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Who Owns and Competes with your Funeral Home


You should know who owns your Local Funeral Home

The latest, most well-known, funeral homes in any city are likely in today's death care industry in the United States to be owned by one of a hand of giant, publicly traded companies based in corporate offices hundreds or thousands of miles away. Like so much of the rest of "Corporate America" a big goal of these companies – which sometimes refer themselves as "consolidation companies" – is to buy many other smaller death-care companies, consolidate operations in order to save expenses, and then take advantage of less competition to raise prices and maximize profit.

Anyone who has a death in a family will likely be working with a cemetery or funeral home, and this business trend in the industry will certainly affect them and the price they may pay for their services. Here is a summary of what customers would do well to know about who owns their funeral home.

Why Knowing Who Owns Your Funeral Home Is Important

Though it may sometimes be tricky to find out who owns your funeral home, doing a little research to find that answer will almost always be worth the effort from a variety perspectives. Perhaps the most important of these is price. Several recent reports Your Local Funeral Homehave noted that funeral homes owned by one of the largest corporations are often the most expensive. In some cases, a cremation selling for just $1,000 at an "independent" funeral home owned and operated by a single person or family will sell for $3,000 or more at a funeral home run by a large corporation. The savings can be substantial!

Another reason why it may be important to know who owns your funeral home would involve long term contracts. In one case in the United States a group of Jewish families negotiated a long term contract with an independent funeral home in their city in which prices for a traditional jewish funeral would be locked in at about $2,000 for everyone in the group who had need of the service until 2016. At the end of that contract, however, the families were scheduled to work on a renewal and had been verbally assured for years that the funeral home would likely agree to another contract with similar terms, only with prices slightly increased to account for inflation. When time came to get down to serious discussions about the renewal, however, the independent company was entertaining bids to be purchased by a much larger chain of funeral homes, none of which were accustomed to offering funerals for as little as $2,000. The families knew that, since no other local funeral home – of of which were owned by large corporations themselves -- would be willing to meet that price, there was little chance that their new contract would offer a similar price – if the sale of the independent funeral home prevailed as was expected. In fact, their best guess at the cost of the future funerals was up to $4,000 or more per funeral. While the new contract has not been tendered as of this writing, this case serves as an example of why knowing who owns a funeral home is important. Had the Jewish families taken into consideration that their independent funeral home might eventually sell out to the larger company who would, thereby, increase the rates for funerals on the renewals, they might have negotiated a longer contract or perhaps another burial plan altogether. (Many families – Jewish or otherwise – have begun returning to ancient traditions of "home" funerals, in which a body is dressed in a family home and a funeral ceremony is conducted by religious leaders entirely without the involvement of a funeral director or cemetery.)

So, we see that just knowing who owns your funeral home may be just the start. You may also need to know a little about the trends in the death care industry that might affect the ownership of the funeral home (or cemetery) with which you intend to do business.

How To Find Out Who Owns Your Funeral Home

It seems reasonable to suggest that the best way to find out who owns a funeral home you may be working with is to simply ask an employee of the home. But this may result in a misleading (or even erroneous) answer. As large corporations have taken over many of the United States' family run funeral homes and cemeteries, they have not always changed the name. And many times the terms of the sale – usually very handsome to the previous owners – require that the old owners continue to manage the business even after the sale and that they not speak about the sale to customers. Hence, it is sometimes the case that customers of a local funeral home that has been serving a particular down for decades may be run by an entirely new organization, to which the locals (and even some of the employees) are completely unaware.

Fortunately, business ownership is almost always usually a matter of public record. So a wise consumer would do well to ask about the ownership of a funeral home he or she is considering doing business with, but then verify the answer at the local courthouse. Most county or district clerks in just about any state can help you, often even via telephone or the internet, to find public documents that identify a business's owner. Likewise for libraries. And, still further, if a funeral home or cemetery is owned by a large corporation, a simple search engine check of the cemetery's name and city will usually yield a link to the web site for that corporation. While the name of the corporation that owns a particular funeral home might not always be listed on the site of the home itself, nearly all of the large corporations that run funeral homes will list the names of each of the homes they own. (In the case of corporations that are listed on a public stock exchange, this is a requirement in most cases. At the very least, the company's public annual reports will have to acknowledge the names of all the cemeteries and funeral homes it owns.) And, finally, the Federal Trade Commission is charged with enforcing the Funeral Rule which regulates funeral homes in the United States. That agency, therefore, keeps ownership records for all funeral homes in the country. Granted, making those records publicly accessible is not a top priority for the agency, but, if all the other methods mentioned above do not lead to a verification of the ownership of a funeral home, a call to an FTC office will likely yield, eventually, to good results

What To Do Once You Know Who Owns Your Funeral Home

Now, we turn to the important question of what to do once you know who owns the funeral home you are doing business with. Probably the most important matter is to decide whether the owner is an independent family (or even an individual) or a large corporation. If it's the latter, then you would be wise to check carefully that prices being offered to you are the best available. As we discussed above, the large corporations who run funeral homes in the United States are typically in the business of consolidating services – for example, cremations in an entire region of Florida are now done in a central location whereas they were once done on-site at more than a dozen different funeral homes that are now owned by a single large company – and maximizing their profit. Customers of funeral homes owned by large companies should not expect lower prices to be offered as a result of the consolidated services. Rather, these companies will typically charge much more than the independently run cemeteries in their area, but they will offer many more amenities – such as extraordinarily plush surroundings at a service, well produced videos of the services and free services for a customer's children who may die before the age of 21 – than independent funeral homes may offer. Many customers report that the amenities provided, however, are not needed or are not worth the extra expense. So, if you are dealing with a large corporation, it is best to be very, very careful about what you are paying for and realize that your overall price for a funeral service will likely be much less if you patronize an independent funeral home.

Keeping Up With Who Owns Your Funeral Home

Once you know who owns your funeral home, it is important to stay abreast of news of any ownership changes that may come about after your time of doing business with the funeral home has ended. There are many reasons for this, and the most important of them have to do with pre-need contracts. It is always important the consumers not assume that their contracts will be serviced as agreed by the new owners. In many cases, for example, a funeral home will be purchased and then consolidated with another home – perhaps even in another city. Customers who have not kept up with the news of the sale may end up being surprised at their time of need to discover that their funeral will not be conducted in the location that had beenCompeting with Funeral Homes originally planned.

The bottom line is that, as with just about every other industry in which a person does business, it is always important for customers to keep up with the trends and other issues in the death care industry in order to make sure they are getting a good deal on their purchases.

Who Competes with the Local Funeral Home

It may be surprising to know that the large local funeral home that you may drive by daily on your way to work is not the only game in town. It's usually just the most visible.

The fact is, though consumers often complain that there are fewer choices for establishments that organizes funerals and burials these days, the number of death care competitors is often large in any given city. The problem is that, as in just about any industry, prime location real estate is expensive. As is significant advertising time and space. So many of the smaller funeral homes operate mostly on a word-of-mouth basis, and their proprietors are often content to subsist simply on the money that can be made by selling funeral services to their friends and family.

While these places may not offer all the convenient amenities and even glamor of the big players in the death care industry in your locale, it is often worth seeking them out and giving them a shot to bid for your business in memorializing a loved one. The rest of this article will delve into a few details about the benefits of doing business with the smaller funeral homes in a city – or, to put it another way, avoiding doing business with the bigger outfits.

Large Corporations Buying Smaller Ones

One of the problems funeral consumers often have with large corporations who run funeral homes is that, except for the prices offered, it is not always easy to know whether you are working with a corporation or a small, family-run business. For decades, large corporations --many based in Houston, Texas, thousands of miles away from some of their funeral homes – have been quietly buying small funeral homes and cemeteries across the country. And in most cases, the new owners retain the name, and even the management, of the old business and even contractually obligate the former owners to not tell the public (unless asked) about the sale. All that changes for customers in these sales, often, are prices – they usually go up dramatically. The strategy that these large funeral home companies follow is to buy as many of the smaller funeral homes as is economically feasible (and acceptable to federal regulators), thus eliminating competition for themselves in many cities. Then the funeral homes can consolidate expenses and raise prices, making the company exceedingly profitable and a very guy buy for investors on the public stock exchanges.

Meanwhile, the few small funeral homes and cemeteries that avoid the attention of the larger companies are forced to keep their prices very low in order to attract new customers. This can be difficult, however, since the small funeral homes do not have the benefit of the consolidated resources. But, in general, the large companies rely on the simple fact that most customers do not know about the smaller ones – simply a matter of marketing and advertising - and can often ask double or triple the price for their services.

So, as we say, the best way to know whether a funeral home is owned by a large corporation is to look at its general price list - a document that all funeral homes are required to provide readily upon request. Before deciding upon a funeral home to do business with, customers would do well to conduct a yellow pages search for all funeral homes in their city (the one place most smaller funeral homes advertise is in the local telephone book). Armed with that, they can rank the funeral homes according to price, and they will almost always discover that the most expensive homes are those that are run by one of the out-of-town companies – and that those same one or two companies own several of the most expensive funeral homes in town.

Independent Retailers Working with Local Customers

Once a decision has been made to work with a smaller, independently owned funeral home, many customers find that accessories for their funerals (caskets, cremation urns, headstones, etc.) are best purchased by independent retailers, small companies that do not offer funeral services but, rather, simply supply the accessories. These retailers, by selling to many customers across the country - and even internationally - are able to take advantage of scale discounts from manufacturers, and they can keep their overhead expenses very low by operating solely online. (A team of 3-4 people operating in a very small office can often serve hundreds or even thousands of customers each week.) Many smaller funeral homes find that they can help their customers keep their costs to a minimum by referring them to the independent retailers for their accessories rather than by attempting to be retailers themselves – as the large companies tend to do. Large funeral companies, meanwhile, will typically attempt to discourage customers from purchasing their funeral accessories from independent retailers. Part of their business strategy is to take advantage of the same sort of volume discounts they can get from manufacturers – since they are buying for funeral homes across the country - but to sell the accessories at premium prices thereby enhancing their company's profitability.

Cremation and Home Funerals

And, finally, another consideration that many consumers are turning to in order to keep their funeral and burial expenses to a minimum is direct cremation and home funerals. These practices typically allow families to avoid the official use of a funeral director's services and therefore can save a family thousands of dollars. The trouble is, however, that, though they may not need a funeral director for every bit of their plans, families often find themselves in need of a funeral director's specialized expertise for consultation purposes on cremation and home funerals. And the large corporations, typically, do not make their staff funeral directors available for such consultations – because cremation memorials and home funerals typically work against the profitability of a corporate-run funeral home or cemetery. So, in many cities, the only place one can find reliable advice from a licensed, experienced funeral director – on matters such as how to maintain a body properly for a home funeral that may be a week or more after a death to how to transport the body in a dignified way from a hospital to a home - is by consulting a small, independent funeral home in their area. Many of these establishments will be eager to make their funeral directors available for a fee that is far less than they might charge for full-service funeral arrangements.

Be aware as a Consumer in a Funeral Home

In most cities and small towns across the United States, at least one funeral home is still a prominent part of the business community. This has been the case for decades and does not appear about to change any time soon. But just because funeral homes still operate and look as they have for years, does not mean their industry is the same as it has always been. Many developments have come about in the funeral home industry since about the middle of the 20th Century, and it is important for consumers understand these changes before beginning plans for a loved one's funeral. Here is a very brief overview of what families of a deceased loved one should know about the funeral home industry.

The most important thing consumers can realize about the funeral home industry is that competition plays a much larger role than it did in the industry's early years. From its earliest days, the industry worked to keep competition to a minimum, all-but assuring in, say, the 1950's, that a family in any particular city had no more than two or three funeral homes to consider hiring to organize memorial services for their loved ones. By keeping competition so limited the most funeral homes in the industry were able to keep their prices artificially inflated, thereby assuring maximum profitability. But this made funerals cost families many multiples more than necessary.

So, in the 1960's – and again in the 1980's – Congress as well as many state legislatures began adopting new laws aimed at encouraging more free competition in the funeral home industry. While it's true that funeral homes still trend toward practices that inhibit competition, this government involvement brought about many the economic forces at work in the industry today that assure competition remains alive – and active.

The best example of this trend in the funeral home industry can be seen with the sales of caskets. Funeral home associations have put great pressure on the largest manufacturers of caskets to sell their wares only to funeral homes themselves rather than to the many independent retailers that have opened shop since laws requiring funeral homes to allow customers to buy their caskets from any source. The largest manufacturers are vary aware that selling caskets to non-funeral home establishments puts them at risk of losing much business from their funeral home clients. And so long as just one large casket manufacturer remains willing to sell exclusively to funeral homes, the others risk financial disaster by not following suite. And, to make matters dire, the free market principals by which our nation operates make it very difficult for lawmakers to force the manufacturers to sell casket to non-funeral home retailers.

Fortunately for consumers, however, there are many smaller companies that have entered the casket-making business in recent years. And these companies have built their success on selling to retailers that are not funeral homes. Economies of scale, of course, mean these smaller companies have difficulty keeping their wholesale prices competitive with their largest competitors. But their non-funeral home customers have lower overhead and profit requirements: this means the non-funeral homes can typically offer competitive retail prices, despite a higher wholesale cost. So, competition remains alive in the funeral home industry despite valiant efforts by funeral homes to keep it to a minimum. And as the smaller manufacturers grow, their wholesale prices will decrease the the level that the larger companies can offer, and retail prices – offered by funeral homes and non-funeral homes alike – will, likewise, decrease due to the forces of competition.

The laws of economics tell us that, eventually, even the larger companies will begin feeling economic pressure to sell caskets to establishments that are not funeral homes. At that point, competition will be in full force in the industry, and consumers will be seeing maximum benefit. It's possible that casket prices could even return to their 1950's levels – more than 60 years of inflation could, conceivably, be reversed entirely!

But this bright future for the funeral home industry depends heavily on consumers doing their part. Families planning memorial services for their loved ones much be willing to be price conscious – even in their time of great emotional distress. They must be willing to check prices offered by the funeral home arranging their service and be willing to buy the funeral accessories from other companies – often based on the internet – as necessary. They must understand their legal rights to buy products such as caskets, cremation urns, and even headstones from any company, regardless of the funeral home they hire, and they must be willing to enforce those rights as needed.

Consumer advocates keeping watch over the funeral home industry typically offer a great piece of advice: when planning a funeral in your family, always seek the help of a friend not emotionally tied to the deceased. Authorize him or her to negotiate with the funeral home and to research all retail options.

Following this advice can not only save a family thousands of dollars on the price of a funeral – it may just save an entire industry, as well, assuring that grand, beautiful memorial services remain a strong American tradition for decades to come.

 
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