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Start Own Brand School or Franchise School?

Posted on December 30, 2017 | by Vinod Kakumanu

School promoters can opt for two courses of actions to start a new school in India. First, establishing their own school and building own school brand and second, opting for a franchise from an established school brand.

Before choosing from the abovementioned options, one must ask oneself a question. Why one wants to start a school? Is it because it is an investment that is least affected by market downturns, Or is it because it is the sort of enterprise which has a component of social impact inherent in it? The answer in most cases is both. So, one has to now choose the option that ensures that the school does not become a financial liability and also achieves its goal of building futures.

Both these choices have their respective implications. The first i.e. building school independently offers the school promoters reserved rights on returns on investment, own school brand, freedom of choosing the board of affiliation, innovative choices in school operations, recruitment standards, location and expansion, immense social recognition and satisfaction of bringing a brainchild to life.  If that is your choice, opting for expert assistance from experienced school consultants in the course of school establishment and management can make things much simpler for the school promoter and help establish a sustainable school.

On the other hand, School franchise is available for all types of school setups i.e. from playschool to K-12 schools and for every curriculum. If school promoters opt to become a franchise they get to use the school brand and receive some assistance on academics and marketing collateral for a one-time franchise fee ranging from few thousands to few crores and a 5% to30% of revenue as yearly royalty. Some franchisors also provide assistance to set up a new school for an additional fee.

 

What are the implications of opting for a school franchise?

The school promoters must do a thorough research of the market before deciding upon the franchisor.  Legal and financial aspects have to be studied well and it is advisable to have a legal advisor on board.

It involves choosing from several school brand franchisors. The franchisors typically look for school promoters who cannot only invest but also set up the school, get enrollments, run the school, collect revenue, afford financial losses, sustain school project and pay the yearly royalty.

In our conversations with school promoters operating franchisee schools, it came to us as a revelation that although franchisor brand name helped them get initial mileage in terms of enrolments, long-term results were not commensurate with the costs and sometimes even regrettable. It must be said that it is an arrangement which offers you certain brand recognition but only an illusion of mutual benefit. Clearly, the school franchise option sounds deceptively simple, but the associated costs must act as a deterrent.

It is notable that most of the successful school’s franchisors were initially single startup schools who held on to their own school brand. I strongly believe that a school project requires a significant commitment, time, investment, entrepreneurial perseverance and dedication of school promoters – these factors cannot be discounted, and I beg to differ from those who believe that franchise offers a shortcut.

Getting into a franchise means becoming a member of the community of schools whose repute will affect the name of your school.  It is, therefore, crucial to choose a franchisor who does not compromise with the ideal standards, which has unfortunately become frequent in case of preschools inviting criticism from child rights agencies.

To sum up, I offer my perspective. An independent school will bear the name of the founder, the franchisee school will not have that obviously. The schools bear the exclusive name of the franchisor school, not to mention the cost of the franchise. Moreover, the consultation that is provided comes at a substantial fee and almost never involves on-site work assistance. The academic programme is subscribed to the franchisee school by the franchisor and changes are hard to negotiate. At any rate, sustainability of the school project will have to be ensured by the school promoters themselves.

Now, it needs to be decided whether you, as a school promoter, are ready to invest in the school project, establish/run a school in the franchisor’s name, market the franchisor’s brand name and share revenue besides setup fee and one-time franchise cost. or else, you decide to go with the realistic choice of establishing an institution in your own brand name, get social recognition, bear similar level risk that a franchise school does by getting every possible assistance from school consultants who can help you to plan, establish, start a school successful and provide ongoing assistance to sustain your vision – all at considerably lesser cost then what is borne by the schools adopting franchise model.  The onus of making this decision lies with the school promoters who envisioned the school.

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Vinod Kakumanu

Founder & Consultant - School Serv

Vinod Kakumanu heads a team of school services professionals and is an independent commentator on Indian school education scenario. Vinod has assisted school promoters establish 35+ schools besides providing ancillary services to over 1000 schools across India. He envisions a future where quality education is made available to every child of the country. The focus he places on the quality of the deliverables and customer satisfaction has made him renowned in the field of K-12 school education.

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