Griswold Home Care is once again selling franchises after a hiatus of more than three years.
The Plymouth Meeting company provides nonmedical services — such as personal care, companionship and respite care — so senior adults can remain at home. It has more than 100 franchise directors that operate 200 offices in 32 states along with 19 corporate-owned offices in four states.
Griswold stopped its recruiting efforts for new franchise directors in July 2014.
“It was a combination of factors,” said Matt Murphy, Griswold’s president and CEO, explaining the decision. “Our industry had not had a lot of regulations over the years. When that changed in 2013 and 2014, it hit us a little hard. We are now a 35-year-old business and we were set in our ways.”
The biggest adjustment was a change in labor laws in many states that resulted in nonmedical home care workers no longer being exempt from minimum wage and overtime pay requirements. Murphy said Griswold supported the change. “It was the right thing for caregivers,” he said. “People don’t become home caregivers to become wealthy. They do it because they have a big heart and want to do the right thing.”
During the summer of 2014, Griswold was also sued by franchise owners in California that alleged they were owed more than $3 million in franchise startup fees because the company was promoting an independent contractor model for home caregivers — freeing franchise owners from paying employment taxes and other tax withholdings — that was in violation of the California Franchise Investment Law.
Murphy said the company decided to put new franchise activity on hold while it resolved the litigation and reworked its franchise agreements so they better reflected the regulatory changes taking place in its industry and addressed concerns of franchise operators.
“We felt we needed to take a break from bringing new franchises on board until this all played out,” Murphy said. “We used that time to make sure we were in compliance with Department of Labor mandates and to hammer out a more durable franchise agreement that was more focused on their success.”
Griswold Chief Operating Officer Michael Magid said the new agreements had to reflect the shift to full-employment home care workers and new requirements related to employee benefits under the Affordable Care Act. “The Affordable Care Act had a big impact on our industry,” Magid said. “When this company began, [nonmedical home care] was a sleeping industry. Aging baby boomers weren’t even on the radar. Now, more and more services are being provided in the home.”
To make the contracts more equitable for franchise operators, Magid said the company reworked royalty arrangements including adding a provision that allowed owners of multiple territories to aggregate their earnings so they would not be penalized with higher payments if, for example, business was thriving in one territory but revenues did not produce the return needed to satisfy minimum royalty payments in another.
Magid said another big change was the company agreed to consult with its franchise association on any major changes, such as adding a new service, to its business model.
“Some of our franchise owners have been at this for 30 years,” Murphy said. “Why wouldn’t we want to listen to them?”
Meg Mairn, the past franchise association president who owns two Griswold Home Care territories in Florida, said the company’s franchise operators began pushing for an updated franchise agreement after the Griswold family began the process of selling the company to a private equity firm in 2009.
While the new owners brought in some positive changes including modernizing back-office business functions, many franchise operators were concerned decisions were being made without their input and feared protections they had when the company was family-owned potentially could be discontinued.
“Matt Murphy coming in three years ago was the start toward healing and moving us all forward in a positive direction,” Mairn said. “He has a very collaborative outlook and will listen to all sides and opinions before making a choice. Under previous CEOs, the association had attempted to renegotiate our franchise agreement without a lot of success.”
Mairn noted reaching a new franchise agreement was not easy. She said the agreement was hammered out during an 18-month process that included going through dozens of versions before coming up with a final 50-page document.
The new contract, finalized in late 2016, earned Griswold the honor of “2017 Franchisor of the Year” award from American Association of Franchisees and Dealers.
While the litigation was being resolved, Griswold saw its number of territories drop from 270 to 200 as some franchise directors retired and others chose to run their businesses independently. Murphy said their goal is to get that number back up to 270.
The company has developed a new franchise development website that includes information and resources for prospecting directors along with corporate news, a short company history including the background of founder Jean Griswold, financial information, and testimonials from some of Griswold’s successful directors.
“We think this site gives a good overview of what we stand for, and information prospects need as they begin the process,” Magid said. “Home care isn’t just a business opportunity like IT or cutting hair; it’s more of a calling. So we’re looking for people who want to combine commerce and compassion.”
John George covers health care, biotech/pharmaceuticals and sports business.