The Education Franchise Industry 2021 – 2022
Apr 20, 2021
- First, whether it’s in early childhood education like Kindergartens, English language development, or Math and other Stem programs, education allows companies to improve the lives of people in their communities and has that feel good philanthropist element not often found in the business world
- Second, the education field continues to be one of the most profitable industries in franchising today. Many brands have experienced 1-2 year ROI (return on investment) and EBITA (unit level profits before tax and depreciation) of 40-60%
- Third, it is a very stable industry that doesn’t change quickly to follow fads and trends like retail or F&B. While constant improvements are always being made, especially in the use of technology, consumers are not expecting us to re-invent the wheel on an annual or even monthly basis
- Lastly, with the recent advances in app-based or online learning, improved speech recognition technology, and other systems that allow independent or distance based learning to be effective and efficient it is an industry that is fairly resistant to problems like Covid-19
Let’s look at some common questions investors have when they first start looking at a new education franchise opportunity.
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What is the most profitable franchise to own?
This is an almost impossible question to answer. Certain industries will definitely average better ROI than others. It is also typically true that the more you have to invest the more profit you will make. Education is consistently one of the top performing industries in Asia and without exaggeration a solid place to build for the future. Asian cultures almost without exception have a huge focus on childhood education, and even as adults, I find most are lifelong learners, always looking to improve themselves.
Within the education industry, there are many different types of concepts. Some of these include English and other languages, Math, STEM, Arts, and Kindergartens. In the US, tutoring is also gaining popularity, but it has not gotten traction in the Asian market yet and we expect it may not or at least be a long time before the demand is there.
The choice between concepts I think mostly depends on the competition and demand in your personal market. There are normally gaps virtually anywhere, but different markets often have variations in the demand and the competition quality which leads to sweet spots with higher chances of success and faster return on investments.
One thing will be important for 2021 and the next few years is ways to continue to function through social distancing and other governmental restrictions as we all attempt to get this stubborn pandemic under control. So, concepts that have superior technology and the ability to function at home, either permanently or at least temporarily as the need arises will continue to experience superior investment performance.
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Which is the best education franchise to own?
Also no perfect answer to this one. That’s why here at VF Franchise Consulting we represent multiple education brands all with unique features. With a wide variety of markets and a similar wide variety of companies all with different objectives and investment levels, there is no “perfect” or “best” franchise to own.
However, we do help companies pick the best education franchise for their company, to meet their strategic plan, and for their territory on a regular basis. With some information about your specific situation, we would be happy to provide this free service to you as well. Please contact us at [email protected].
There are some important guidelines and suggestions that can be followed.
- The more units and the more countries a brand has already been successful in can be a good indication of its likelihood of success in your market
- Smaller brands do not have the same track record, but often are more flexible with localization, and you may have more negotiating room on key terms and conditions
- Franchise brokers who have multiple brands can help potential investors compare, as opposed to contacting a brand directly where you only have 1 option that may not be the best for your company and market
- Ask lots of questions when you communicate with the brand, the more info you have the better
What long term effect has the Covid-19 pandemic had on the education industry?
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There are a few points here worth discussing here. First, many brands reacted quickly and decisively to assist their franchisees during the crisis. That can be a good indication of the overall health of the brand and the dedication/skill of their team. These are the types of brands you want as your long-term partners. Ask how their brand handled the challenges of 2020, and how they supported their franchisees.
Second, I think 2020 highlights the importance of being flexible, and for education the importance of at least being ready and able to function online for periods of time. Technology becomes important here. For example, one of our partners, Visang Education has several brands, Wings and Elif being just two.
As soon as the pandemic hit, they immediately started modifying their already amazing IT system to seamlessly go from in-class to distance classes all within their proprietary software. No Zoom, no WhatsApp, or other third party software. No stress for teachers, students, or franchisees to move to online and later back to in-class as required.
Another brand, Qooco, has always been online. Students study 10-15 min a day wherever they are, right on their own devices. They only go into the centers once per week to meet their coach and for the free extracurricular clubs and activities. It was easy for them to move the weekly coach meeting online and they remained virtually unaffected, even when their centers were closed. It is easy to see how these 2 brands hold nice advantages for anyone looking to enter the Education business in 2021-22.
It’s not possible to foresee every challenge the future will hold for you as a new franchisee. But, remember, this is part of the reason you buy a franchise, so you have support when problems arise and you’re not just on your own.
How do I get a school franchise? How do I get an education franchise?
This normally starts quite simply, reach out to us for a discussion. You can email us at [email protected] or sms on most social platforms at +84(0)773039633. Once we know what territory you’re interested in and some specifics about your objectives and company we can share a variety of suitable brands looking for partners in your market.
There are quite a number of steps to getting an education (or any) franchise. After an initial discussion to make sure we match up the correct franchise for you and your market, we will collect a signed NDA (non-disclosure agreement) which will allow the brand to share more sensitive information with you. Also, an application so they have a bit more information about your company and objectives. Then a 3-way call with us, yourselves, and the franchisor development team.
This is followed by the drafting of a LOI (letter of intent) sometimes called a MOU (memorandum of understanding) which outlines the negotiated key terms and conditions of the proposed agreement. Usually a deposit is paid at this time to hold your chosen territory. Typically 60 days later a franchise agreement is signed and the actual project begins.
In summary, education remains one of the very best industries to get involved in, both in the past, and in the post-covid period of 2021-2023. High return on investment, relative ease of operations, and huge community benefits put it ahead of other potential investments. Please reach out to our team to learn more.
About the author:
Robert has more than 30 years’ experience in the restaurant, retail, and education industries. He has held various roles in the education field here in Asia including managing director, program coordinator, and hospitality program director.
He currently lives and works as the Director of Business Development for VF Franchise Consulting and can be contacted at [email protected] or on a wide variety of social platforms at +84 77 303 9633.