 million to $2.3 million for the initial investment.
Targeting rural America
Country Place Living currently owns and operates seven locations throughout Kansas, and is now selling franchises in rural communities in Colorado, Oklahoma, Iowa, Kansas, Missouri, Nebraska and Texas.
The firm focuses on new construction rather than refurbishing existing properties, and is expanding predominately in communities that range in size from 1,500 to 50,000 people. "Obviously, land cost is something that has to be considered, as well as the prevailing rate for senior services in those areas," Gartman says.
Franchising smaller assisted living facilities is certainly a feasible concept if done right, said Michael Newman, owner of Always Best Care Seniors Services, a senior services franchise based in Sacramento, California. "The senior industry is certainly one of the fastest growing industries in the country right now," Newman says. In addition, people want to stay at home and in their own communities. So there is a demand for assisted living facilities in smaller
markets. And because those smaller facilities don't come with all of the added infrastructure and overhead of a larger complex, they can be more reasonably priced for residents, he adds.
Targeting rural communities has other perks including lower land costs and fewer zoning issues. "The attitude toward growth in these smaller communities is dramatically different, because this is such a win-win business," West says. "Not only can the owner/operator make money and do good things for their residents, but they can have a positive economic impact on a small town by increasing the tax base, providing jobs and keeping elderly people in their
original communities."
