Home care franchise fees and royalties: what the FDD tells you
By Scott McKenzie, founder of Home Care Agency Blueprint · Updated
A franchise’s fees are disclosed in its Franchise Disclosure Document (FDD): initial fees in Item 5, other fees such as royalties in Item 6, and the franchisor’s estimate of your initial investment, including funds for the first months of operation, in Item 7. Amounts differ by brand and change, so this site lists no fee figures. Read the current FDD for each franchise you consider.
When you get the FDD
Under the FTC Franchise Rule, a franchisor must give you its current disclosure document at least 14 calendar days before you sign a binding agreement or pay the franchisor or an affiliate in connection with the sale. Use that time to read it, call franchisees and get advice. Some states have franchise laws of their own; ask a franchise attorney which apply where you live.
The FDD items to read for cost and risk
Item names are from the FTC Franchise Rule. The notes on what to look for are ours.
| Item | Name in the rule | What to look for |
|---|---|---|
| 5 | Initial Fees | What you pay before opening, when it is due, and whether any of it is refundable. |
| 6 | Other Fees | Every recurring or occasional fee, how each is calculated, and when it can change. |
| 7 | Estimated Initial Investment | The franchisor’s estimate of your total cost to open. Compare it with your own quotes and your local wage and rent levels. |
| 8 | Restrictions on Sources of Products and Services | Vendors and software you must use, and whether the franchisor earns money from them. |
| 11 | Franchisor’s Assistance, Advertising, Computer Systems, and Training | What training and launch help is actually included, and what costs extra. |
| 12 | Territory | What is protected, what is not, and what could happen if targets are missed. |
| 17 | Renewal, Termination, Transfer, and Dispute Resolution | How you can renew, sell or leave, and what restrictions apply after you leave. |
| 19 | Financial Performance Representations | Whether the franchisor makes any earnings claims, and the basis for them. |
| 20 | Outlets and Franchisee Information | Current and former franchisees you can contact, and how many outlets opened, transferred or closed. |
| 21 | Financial Statements | The franchisor’s own financial condition. |
The full disclosure document has 23 items, from the franchisor’s background (Item 1) to the receipt you sign (Item 23).
Questions to ask before you compare costs
- Which fees in Item 6 are a share of revenue, which are fixed, and which can the franchisor raise?
- Does the Item 7 estimate include enough working capital to cover payroll before clients pay you?
- Which software, insurance or vendors must I buy through the franchisor, and does it earn money from them (Item 8)?
- What does training cost beyond the initial fee, including travel (Item 11)?
- If Item 19 includes earnings information, what is it based on, and how many outlets does it cover?
- What do franchisees listed in Item 20 say their real costs were?
Comparing with an independent budget
An independent agency has no franchise fees, but it still pays for licensing, insurance, software, payroll, marketing and any training or advice it buys. Build that budget in writing before comparing; homecarestartupcost.com (also published by Home Care Agency Blueprint) has a free calculator for it. Then score both in the worksheet.
Earnings claims. If a franchisor makes financial performance representations, the rule expects them in Item 19. If Item 19 has none, the FDD must say so. Be cautious about earnings figures you hear outside the FDD.
What to do next
Frequently asked questions
How much does a home care franchise cost?
It depends on the brand and changes over time, so we do not publish figures. The franchisor must disclose initial fees in Item 5, other fees in Item 6, and its estimate of your total initial investment in Item 7 of its current FDD.
What is a royalty?
A recurring fee paid to the franchisor, often tied to your revenue. How it is calculated and when it is due should be listed in Item 6 of the FDD.
Want to talk through your options?
A free 15-minute clarity call with Home Care Agency Blueprint. It helps people start independent agencies, so expect that perspective. You do not need to finish the worksheet first.
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