Franchising continues to grow in the fast food, fitness and shipping industries. Can it work in home medical equipment? You bet, says Ric Wren, president of Middletown, Ohio-based WrenCare.
People interested in the HME market may be hesitant about entering this industry — they either can't or don't want to do it alone — and that is why franchising can be a safe alternative, says Wren.
“With all the changes that are taking place in legislation and so forth, I think they really need somebody to partner with to go through this,” he explains.
Wren's decision to build an HME franchise operation came after WrenCare, the company he and his wife, Carla, created in 1999, began looking for new opportunities to expand their business. The path that led WrenCare from a single location to branch locations to offering franchises has been direct — and deliberate.
Getting Started
Both of the Wrens' backgrounds are in the HME industry. He worked for a large HME provider for 22 years — as everything from a driver and delivery technician to running five locations as a regional branch manager. She worked for several HME providers selling equipment and respiratory services. They wanted to own their own company, so they recruited partners and created a business plan that would ensure their success.
“We envisioned that we were going to have a large company over many years, so we wanted to put together the right team,” says Wren. “I tried to find people that I could get along with and I could trust. Trust was a big issue, because I had heard so many horror stories about people getting into business, getting the wrong partners and putting the wrong team together.”
The first person the Wrens approached was Ron Ferguson, a pharmacist who was in the home infusion business at the time. Ferguson and another pharmacist, Jerry Fitzgerald, became the Wrens' partners, and WrenCare was born.
From the beginning, the partners set about creating a model that could grow quickly and easily. They located corporate headquarters in Middletown with a centralized customer service department and a purchasing warehouse. They chose to house the accounts receivable department in Fort Laramie, Ohio, where Wren knew a core group of people who were experienced in HME and respiratory billing practices. Then they started to work developing the Middletown location and began opening branches. The decision to franchise came after the additional locations were opened.
“As we started adding offices, we realized that was a slow process. You have to find the right people, and it is very costly to start up your own operation; sometimes it can take a year or two to become profitable,” explains Wren. “So, at that time, Ron came to me and said, ‘Why don't we franchise our model?’”
The partners decided to take the same business concept they had been using to open additional branches to create a franchise-based model.
“We wanted to grow quickly — which we were — and we knew that if we added all of our own offices … we would have to spend more money,” says Wren. “In a franchise situation, we would share that expense with the franchise owner.”
Wren points out another consideration. “If you have a branch manager who has two or three terrible days, he can end up leaving and going somewhere else, [but] if you have a franchise owner in place, that probably won't happen. They can go through all the tough times,” he says. “A franchise offers more stability.”
The Face of Franchising
Wren and his partners believed they would be successful if they could get people vested in ownership who are the faces of their communities. And, he says, they knew they could offer franchisees a model that works.
“While we were developing the franchise model, we continued growing our core business and our own branches,” Wren says. “That shows the franchisees that we are not a company just coming in trying to sell franchises; we actually run our own business and we can help them run their business.”
Wren says the company's model works best for small, independent HMEs that need operational support to get to the next level.
“Our model is focused on two things: customer service and operational efficiency. It is the same model everybody aspires to have, but I think the difference is how you execute,” says Wren. “We show franchisees how to execute the model by offering training at our corporate headquarters in Middletown, at their location and over the phone. We also share with them how we have been successful in growing our business so quickly.
“We are finding people coming to us who have done a fair amount of due diligence to make sure they understand what they're getting into and what type of business opportunity this is,” says Wren. “It is pretty exciting.”
Keeping franchisees satisfied is essential, according to Wren. To help them focus on their customers and building their business means offering the support they need to prosper. And that includes access to the company's centralized customer service support, centralized accounts receivable support and information systems. WrenCare also performs the mundane, but essential, data entry function for its franchises.
“We tie everybody together through our information systems via the Internet, so they don't have a lot of expense tied up into our computer system. It is a protected system over the Internet,” explains Wren.
“We have them batch their paperwork and ship it to our billing center where all the data entry occurs.”
With most of its own branches accredited by JCAHO, the company also offers support to franchisees in preparation for the accreditation process, which, Wren points out, will soon be a requirement for Medicare business.
Building Toward the Future
The goal of the franchise model is to free the local owner from time-consuming operational requirements to focus on growing business and providing good service.
“We want them to service the patients and the customers. We want that local presence, that local face to be important in the community,” emphasizes Wren.
“If they keep it simple on their end, and they get the paper flow to go to us, then we both win in the situation,” he continues. “The customers love it, too. They get a local company with local ownership they can deal with — and we just see the company growing much faster.”
Now with five company-owned branches — four in Ohio and one in Indiana — and six franchises — in Ohio, Indiana and Florida — Wren says he and his partners plan to have 100 franchises in place over the next decade. Two additional franchise locations are currently set to open in Texas and Ohio.
The current franchise contract is set up around a five-year agreement, but Wren believes the commitment is for a much longer time. “We see this as a long-term commitment, even though the contract states it is for five years. Obviously, the franchisees are going to try to build a business based upon this model, and for all the reasons that they are beginning with us, they are the same reasons we expect them to stay with us,” he says.
“Our overall philosophy for WrenCare is to treat our franchisees as one of our best customers and to help them to become successful,” says Wren. “If we do that, we feel that there is no reason for them to do anything differently than to continue with us.”
Wren is optimistic about the future of WrenCare and its ability to franchise. He is also optimistic about the future of the HME industry.
“Even though we know we are going to be fighting financial cuts in the future — we always have and we probably always will — we believe through operational efficiencies, through intelligent growth and with the right business products and models, we can thrive in this business,” he says.
