Home Instead FDD Item 6: Other Fees | What Franchisees Need to Know
Home Instead FDD Item 6 is the section of the Franchise Disclosure Document that lists every ongoing fee a franchisee will pay after the initial $54,000 franchise fee. For prospective Home Instead franchisees investing $98,000 to $125,000 to enter the senior care market, this is where the true recurring cost of the franchise relationship becomes clear. At Lopes Law LLC, we review Home Instead FDDs regularly and the fee structure in Item 6, particularly the sliding royalty scale, is one of the key items we analyze.
This guide breaks down exactly what Home Instead discloses in Item 6, explains the unique sliding royalty structure, and walks through the specific fee obligations that every buyer needs to understand.
What Is FDD Item 6 and Why Does It Matter for Home Instead?
Item 6 of any Franchise Disclosure Document is titled “Other Fees.” Required by the FTC Franchise Rule (16 C.F.R. Part 436), it must disclose every recurring fee the franchisee will owe during the franchise term. For Home Instead, one of the largest senior home care franchise systems in the world, Item 6 reveals a fee structure that changes as your business grows, which is unusual in the franchise industry.
Understanding the complete fee picture is essential because Home Instead franchises can generate significant revenue. With average gross sales reported at approximately $2.26 million, the dollar amount of fees paid to the franchisor is substantial even when the percentage rates appear moderate.
What Fees Does Home Instead FDD Item 6 Disclose?
| Fee Category | Amount | When Paid |
|---|---|---|
| Royalty Fee | 4% to 7% of gross sales (sliding scale) | Monthly |
| Advertising / Marketing | ~2% of gross sales | Monthly |
| Technology Fees | As required | Monthly |
| Insurance | Required minimums (varies by state) | Annually |
| Transfer Fee | As disclosed in FDD | Upon transfer |
| Renewal Fee | As disclosed in FDD | Upon renewal |
| Late Payment Penalties | As disclosed in FDD | As incurred |
How Does the Sliding Royalty Scale Work?
Home Instead’s royalty structure is unusual in that the rate decreases as your gross sales increase. The royalty ranges from 7% for lower-revenue franchises to 4% for higher-revenue operations. This inverse sliding scale rewards growth: as your business generates more revenue, the percentage you pay in royalties decreases.
For a new franchise generating $500,000 in its first year, the royalty rate may be at the higher end (closer to 7%, or $35,000). As the business matures and reaches $2 million in annual revenue, the effective rate may drop to 5% ($100,000). At the highest revenue levels, the rate may reach the minimum of 4%.
Attorney’s note: While the sliding scale rewards growth, it is important to understand the exact revenue thresholds that trigger rate changes. At Lopes Law LLC, we map the complete royalty schedule against projected revenue to show exactly how much you will pay at each growth stage. This allows prospective franchisees to model the true cost of the franchise relationship at their projected revenue levels rather than assuming the lowest available rate.
How Do Item 6 Fees Add Up for a Typical Home Instead Location?
To illustrate the financial impact, consider a Home Instead franchise generating $2.26 million in annual gross sales, close to the reported system average.
| Fee | Calculation | Annual Cost |
|---|---|---|
| Royalty Fee | ~5% of $2,260,000 (estimated blended rate) | $113,000 |
| Advertising | 2% of $2,260,000 | $45,200 |
| Technology Fees | Estimated | $6,000 to $12,000 |
| Insurance | Workers comp, GL, professional liability | $20,000 to $40,000 |
| Total Item 6 Fees | $184,200 to $210,200 |
That is approximately 8.1% to 9.3% of gross sales going to franchise-related fees before paying caregivers, administrative staff, office rent, or any other operating expense. In the home care industry, labor costs typically represent 55% to 65% of gross revenue, making margins sensitive to every additional percentage point of franchise fees.
Reviewing a Home Instead FDD Right Now?
At Lopes Law LLC, our $3,000 flat-fee FDD validation review covers all 23 items and breaks down the sliding royalty scale in plain language. Free 20-minute consultation to get started.
What Should Prospective Home Instead Franchisees Focus on in Item 6?
- Royalty rate thresholds: Identify the exact revenue levels at which the royalty rate decreases, and model your projected revenue against these thresholds.
- Advertising fund transparency: Understand how the 2% advertising contribution is used and whether you have input on local marketing spend.
- Technology fee trends: Determine whether technology fees have increased over recent years and whether future increases are capped.
- Insurance requirements: Senior care franchises require specialized insurance including workers compensation, general liability, and professional liability. Costs vary significantly by state.
At Lopes Law LLC, our flat-fee FDD validation review is $3,000. For more context, see what to expect from an FDD review, Item 19 financial performance, and franchise agreement red flags. For existing franchisees, learn about our franchise exit audit.
Important: The fee amounts discussed are based on publicly available Home Instead FDD information and are provided for educational purposes. Actual fees vary by location and agreement version. Always review the current FDD with a qualified franchise attorney before making any investment decision.
Frequently Asked Questions About Home Instead FDD Item 6
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Last updated: March 12, 2026
Understand Every Fee Before You Sign
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