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Anytime a company gets a new owner with a new vision, it’s almost inevitable there will be dissent.
That’s even more likely when it comes to franchisers being bought up in home-based care, given the individual franchisee owners involved.
There were multiple large-scale franchise acquisitions in 2021, and all with different sorts of acquirers. For instance, Wellspring Capital Management acquired Caring Brands International, Interim HealthCare’s parent company. Advocate Aurora Enterprises, a part of the large health system Advocate Aurora Health, acquired Senior Helpers.
And Honor Technology acquired Home Instead.
Honor and Home Instead have big plans together, but some speed bumps between franchisees and company leadership have understandably surfaced, sources told Home Health Care News. It has been just over a year since that deal was officially announced.
In HHCN’s one-year lookback at the deal from September, Honor CEO Seth Sternberg commented on whether franchisees had been resistant to the changes that Honor was trying to implement.
“That’s kind of like asking, ‘Are humans ever resistant to change?’” he said. “You tend to find there are these classic adoption curves, where you have early people who love change, and they want to lean into change. Then you have the middle of that curve, if you will, where people tend to then follow once those first people get there. And that’s kind of what you just expect from any new system that you’re adopting into an existing system.”
Some of that resistance, HHCN has learned, relates to the implementation of Honor’s technology, and how much Home Instead franchisees are able to control after they begin using it.
An association forms
After the Honor-Home Instead deal came to fruition, the Independent Association of Home Instead Franchisees also came together, led by Bill Mishkin, who owns a Home Instead franchise location in Melrose, Massachusetts.
Now, the owners involved in the association make up over 60% of Home Instead’s U.S. revenue, according to Mishkin. Those involved are from across the country and Canada, with interest gaining in Great Britain as well.
In total, there are 253 owners representing 325 franchise locations in the association.
“It became apparent fairly early on that we needed to have a voice, and obviously wanted a seat at the table in determining what our destiny is,” Mishkin told HHCN.
Early on in 2022 when the association started, its conversations with Home Instead and Honor’s senior leadership went well, Mishkin said. And he left long meetings with senior leaders “pretty optimistic” about the relationship moving forward.
He was initially bullish on the Honor transaction, in fact.
“I’ve been so pleased with the [Home Instead] brand. They’ve been a terrific organization to work with. They have a great reputation in the field,” Mishkin said. “Home Instead has always been great on the high touch, but not great with the high tech. … Many of the franchisees – including me – were initially very excited about the possibility of being able to use [Honor’s] technology.”
Some of that positivity has faded, Mishkin explained, due to what he sees as directional changes.
At first, for example, Home Instead franchisees were told they could adopt Honor’s technology, but stick with their existing Home Instead model. That was then taken off the table, according to Mishkin.
Now, if the Honor technology is adopted, franchisees are expected to turn over most – or all – of their back-end operations to Honor.
“Early on in our strategy development, we considered a dual path of continuing to develop the Care Platform model and developing a software only product for markets that are not yet suitable for the Care Platform model,” Sternberg told HHCN in an email. “As we got further into the integration, it became obvious that to transform how society cares for older adults at the necessary pace and scale, the Care Platform is the best solution, and that we needed to focus all of our development efforts there.”
Sternberg added that knowledge sharing from franchisees is “incredibly important” to Honor, and that it has a constant feedback loop from franchise owners.
That feedback loop is not with Mishkin’s association. Instead, it’s with the Franchise Exchange Council, “a group of owners who were elected by their peers to represent the voice of the entire owner community,” according to Sternberg.
“We began implementing the Care Platform into targeted markets with Home Instead businesses that opted into the tech-enabled model,” Sternberg said. “As a result, in less than a year we have increased the number of clients who receive home care via the Care Platform by nearly 50% compared to prior to the acquisition. Home Instead owners who have opted onto the platform are closely connected to the care and product team, providing continuous feedback to elevate the care experience for clients, their families and our Care Pros.”
From Honor’s perspective, this makes strategic sense. It wouldn’t have acquired Home Instead if it didn’t believe that it could make its own impact on the franchise network, taking franchisees from one business frame of mind to another.
Yet Mishkin believes handing over operations and embracing Honor’s platform doesn’t make sense – at least not yet.
“We really structure an individual care plan for each one of our clients that we work with,” Mishkin said. “There’s an amount of flexibility that we need to have to be able to staff things quickly. There’s been some challenges with the [Honor] platform. And, [under this agreement], the functions that are handled by a lot of the franchisees would move to Honor.”
Overall, he continued, “there have been very few franchises” that are interested in that model. That’s at least according to his experience at the Independent Association of Home Instead Franchisees, he said.
“We generally believe that current clients are better served under the existing Home Instead model,” Mishkin added.
Mishkin pointed to a lack of “proof of concept” that the Honor model would work better for clients, and said that there are a “variety of opinions” on how well it works from the franchisees that have gotten on the platform.
Losing the high touch
Mishkin and others are worried that the Honor technology will force them to lose “high touch” with their clients.
For the following opinion, Mishkin wanted it clear that he was representing himself, not the Independent Association of Home Instead Franchisees as a whole.
“Technology companies want things to fit into a box,” he said. “They want specific numbers of hours. They want specific duties that people need to perform. And our client care can change day to day and hour to hour. And we’re really afraid of losing that most-important high touch.”
Mishkin considers himself a “huge believer in technology” and someone who understands the need and the inevitability of disrupters in any space.
Additionally, Honor informed franchisees, he said, that there will be a temporary dip in revenue once a franchisee adjusts to the Honor system. This makes sense, as any time a home-based care agency adjusts its systems or technology, there is an adjustment period.
Honor did not confirm or comment on that specific point. In previous interviews with HHCN and elsewhere, Honor has touted long-term gains associated with its tech.
The idea: Once franchisees and care professionals are familiarized with the Honor technology, it will unlock the ability to scale at a higher rate.
Mishkin still has his doubts.
“So, I understand how these technologies can improve what you do dramatically,” Mishkin said. “I believe the platform is still in the neophyte stages; it has a long way to go in terms of development. The way it’s presented now doesn’t show us the ability to do anything much better than we can today.”
Moving forward, the association’s goal is to find a middle ground: for franchisees to be able to utilize the technology, but still run their own businesses as they see fit for the time being.
As Sternberg told HHCN, Honor doesn’t necessarily believe that’s the best way forward.
In turn, there’s now a bridge that needs to be gapped between the two parties.
“One of the things that [Honor] talks about a lot is its ability to acquire and maintain care professionals,” Mishkin said. “That’s the silver bullet. If they could actually prove that that can happen, then you will own the marketplace. And I do believe the way that we acquire and retain care professionals today is not sustainable. But they haven’t proven that works anywhere yet, and we need to see that.”
Despite that gap, Sternberg remains confident.
“We’re as bullish on the combination of Honor and Home Instead as we’ve ever been,” he said. “We highly value the relationships with our franchise owners and we are investing heavily in their future success. … Building a workforce that has the tools and agency to provide that care is critical to solving one of society’s biggest challenges, and Honor is leading the way.”
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