Children's Franchise Opportunities

Child Related Industry Outlook And Trends

• Demographics

  Demographics

  The good news for child-related franchises is that analysts predict a steady flow of potential customers. Data from Gallup researchers indicate that U.S. attitudes about having children remain consistent. A 2013 Gallup survey on child planning found results comparable to a similar survey in 1990, which showed that 90 percent of American adults said they have children or were planning to have children. The majority of respondents said that the ideal number of children per family was 2.6, which was the same number Gallup has reported since the late 1970s. According to Gallup, the concept of "life without children" doesn't describe the circumstances or desires of the majority of Americans.

  Children under age 18 represent about 23 percent of the total U.S. population, according to the U.S. Census Bureau. That translates to about 74 million children. Long-term forecasts show that the number of children under age 18 is on a steady increase. The total number of U.S. children under age 18 is expected to grow to 75 million by 2025, and to 76 million by 2029, according to estimates by the Forum on Child and Family Statistics.

  Research shows that all those children are keeping busy with activities that can be provided with child-related franchises. The popularity of many children's extracurricular activities is evident in the results of a 2015 report on social and demographic trends by the Pew Research Center. When parents of children ages 6 to 17 were questioned, 73 percent said their children had participated in sports in the 12 months prior to the survey. Of those surveyed, 54 percent also said their school-age children had taken lessons in music, art or dance in the 12 months prior. In addition, 36 percent said their children received tutoring or regular academic preparation during that period, according to the report.

• Growth Potential

  Growth Potential

  Many child-related franchises provide services that Entrepreneur magazine refers to as "recession proof." Despite economic downturns, child-related businesses often continue to maintain a constant stream of revenue. Parents typically continue to finance enrichment or supplemental educational opportunities despite tighter budgets, according to Entrepreneur. Franchises that provide experiences in sports, music or art also can count on the likelihood of consistent customers. In an analysis of parental spending during the recession of the late 2000s, researchers from the Stanford Center on Poverty and Inequality noted, "Parents may view spending on children as one of their most important financial commitments, and cut back in other areas first."

  In January 2017, the United States Department of Agriculture reported that the estimated cost to raise a child born in 2015 through age 17 was $233,610. That estimate was projected for a middle income, married-couple family with two children. The largest percentage of total expenditures was attributed to housing, for which parents spent 29 percent of total child-rearing costs. Services often provided by child-related franchises accounted for notable percentages. Childcare and education represented 16 percent of child-rearing dollars. Miscellaneous costs, which included items such as personal care, sports and entertainment, accounted for 7 percent of total child-rearing costs. That amount was higher than clothing costs, which represented 6 percent of total expenses.

• Common Business Models for Child-Related Franchises

  Common Business Models for Child-Related Franchises

  Tutoring and Educational Services

  Tutoring and educational services include training for traditional classroom subjects, as well as preparation for standardized placement tests, such as the SAT and ACT. As school districts deal with tighter budgets, private tutoring services offer a way for parents to help their children achieve academic goals when in-school support is not available or adequate. Others are eager to give their children "an edge" when looking ahead to college acceptance. In October 2016, Global Industry Analysts, Inc., forecast that the entire global market for private tutoring services was likely to reach $227 billion by 2022.

  A September 2015 report by IBISWorld reported that child education and developmental center franchises in the United States earned annual revenue of $3 billion. This segment, which specializes in center-based care for children under the age of 6 years, experienced 5.1 percent annual growth in the five years between 2011 and 2016. Child education and developmental center franchises benefitted from an increasing emphasis on early childhood education as a basis for success in kindergarten through 12th grade, according to the report.

  Businesses offering online tutoring are one segment that has gained popularity as parents and students become more comfortable with the convenience of online learning. An April 2015 report by IBISWorld tallied annual revenue for the U.S. online tutoring services market at $411 million. For this segment, analysts identified a 4.2 percent annual growth rate for the five years between 2011 and 2016. In December 2016, the research firm Technavio estimated a compound annual growth rate (CAGR) of 13.68 percent for the global K-12 online tutoring market through 2021.

  Some of the most common types of franchises offering tutoring and educational services include:

  • Early Educational Child Care: Franchises including Lightbridge Academy offer childcare with an emphasis on education for children from birth through pre-K.
  • In-Home Tutoring: Franchises such as Tutor Doctor offer flexible one-on-one sessions in the convenience of a student's home, providing an attractive option for busy working parents and their active children.
  • Tutoring Centers: Franchises such as The Tutoring Center occupy storefront space, creating a unique learning environment to enhance the educational experience.
  • Online Tutoring: Franchises such as Club Z! offer one-on-one virtual tutoring, allowing the business to reach students in any location where they have an Internet connection. A novel component of some services allows students to access an on-demand tutor for homework help as needed.

  Enrichment Programs

  There's a growing market for child-related franchises that offer education and experiences not available in mainstream schools. These franchises often appeal to parents who want to help their children build upon interests in S.T.E.M. (Science, Technology, Engineering and Math) subjects, music or the arts. Rather than offering a tutorial approach, these franchises typically provide unique or novel ways for children to learn and expand skills in specialized areas.

  Some of the most common enrichment programs emphasize:

  • Art: Franchises such as Kidcreate Studio help children find their inner artist by offering a range of classes at on-site studios, in-school classrooms or as part of special events such as birthday parties.
  • Music: Franchises including School of Rock take music instruction and repackage it with fun and exciting instruction for children to pursue their talents.
  • Engineering: Franchises such as e² Young Engineers allow children to investigate S.T.E.M. concepts with fun and interesting programs not available in traditional classroom instruction.
  • Computers: Franchises such as Code Ninjas use computer-coding instruction to help children refine important math and problem solving skills.

  Sports and Fitness

  Child-related sports and fitness franchises have enjoyed continued growth as medical and behavioral studies support the fact that childhood obesity lays the groundwork for weight problems and long-term physical ailments into adulthood. In 2015, the CDC reported that at least one-third of U.S. children carry more than the recommended weight for their age and height. This growing incidence of childhood obesity has helped to create more support for the need to encourage children to exercise, whether in organized sports or individual athletic pursuits.

  According to a report by the research firm IBISWorld, the children's fitness franchise industry earns annual revenue of $550 million in the United States. The industry had 2 percent annual growth between 2011 and 2016. Future growth is expected as more varieties of instruction and classes are introduced to this industry.

  Child-related sports and fitness franchises come in many varieties. Some of the most common franchises are:

  • Indoor Gymnastics Centers: Franchises including My Gym Children's Fitness Centers include weekly movement and socialization classes for younger children from age 6 weeks.
  • Specialized Sports Centers: Franchises like British Swim Schools concentrate on the instruction of one specific sport or physical activity.
  • Martial Arts Instruction: Franchises including Pro Martial Arts teach children a variety of martial arts for self-defense, confidence and personal fulfillment.
  • Indoor Trampoline/Inflatable Bounce Park: Franchises such as Skyzone tap into the fun of jumping and bouncing by offering classes, parties and open gyms in fixed physical locations.

  Other Markets

  Almost any product or service can be repackaged as a child-related franchise. These options succeed by taking a proven marketable strategy and redesigning it to make it child-friendly. Other franchises succeed with offerings that cater to a need or demand that's only apparent in the child-related market. Some examples of the broad range of child-related franchise opportunities include:

• Financial Matters

  Financial Matters

  Since child-related franchises span a broad range of business segments, start-up costs can vary widely. Businesses in this segment can be started for as low as $20,000 for some home-based franchises, while those that require a physical space and specialized equipment can involve investments of several hundred thousand dollars. Franchises that require the purchase of proprietary equipment, programming materials or inventory are likely to have the highest start-up costs.

  The lowest start-up costs are associated with those franchises that offer services performed at a client's site and managed from a home office. Costs also are lower when franchisees are permitted to rent space from places such as schools, churches and community centers on an as-needed basis. This arrangement can significantly lower location costs and free franchisees from having to maintain a location when it's not in use.

  As the owner of a child-related franchise, you'll also be subject to the costs specific to the industry in which your franchise operates. If you're the owner of a children's hair salon, you'll have to meet zoning codes, modify physical space and acquire appropriate licenses and inspections. Toy store franchisees will have to add the price of inventory and fixtures before opening their doors. Depending on your franchise agreement, you may be required to purchase your equipment and products from a list of approved vendors so the franchisor can maintain control over the components you're using to deliver services. Ongoing fees typically include franchisor royalties, advertising costs, rent or mortgage payments, utilities, payroll, and site and equipment maintenance.

• Benefits

  Benefits

  As the owner of a child-related franchise, you'll benefit from the fact that your business will have a target market with a constant stream of new prospects. In the United States, about 10,829 babies are born every day, according to the Centers for Disease Control and Prevention (CDC). That's almost 4 million births per year.

  While you'll be responsible for the eventual success of your child-related business, you'll incur a lower risk by owning a franchise. Your investment will be based on a business plan that has a proven track record with successful programs, curriculum and products. From the start, you can attract potential customers based on the name recognition and reputation of your franchise. With specified franchise territories, you won't have to compete with other franchisees for customers. In many cases, you may benefit from group discounts negotiated by your franchisor for the purchase of franchise-specific equipment or materials.

  Since your franchisor has an interest in your success, you can expect a wide range of guidance and support from your franchisor as you execute your business plan. The corporate franchise team will be a resource for providing the training and support you need to reach your goals. In the planning phase, a franchisor can advise and assist with decisions such as selecting the right location, securing financing, hiring employees and purchasing equipment. You'll also have the benefit of your franchisor's experience in purchasing insurance, generating leads and handling franchise-specific challenges.

  As the owner of a child-related franchise, you'll also gain the satisfaction of making a difference as you impact young lives. Helping children master educational challenges, achieve athletic goals, explore new interests or have fun in new environments can have life-changing effects on your young clients. Even if your influence isn't obvious, the confidence or enthusiasm you spark can be the basis for future achievements and success throughout your clients' lives.

• Important Considerations

  Important Considerations

  One of the most important considerations you'll have as the owner of a child-related franchise is client safety. Whether you and your employees interact with or without parents present, businesses that serve children have an obligation to ensure that children are safe while in their care. The issue of safety can involve strict entry and exit procedures, physical modifications to business locations or higher insurance premiums. It also can entail obtaining employee background checks and criminal and child abuse clearances to ensure that your young clients will be safe in the care of your staff.

  Given the target market of child-related franchises, location can make or break your franchise if you're operating in a set physical space. You may have limited options since you'll want to be where households with children are most prevalent. Starting a child-related franchise in an area that appeals to young singles or retirees will put you at a disadvantage from the start. Demographic research and guidance from your franchisor should help you identify areas where you're most likely to find households with children. Being physically close to your target market may be more costly, but it could make a difference to parents who have to transport children back and forth to your location.

  You also may be challenged by the need to maintain a consistent customer base. Unlike other industries where you can count on long-term customers, it's likely that your clients will change over as children age out of your business. Of course, quality service can earn return visits from parents with more than one child and recommendations from satisfied customers. However, you'll likely have to maintain a consistent marketing program to reach the families that are growing into your services since you'll need their commitments to replace those that are leaving.

• Characteristics for Success: Who Should Consider a Child-Related Franchise?

  Characteristics for Success: Who Should Consider a Child-Related Franchise?

  With so many options in the child-related industry, you're likely to find a business to match your interests and goals. While you may not need experience in providing the specific services your franchise offers, you'll make the most of your efforts if you're prepared for the demands and challenges you're likely to encounter. Having these strengths and skills may help you enjoy what you do and find success in one of the many business models available in this industry:

  • You're young at heart. If you're in charge of maintaining a kid-friendly environment, you'll keep clients happy if you can envision an experience from a child's perspective and accommodate those preferences.
  • You can enforce an environment where safety always comes first. You'll have to ensure that your staff maintains an "accident-free zone" since small mishaps can escalate quickly into major accidents among young clients.
  • You have knowledge of your industry. You'll be better able to judge if you've got what it takes to please customers if you're familiar with the products or services you're offering.
  • You can be flexible. You'll do best if you and your staff are prepared to switch gears when your approach doesn't align with the interests or abilities of the children you're serving.
  • You can identify and retain child-friendly employees. If your employees are providing services directly to children, you'll have to be astute in finding the right people since children have a keen sense for identifying child-friendly imposters.
  • You're not intimidated by demanding parents. You'll need to channel a diplomatic persona to deal with parents who may think their children aren't getting their money's worth and that you're to blame.