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| Children/Educational.. |
The ABCs of educational franchises
When Alka Garg decided to start a business that would provide the flexibility, income and work-life balance she craved, the stay-at-home mom embarked on an intense search for the perfect opportunity.
Garg, a former tax accountant, spent several months researching before she inked a deal to open a Kumon Math and Reading franchise.
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Tutoring businesses, like Sylvan Learning Centers, are expanding as the path to college gets increasingly competitive. |
Since June 2004, her Charlotte, North Carolina, tutoring business has grown to 340 students. Garg relies on word-of-mouth advertising and the Kumon name for new customers.
"The parents I meet say education is a high priority for their family. They want to give their children the best opportunity to succeed in life," says Garg.
Consumer-based tutoring businesses and test-prep services fetch $3 billion to $5 billion each year in the U.S., according to Boston-based education information company Eduventures.
Growth in tutoring, which used to be something brainiac high-school students and retired teachers did to earn extra cash, has ranged between 4 percent and 9 percent a year.
But as colleges get more competitive and countries like India and China churn out a highly skilled, low-cost workforce, educational franchises play a significant role in how American children learn new subjects and achieve academic milestones.
More than 3 million high-school seniors applied for admission into elite colleges last year, up 28 percent over the past 10 years.
Shifting priorities in the U.S. education system spurred by the radical No Child Left Behind Act of 2002 have also fueled the demand for programs like Kumon Math and Reading Centers, Mathnasium and Sylvan Learning Centers in recent years.
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Peter Cohen is president of Sylvan Learning Centers, which just added in-home and online tutoring. |
"I think the No Child Left Behind initiative actually gave parents better access to information about how well their schools are performing," says Deven Klein, vice president of franchising at Kumon.
"Parents have the ability to make sure their children are getting the academic skills they need to succeed," says Klein.
At Kumon, students attend two 30-minute sessions weekly to review completed assignments and identify potential weak spots. Tuition ranges from $80 to $120 per month for one subject.
Students at Mathnasium attend twice a week for 35 to 55 minutes and receive a customized math curriculum developed by the franchisor. Fees are steep though -- $200 per month.
According to FRANdata, an Arlington, Virginia-based franchise information and research firm, the number of educational units jumped from 3,219 in 2000 to 5,223 in 2006.
Children's educational programs, general courses and related services accounted for 85 percent of the sector while computer training, dance and fitness classes and modeling schools made up 9 percent, 4 percent and 2 percent, respectively.
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Mathnasium Learning Centers Founded: 2002 U.S. students continue to lag behind their counterparts from other industrialized countries in math. Entrepreneur Peter Markovitz hopes to change that. Mathnasium Learning Centers is based on the concept that children don't hate math Ð they are just confused and overwhelmed about the way it's taught to them.
Fees can average between $160 and $225 per person and students can drop in for additional lessons. A typical center, averaging 1,000 square feet, can have as many as 15 students and four teachers in one session. "Math is the foundation for all other learning," says Mitch Brown, chief operating officer. "But it can be difficult to grasp the material, especially in a room with 30 other kids. Our centers provide the individualized attention they need." During the first session, all students receive an assessment that clearly identifies strong and weak areas. From there, they receive customized math assignments each week, says Brown. Since launching in 2002, the franchisor has opened 170 units in North, South and Central America, the Caribbean, Europe and Asia. Prior to launching Mathnasium, Markovitz started and managed Futurekids, an education company that has taught millions of children in 76 countries around the world. The Los Angeles-based math franchisor attracts a myriad of investors from diverse backgrounds, including an attorney who is also a certified public accountant, a scientist with a Ph.D. in molecular biology, a Fortune 100 company exec, a technology expert and college lecturer. Company officials would like to see more school teachers, homemakers and experienced professionals pursue a Mathnasium franchise. |
Students at Mathnasium Learning Center attend a 35- to 55-minute session twice a week and receive a customized math curriculum developed by the franchisor. Investors like Garg are attracted to the education industry because of the flexible schedule, return on investment and low cost of entry, which can start for as little as $10,000.
Although it's difficult to imagine how fingerpainting lessons will get 3-year-old junior into Harvard in 15 years, enrollment in franchises dedicated to crafts, cooking, dance and foreign language have exploded in recent years.
Abrakadoodle, a popular national arts education program, offers classes, camps and parties for children 20 months to 12 years old. Since it started franchising in 2004, the company has added 75 units.
The Kiddie Academy, which combines an academic program mixed with all-day care for children from infant to 5 years old, has 92 franchise sites and 62 under development.
"We have heard grade-school teachers say they see the difference between children who have been exposed to early education and those that haven't," says Fred Harms, vice president of franchise development. "People have higher academic expectations on our children today than ever before. You have to get an early start to be competitive."
Make no mistake: Educational franchise concepts are not just some glorified daycare center with lesson plans. They are real businesses that offer valuable curriculum to consumers and high-profit potential for investors, according to Libava.
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Kumon Math and Reading Centers Founded: 1958 When his son began struggling in math class, Toru Kumon did what any other parent would do. He developed materials to help the second grader comprehend the subject matter successfully. After neighbors pleaded with him to tutor their children, Kumon launched the first Kumon Center in 1956. Within two years, the Japanese entrepreneur established the Kumon Institute of Education.
Today, the Kumon Math and Reading franchise has grown to 4 million students in 26,138 centers around the world. There are 250,000 students enrolled in more than 1,800 units in the U.S. The concept is simple: students work through 20 clearly defined skill levels and hundreds of short assignments spanning materials covered from preschool to college level. With each assignment, a child advances in small, manageable increments. At Kumon, which emphasizes daily practice and mastering skills through the use of its curriculum, students attend two 30 minute sessions weekly to review completed assignments and identify potential weak spots. Kumon centers generally occupy 1,200 square-foot sites in retail strip areas and have anywhere between 300 and 500 students enrolled with tuition fees ranging from $80 to $120 monthly per subject. Some franchisees are corporate refugees and retired teachers. The company is also attracting boomers eager to be their own boss. |
"These types of franchises are definitely popular right now, especially among dual-income families that don't have a lot of time on their hands," says franchise consultant Joel Libava. "Kids in third through eighth grades who need math and reading services are the sweet spot for this industry."
But Libava worries the education market has become too saturated, especially with specialty businesses and cautions against an industry-wide consolidation, which could chase potential franchisees away from the market.
"The niche sector has to rely heavily on a strong networking system," says Libava. "They are attracting people who have a passion for what they offer. Parents are nickel and dimed for everything these days. There has to be a need for these services."
Proving that no one is immune to changing trends and stiff competition, education giant Sylvan Learning Centers recently revamped its business plan to include online and in-home tutoring services.
The company, which has annual revenue of more than $500 million, is also contracting with schools that need help to boost test scores under the federal No Child Left Behind Act.
"As long as the public school system continues to fail to meet the needs of our children, there will be tutoring companies," says Susan Fairbairn, who owns five franchise units in Texas.
