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2014 Child Education & Tutoring Report: Franchise Information

2014 Child Education & Tutoring Report: Franchise Information

Below is an overview of a limited number of topics to consider when buying a franchise, including a summary of costs.

 

Please note: the provisions and fees illustrated in this report are only the most common and not a complete listing. All figures come from the Franchise Disclosure Document (FDD) of each respective franchise, dated 2013 or, if available, 2014. Please review the FDD for all of the provisions and fees related to investing in a specific franchise.

 

What is the required professional background?

In an interview with Bloomberg TV, Rogelio Martinez, VP of International Franchise Development for Tutor Doctor, revealed that over 80% of the system’s franchisees do not have an educational background. Child education and tutoring franchises typically provide comprehensive training to their franchisees on their respective curriculum and operations system. Typically pre-opening training consists 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. Other support systems in place can include advising via phone or in-person visits.

 

What personality traits are franchisors looking for in prospective franchisees?

“We look for folks that see a need in their community and want to fulfill that need in their community for education. We look for folks that certainly enjoy and love children and like to have fun as well as a Monday to Friday schedule,” says Richard Peterson of Kiddie Academy. A customer-oriented philosophy is also a trait many franchisors look for in potential franchisees.

 

2014 Child Education & Tutoring Report: Franchise InformationLocation Makes a Difference…

Operating a franchise requiring a storefront space involves the critical step of choosing a well-situated location. Not only is a franchise location a main determinate of how many potential consumers you will have, it is also a form of marketing. Fortunately, for incoming franchisees, franchisors are apt to help in the selection of a proper location for their system. For example, the Goddard School works closely with its franchisees to find sites that have “good visibility, ease of ingress [and] egress, and are situated in well-trafficked and densely populated areas,” according to CEO Joe Schumacher. He added that the location surrounding a Goddard School franchise “should have supporting demographics consisting of a large population of children under the age of five, high median family income, and a desirable median age in a three-to five-mile radius. [The Goddard School considers] sites in residential communities, general business areas, and corporate campuses.”

 

…If You Need a Location At All

Some franchise systems don’t need a physical location outside of the franchisee’s residence. For example, the franchise Bricks 4 Kidz is a mobile, or home-based, business. Franchisees offer their services by travelling to schools, camps, and homes. STEMTech Kids, which specializes in science, technology, engineering, and math, is another franchise that doesn’t require franchisees to maintain a storefront. STEMTech Kids franchisees provide their services by conducting camps, programs, workshops, parties and events mainly at public and private schools and universities, park district facilities, community centers and similar locations.

 

Special Regulations

It is the franchisee’s responsibility to make sure he or she is in compliance with the franchisor’s requirements, as well as all applicable laws and regulations of his or her area. Some states may require franchisees to obtain specific certifications or licenses to operate an education-based franchise, and most states will require a background check for those employed to work with or around children. In addition, depending on local 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. A prospective franchisee should consult the appropriate authorities for special requirements that may apply before signing any agreement. 

 

2014 Child Education & Tutoring Report: Franchise InformationBelieve What You’re Teaching

Industry professionals recommend that prospective franchisees deeply research the curriculum of the franchise concepts they’re considering. What makes the franchise successful? Is the concept sustainable? Will you tire of the topics? If you don’t truly believe in what your franchise system is teaching, there’s a higher potential for dissatisfaction with the operation of your business down the line.  

 

Initial Investment

Investment costs vary for different franchises depending on the particular business system and execution requirements. The following charts demonstrate, by comparison, initial costs associated with opening one of the sample franchises presented.

 

Initial costs associated with opening a franchise include the franchise fee, training expenses (such as travel and living expenses, not the actual training courses), grand opening marketing costs, and more.

 

One major variable in the initial franchise investment is the cost of real estate. Please note that some franchisors do not include land or real estate costs in estimates because (1) some concepts don’t require a separate office space, (2) the price variation between different areas, and (3) whether the franchisee has to undertake the construction of a new building or can find a leasable location.

 

Franchise

Estimated Minimum Initial Investment

Estimated Maximum Initial Investment

Primary Real Estate Needs

Bricks 4 Kidz

$33,800

$51,050

In-School and On-Site Tutoring

GradePower Learning

$94,600

$243,500

Center-Based

Huntington Learning Center

$98,315

$198,180

Center-Based

Kiddie Academy

$372,700

$3,362,000

Center-Based

Kumon

$72,187

$149,319

Center-Based

Mathnasium

$99,750

$139,000

Center-Based

STEMTech Kids

$29,800

$36,100

In-School and On-Site Tutoring

Sylvan Learning

$146,800

$262,500

Center-Based

The Goddard School

$610,300

$848,200

Center-Based

Tutor Doctor

$62,500

$100,700

Center-Based

 

A special cost involved in the initial investment of buying a child education or tutoring franchise is the price franchisors attach to their proprietary systems. Below are curriculum costs for 6 of the sample franchises.

 

Franchise

Initial Cost of Curriculum

What does it cover?

Bricks 4 Kidz

$200-$1,000

Product & Supplies

GradePower Learning

$15,000-$20,000

Literature, Education Materials

Kumon

$3,545

Initial Purchase of Materials & Recommended Reading List

STEMTech Kids

$1,000-$2,000

Start-Up Package

Sylvan Learning

$14,400-$14,450

Initial Inventory of Learning & Instructional Materials

The Goddard School

$13,800

Stationery, Forms, and Curriculum

 

No matter the cost of the curriculum and related materials, the invaluable part is the training the franchisor provides on how to properly implement the franchise system in your area.

 

Ongoing Fees

Throughout the length of the agreement there are costs for being a part of the franchisor’s business system.

 

These costs include items such as royalty fees, charges for technical support and marketing costs. The most common is the royalty fee. Examples of how royalties are collected are given below for 10 sample franchises.

 

Franchise

Royalty

Bricks 4 Kidz

7% of Gross Receipts; Minimum $1,500 every 12 Accounting Periods

GradePower Learning

10% of the monthly Gross Revenue subject to a monthly minimum of $500 for the third through ninth month of operation; $1,000 for the tenth month and each month going forward

Huntington Learning Center

9.5% of Gross Revenue; 8% for certain franchisees; $2,000 monthly minimum for all franchisees

Kiddie Academy

7% of gross revenues

Kumon

$15-$36 times the number of enrolled students

Mathnasium

Initially, 10% of the monthly gross receipts, plus a base royalty fee of $500 per month; then, the base royalty fee plus the greater of (i) the 10% monthly royalty or (ii) $1,400

STEMTech Kids

10% on first $75,000 in Gross Revenue and 8% on Gross Revenues in excess of $75,000 for each calendar year; franchisee must pay a minimum monthly royalty of $425 for a standard territory and a minimum monthly royalty of $650 if purchasing a larger territory

Sylvan Learning

8% or 9% of monthly gross revenues depending on territory

The Goddard School

7% of Gross Receipts of the School; royalty fee is reduced during the first year to 2% of Gross Receipts for months 1-3, 4% for months 4-6, and 6% for months 7-12

Tutor Doctor

Greater of 8% of Gross Revenue, or the minimum royalty due

 

In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees or costs for additional training. Prior to investing, prospective franchisees should do their research and carefully review a franchisor’s FDD for more detailed information on all systems, procedures and costs.

2014 Child Education & Tutoring Report: Franchise Information

 

To start your search for the right franchise for you, browse our listings at the links below:

Child Education Franchises

Tutoring Franchises

 

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Child Education Franchises...

Huntington Learning Center Join the #1 revenue producing tutoring franchise for under $100,000. Educational experience not required. Read More Min. Cash Required:
$75,000.

Lightbridge Academy Be a part of the next generation of child care franchises with an investment that grows! Read More Min. Cash Required:
$200,000.

BRICKS 4 KIDZ If you love working with children, this is the franchise for you! Low cost, easy to learn, work from home part/full... Read More Min. Cash Required:
$20,000.


Snapology Build your future as you inspire and educate the next generation. Your dream job awaits! Read More Min. Cash Required:
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VINCI Preschool VINCI Preschool offers and opportunity operating an educational facility for children aged from birth to... Read More Min. Cash Required:
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e² Young Engineers Build your tomorrow today with e² Young Engineers' edutainment franchise focused on STEM! Read More Min. Cash Required:
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