Domiciliary Care Franchise vs Independent: Which Costs More to Run?

The short answer: which model costs more to run?

An independent domiciliary care agency is cheaper to run year on year, because you pay no franchise fee and no royalty on your turnover. A franchise costs more in cash, and in exchange you get a brand people recognise, a tested operating system and a faster path to your first care packages. Both routes end up at the same place: a Care Quality Commission (CQC) registered home care provider serving clients in your area. The difference is what you pay to get there and what you keep once you arrive.

Think of it as buying a business in a box versus building one from raw materials. The box is quicker to open and far less likely to fail in year one, but you rent it for the life of the agreement. The raw materials are cheaper and the finished business is wholly yours, but you cut every piece to size yourself, including the bits that are tedious and the bits that are risky. Neither is automatically the right answer. The right answer depends on your experience, your appetite for risk and how much of the margin you want to keep.

Money is where most owners start, and rightly so, because care is a thin-margin business. Where a specialist earns its keep is in setting the two models side by side with real numbers, so you see the lifetime cost rather than the launch brochure. Our healthcare and social care accountants page sets out where that fits, and our business mentor programme exists precisely for owner-managers weighing a decision this size before they commit.

What you actually pay in a care franchise

A UK home care franchise charges you in three layers: an upfront fee, an ongoing royalty and a marketing levy. The upfront fee usually lands somewhere between £20,000 and £35,000 plus VAT, and that buys the licence to trade under the brand, the initial training and the operating manuals. Once you add working capital, premises, recruitment and the cost of getting through CQC registration, total start-up investment for a home care franchise commonly runs £100,000 to £150,000. Premium brands quote higher: Home Instead, for example, sets out an all-in initial investment of roughly £85,000 to £96,000.

The royalty is the layer that matters most over time, and it is the one owners underestimate. Most care franchises charge a management service fee of 5 to 6 percent of your gross turnover, billed monthly, every month, for the life of the agreement. Read that again: it is charged on turnover, not on profit. Whether the agency had a good month or a brutal one, the royalty still comes off the top. On a five to ten year term, that fee is the single largest cost difference between the two models.

On top of the royalty sits a national marketing levy, usually around 2 percent of turnover, which funds brand advertising across the whole network rather than your branch specifically. So a franchisee turning over £500,000 a year typically hands roughly £30,000 in royalty and £10,000 in levy to the franchisor, about £40,000 a year, separate from the upfront fee they already paid. The trade is real value in return: lead generation, a recognised name, ready-made policies and a support team you can phone. The point is simply to count it honestly.

One operator detail worth knowing before you sign: most care franchises grant a defined territory, a postcode area inside which you have exclusivity but outside which you cannot trade. That protects you from a network neighbour, but it also caps your growth at the edge of the map. If your best referral source sits one postcode over, the territory line, not the market, decides whether you can serve it.

What it costs to run independently

Going independent removes the franchise fee and the royalty entirely, and instead you buy or build each piece a franchise would have bundled. There is no licence to pay for and no percentage of your turnover leaving every month. What you take on is the assembly job: the brand, the website, the lead generation, the care-management software, the policies and procedures, and the CQC registration, all sourced and stitched together by you.

Set-up costs for an independent domiciliary agency are lower in cash but heavier in effort. Registering with CQC, writing or buying compliant policies, branding, a website, care-planning software and an initial marketing push typically come to £15,000 to £40,000, plus the working capital to cover wages before the invoices land. You are not writing a £30,000 cheque to a franchisor, but you are spending evenings choosing a roster system and a DBS process instead of being handed one.

Year on year, the independent model is usually the cheaper of the two to run. The recurring costs are real but modest: care-management software, your own marketing, and the specialist support you buy in for accounting, payroll and compliance. For an agency turning over £500,000, those ongoing costs commonly land around £25,000 to £30,000 a year, against roughly £40,000 in franchise fees on the same turnover. And crucially, your costs do not automatically scale with every extra pound you bill, the way a percentage royalty does.

The catch is leads. The single thing a franchise sells hardest is a brand that generates enquiries, and an independent has to earn that reputation from a standing start. Most independents we work with replace it with a sharp local presence, strong relationships with social workers and discharge teams, and visible CQC ratings, which over time become a more durable moat than a national logo. It is slower in year one. It is yours forever.

Where the maths tips: the royalty on turnover

The decision tips on one fact: a franchise royalty is charged on turnover, while your profit is a thin slice of that turnover. The Homecare Association puts a sustainable minimum price for homecare at £34.42 an hour for 2026/27, and after carer wages, employer National Insurance at 15 percent, holiday pay at 12.07 percent, pension, travel time and office overhead, a well-run agency keeps a net margin of roughly 8 to 12 percent. A 6 percent royalty plus a 2 percent levy is 8 percent of turnover. Set that against a 10 percent net margin and you can see the problem: the fees can take most of the profit, because they are levied on the whole pie while you only ever eat the slice.

Put numbers on it. An agency turning over £500,000 at a 10 percent net margin makes £50,000 before any model costs. The franchise version hands over roughly £40,000 a year in royalty and levy, leaving very little. The independent version spends maybe £26,000 on software, marketing and specialist support, and keeps the rest. The franchise is not being greedy, it is selling a service and pricing it on turnover, which is normal for franchising. But in a low-margin sector that pricing basis is exactly what owners must model before they sign, not after.

CQC, payroll and what a franchise does not remove

A franchise gives you brand and systems, but it does not take your regulatory or tax duties off your plate. You still register with the Care Quality Commission as the provider for your area, you still hold the rating, and you still face the inspections. The franchisor hands you CQC-ready policy templates and training, which genuinely shortens the registration runway, but the registration is in your name and the duty to comply, as the CQC makes clear, sits with you. If the rating slips, it is your business that wears it, not the network.

Payroll is the same story. Whether you franchise or go independent, you run Real Time Information payroll for your carers, deduct tax and National Insurance, pay employer National Insurance at 15 percent above the £5,000 secondary threshold, auto-enrol eligible carers into a pension at 3 percent, and pay the National Living Wage of £12.71 an hour from April 2026 across contact time and the travel time between calls. None of that is bundled into the royalty. A franchise may give you a recommended payroll provider, but the compliance, and the cost, are yours.

VAT is one more area the brand does not change. Most domiciliary care delivered by a CQC-registered provider is exempt from VAT under the welfare exemption, which means you do not charge VAT on care but you also cannot reclaim the VAT on your costs. The rules are set out in HMRC VAT Notice 701/2, and they apply identically to a franchisee and an independent. The lesson across all three areas is the same: the franchise fee buys marketing and method, not compliance. The finance and regulatory engine is yours to run either way, which is exactly why the accountant you choose matters more than the logo above the door. For the day-to-day mechanics, our bookkeeping service and payroll and PAYE service carry the load whichever model you pick.

Which model suits which owner?

A franchise suits the owner who is new to care and values a proven launch over keeping every point of margin. If you have never registered with CQC, never built a roster, never recruited carers at scale, then the brand pull, the ready-made systems and the support team genuinely lower the chance of an expensive year-one mistake. You pay for that safety with the royalty, and for many first-time owners that is a fair trade, because the alternative is learning the hard way on real clients.

Independent suits the owner who already knows the sector and wants to keep the margin a franchise would take. A registered manager going out on their own, an operations lead who has run a branch, or anyone with care and management experience is buying very little from a franchise except the brand, and a brand can be built locally over two to three years for far less than a decade of royalties. The control matters too: you choose your software, your suppliers and your growth path, and you can change any of them when they stop serving you.

There is a third path that quietly suits a lot of owners: go independent, then buy in the specialist support a franchise bundles, piece by piece. Care-management software, an HR and compliance partner, a strong local brand and a specialist accountant cover most of what the franchise package contains, without the percentage of turnover leaving every month. You carry more of the assembly, but you keep the equity and the upside. That is the top-right corner of the strategy map above, and in our experience it is where the more experienced owners tend to land. For a fuller view of the numbers that decide an agency's health, our guide to domiciliary care agency profit margins shows where these fees sit in the bigger picture, and our piece on sole trader vs limited company for a domiciliary care provider covers the structure underneath either model.

What this means for you: how to decide

The decision is a modelling exercise, not a gut call, and most of it can be done on one page before you sign anything. Work through the steps below with your real numbers, and the answer usually makes itself obvious.

1. Project your turnover for years one to five. The royalty is a percentage of turnover, so the cost of a franchise is whatever you bill, multiplied by 6 to 8 percent, every year. Model a realistic ramp, not the brochure's best case.
2. Total the franchise cost over the full term. Add the upfront fee, the royalty and the marketing levy across the whole five to ten years. Compare that figure with the cost of building and running the same agency independently. The gap is what the brand and systems are costing you.
3. Be honest about your experience. If you have never run a regulated care service, weight the franchise's de-risking heavily. If you have, weight it lightly, because you are buying mostly a name.
4. Price the independent support you would actually need. Software, compliance, branding and a specialist accountant. If that total is well below the franchise fees, independent plus support is the cheaper route to the same capability.
5. Check the structure underneath. Most care agencies run as a limited company, and the dividend, salary and corporation tax position changes your take-home either way. Get the structure right before you launch, not after.
6. Get a specialist to model both. A care accountant runs the franchise and independent numbers side by side, factors in CQC registration, payroll and the welfare VAT position, and shows you the lifetime cost of each. You can check your own numbers in a free call with LOYALS.

Done in this order, the choice between a franchise and going independent stops being a leap of faith and becomes a calculation. Both can build a strong, compliant, profitable agency. The only mistake is signing a ten-year fee structure without first seeing what it costs you over ten years.