Numerous home care franchise agencies across the country faced difficult times when the Department of Labor changed the rules governing minimum wage and overtime for home care workers. When these rules suddenly meant caregivers working for agencies could no longer be considered ‘independent contractors,’ it added costs to those smaller agencies, and some could not make it without other changes.
Matthew Murphy took over as CEO of Griswold Home Care, and within his first week he was inundated with lawsuits filed by franchisees. And they didn’t stop there. Within weeks he was dealing with a host of dissatisfied franchise owners who were frustrated with a lack of support or rule changes at the company level to help them navigate the new Labor Department rules.
When Matthew Murphy was asked what bothered the franchisees who had brought the lawsuit against this company, he said (during an interview with The Inquirer Daily News at Philly.com, written by Jane M. Von Bergen):
“Instability. And it was a choppy time in the business. This industry had not had a lot of regulation over the years. There was regulation coming in on a large scale in 2014. Historically, employers didn’t need to pay caregivers minimum wages or overtime, but that changed. Our model had always been that caregivers were independent contractors.
In light of the regulatory changes, many of our [franchisees] would be required to change their model to one where they employed caregivers. That resulted in a lot of our franchisees suing us because we weren’t preparing them adequately for the changes: “Hey, you sold me this [independent contractor] business, but now I can’t run the business I bought.”
One thing Matthew Murphy did immediately was stop selling franchises. He understood that things were not well and couldn’t, in good conscience, tell a potential buyer to take a major risk and deplete their savings and retirement funds just to give it a shot. He knew they had to solve the problems that too many of these franchises were facing.
From there, he found some of the franchise owners willing to talk about their concerns rather than fighting it out in court, and it became the model he used to address the concerns of other franchisees. They ultimately settled on a new franchise agreement and a new way to negotiate new deals moving forward.
As the landscape within the home care industry continues to change, it becomes essential to have a solid relationship between the company and its franchise owners. Griswold Home Care certainly highlights that it can be done.
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