Child Education Industry Report - Franchise Information (4)

Franchise Information

 Important Note: The provisions and fees illustrated in this report are only the most common and not a complete listing. Please review the Franchise Disclosure Document (FDD) for all of the provisions and fees related to investing in that specific franchise.

The qualifications needed for each franchise system vary by franchisor. Prospective franchisees considering the child education franchise industry need to assess their qualifications to see if they match up with those required in this field. “Passion to make a difference in a child’s life and in their communities; the desire to enjoy what they do on a daily basis, business acumen, [and] the ability to work with children and their parents,” are some of the most important traits Mathnasium looks for in prospective franchisees according to Novak. And while he was speaking specifically about Mathnasium, those are traits that virtually all child education franchisors would agree are important for a franchisee to possess. Every franchisee is a brand ambassador for the company they work for. The system can be taught to them, but most often the franchisee must embrace the ideals of the franchisor to find optimal success.

In researching and evaluating potential franchises, there are several factors to consider. Here’s a brief look at some of those items for prospective franchisees to take into account.

Curriculum

“Research the effectiveness of the concept’s curriculum,” advises Novak. “Does it really work and/or provide a difference? Is there an identifiable bang for the buck? With many children’s educational concepts out there and tightening pocketbooks, this is a very important matter.” If you don’t believe in what you and your staff are teaching, there’s a higher likelihood of creating difficulties in operating your business that wouldn’t be there otherwise.

Training

Prospective franchisees don’t need to be concerned if they don’t have prior education, or education-related, experience. Many franchisees have found success in industries unrelated to the franchise industry they eventually entered. Child education franchises provide comprehensive training to their franchisees on their respective curriculum and operations system. Franchisees, along with any other employees specified by the franchisor, must successfully complete any pre-training work, initial training program, and all certification training courses the franchisor may require before the franchised business can open. Typically pre-opening training will consist of a combination of classroom and on-the-job training. Most franchise systems offer (and some require) additional training after the franchised business is open.

Support

There are many ways in which child education franchisors support their franchisees throughout the time of their relationship. For example, Kiddie Academy utilizes ongoing, refresher training along with Franchise Business Consultants who assist franchisees from the opening of their franchise through site visits, additional training sessions, and sharing of best practices. Additional ways franchisors support their franchisees in this industry include marketing and public relations campaigns, conventions, conferences, Intranet to connect with fellow franchisees, and call center assistance.

Territory

The territory a franchisee will be granted to run his or her franchised business will be dependent on a number of factors that may include one or a combination of the following: geography, population density, number of children, average household income, traffic, and additional factors. A common basis of territory size is number of potential customers within a given area. For example, Mathnasium sets territories based upon a minimum of 4,000 children between the ages of 5 and 17 residing in the territory. Currently, the average distance between Mathnasium learning centers is greater than 5 miles, but can be adjusted with written notice. Check with franchisors to find out if they offer exclusive, protected, or unprotected territories.

Regulations

Certain states may require franchisees to obtain specific certification(s) or license(s) in connection with running an education-based franchise. Most states require a background check of people employed to work with or around children. Depending on local laws or zoning codes, a franchisee may experience additional requirements such as the need for separate bathrooms for boys and girls, water fountains, special exit doors equipped with panic bars, fire safety improvements, and accommodations for disabled persons. An attorney should be consulted in reference to any special requirements that may apply to the franchisee or the franchised business. It is the franchisee’s responsibility to make sure he or she is in compliance with all applicable laws and regulations in addition to the franchisor’s requirements.

Security

The safety of their children is of upmost importance to parents. Therefore, security measures, particularly those taken by outlets that also provide child care services, is high on the priority list. For franchised businesses where this is concern, access to the building typically is closely monitored and restricted to designated people that may include parents, children, faculty and other designated people. Many of these places have closed circuit television that allows parents to watch their children on monitors from a computer with the aid of an access code of some kind.

Initial Costs

The range of investment between franchises can be large due to variations in their business systems and what it requires to execute them. The following charts demonstrate this by comparing initial costs associated with opening one of the 17 franchises presented.

Comparison Chart of the Minimum Amount of Cash Liquidity Required of Franchisees to Start Selected Franchises

Chart Showcasing the Franchise Fee Amount (or Range) Involved in Investing the Selected Franchises

Comparison of Estimated Initial Investment Ranges for Selected Child Education Franchises

Ongoing Fees

The average franchise agreement length for these companies is 11 years with a range of two years to 25 years. During that time period, regardless of length, there will be costs that must be paid regularly. These include items such as royalty fees and marketing costs. Although fees like these are common, they are not universal. Some franchises, like The School Place, don’t charge a royalty because of the way they are structured. Below is a chart outlining the royalty structure for the rest of the featured franchises in this report.

Selected Child Education Franchise Royalty Fees

There are additional ongoing fees that are assessed regularly such as technology fees to cover items like server hosting, internet access, etc. Select fees are assessed on an “as needed” basis such as audit fees or costs for additional training. All prospective franchisees should do their research and carefully review a franchisor’s FDD for more detailed information on all systems, procedures and costs involved before in investing in that franchise.

An education franchise can truly be a rewarding career move for anyone who has ever wanted to be their own boss and make a difference in a child’s life. “The best part of a children’s educational franchise is the ability to see [and] enact change, make a difference, every single day,” says Novak. “The education category offers great job satisfaction but candidates must always remember, at the end of the day, this is a business so franchisees must also know their numbers.” Adds one Kumon instructor, “When a parent tells me that their child has been nominated for an award and it’s because of Kumon, that’s the greatest moment for me.”