Education Franchises

Education Industry Outlook And Trends

• Demographics

  Demographics

  With so many options in the education industry, franchises can specialize in specific demographics or offer a range of programs that cater to the needs of different groups. Many franchises direct programs toward children, often with services that include traditional tutoring for math and reading, college test preparation or supplemental education in areas such as foreign language or computers. Other child-related franchises offer instruction in areas such as art or music, providing opportunities in fine arts education that many schools are unable to provide due to time and budget constraints.

  With data from the U.S. Census Bureau indicating that children under age 18 represent about 23 percent of the total U.S. population, the potential market for child-related franchises in the education industry is 74 million students. With the number of children under age 18 expected to grow to 75 million by 2025, and to 76 million by 2029, according to the Forum on Child and Family Statistics, education franchises can expect long-term growth. In addition, a report in Entrepreneur magazine identified child-related franchises in the education industry as being almost "recession-proof" because most parents try to give their children as many opportunities as possible, even when family finances are tight. In an analysis of parental spending during the recession of the late 2000s, researchers from the Stanford Center on Poverty concluded, "Parents may view spending on children as one of their most important financial commitments, and cut back in other areas first."

  Franchise opportunities in the education industry also have a broad range of potential adult students. Businesses that offer instruction in foreign languages, technology skills and business training can provide services to adults pursuing professional advancement or career transitions. Education franchises also can provide lessons to adults seeking personal improvement and enrichment in areas including driving, cooking or social dance. Franchises that provide adult education have a significant potential market according to data reported by the Pew Research Center:

  • 73 percent of adults identify themselves as life-long learners.
  • 74 percent of adults can be categorized as "personal learners," defined as those who have participated in at least one educational activity in a topic that interests them within a 12-month period.
  • 63 percent of working adults can be categorized as "professional learners," defined as those who have attended at least one class or training session to improve job skills or advance professionally within a 12-month period.
• Growth Potential

  Growth Potential

  Franchises in the education industry that provide child-related programs can look forward to long-term growth due to a naturally renewable customer base. According to the CDC, there are about 10,829 new U.S. births every day, totaling almost 4 million births annually. This steady target market, as well as a growing emphasis on the correlation between early childhood education and success in kindergarten through 12th grade, contributes to an ongoing demand for child-related education services, according IBISWorld. Industry analysts reported that education and developmental center franchises that provide center-based care for children under the age of 6 years had 5.1 percent annual growth between 2011 and 2016.

  Additional growth potential also is predicted for franchises that serve adults in the education industry. In addition to growing demand for professional and business training programs, opportunities exist for adult instruction in core literacy and occupational skills. In the United States, an estimated 20 million U.S. workers have limited English proficiency, according to World Education, Inc. The number is expected to expand as projections indicate that about 20 percent of U.S. workers will be immigrants in 2030. In addition, approximately 32 million U.S. adults do not have basic numeracy and literacy skills. According to Tyton Partners, these individuals could change their lives and society if they could learn these skills through programs in the adult education industry.

  Expected growth for franchises in the education industry also is expected based on the following data:

  • The number of all types of businesses in the education industry with between 20 and 99 employees increased 12.8 percent between 2009 and 2015, according to Kentley Insights.
  • An increase in in-home Internet penetration and changing consumer preferences for online educational services contributed to the 4.2 percent annual growth rate of the U.S. online tutoring industry between 2011 and 2016, according to IBISWorld.
  • In December 2016, the research firm Technavio predicted that the global K-12 online tutoring market was positioned to reach a compound annual growth rate (CAGR) of 13.68 percent from 2017 through 2021.
  • The U.S. test preparation market is forecast to grow at a CAGR of 6 percent between 2017 and 2021. The majority of growth is expected in the university exams segment, attributed in part to the increasing number of international students pursuing higher education in the United States, according to a June 2017 report by Technavio.
• Common Business Models for Franchises in the Education Industry

  Common Business Models for Franchises in the Education Industry

  Franchises in the education industry serve students of all ages and learning styles. These businesses offer knowledge and training in many types of formats and environments in addition to traditional classroom instruction. In all business models, successful franchises in the education industry work to match the needs of their students with the curriculum and methods that produce desired results.

  Adult Education: Franchises such as Online Trading Academy and New Horizons Computer Learning Centers provide programs that meet the unique educational needs of adults seeking to change careers, start new professions post-retirement or simply pursue personal interests. These franchises successfully address the challenges of adult education while providing instruction that can help students focus their lives in new directions.

  Art Education: Franchises such as KidCreate Studio and the School of Rock provide art and music education for students who want to explore and develop skills in these areas. Depending on the curriculum of local school districts, franchises that offer art education can fill a void for instruction that often has been reduced or even eliminated from traditional classrooms.

  Business Education: Franchises such as Six Disciplines and Dale Carnegie Training provide leadership training to help professionals develop the skills they need to succeed in their businesses. These highly specialized programs often include instructors who are owner/operators, experienced consultants or professional business coaches.

  Educational Child Care: Franchises such as Legacy Academy and Montessori Kids Universe combine education with caregiving for the youngest of students. These franchises incorporate early childhood education into the daily activities and routines of babies and young children to position them for eventual academic success.

  In-Home Tutoring: Franchises such as Club Z In-Home Tutoring Studios and Tutor Doctor provide private and convenient one-on-one tutoring services for academic subjects, college test prep and enrichment. Since tutoring is provided at the student's location, these franchises offer opportunities for franchisees seeking a home-based business model in the education industry.

  Retail: Franchises such as Learning Express and Kazoo Toys market specialty educational toys for all ages. These establishments typically cater to parents who want to provide opportunities for unique and premium products that encourage learning through play, hands-on creativity and non-violent entertainment.

  S.T.E.M. Education: Franchises including E2 Young Engineers and Challenge Island offer engaging and educational S.T.E.M. (Science, Technology, Engineering and Mathematics) programs to clients ranging from preschoolers to senior citizens. Using unique "edutainment" programs, these franchises instill key science and engineering concepts using nontraditional materials and hands-on curriculum.

  Traditional Tutoring Centers: Franchises such as Mathnasium, Kumon Math and Reading Centers and JEI Learning Center typically are stand-alone locations that offer school-age clients supplemental instruction in core curriculum subjects such as reading and math or test preparation. Using private classes or group instruction with low student-to-instructor ratios, these franchises offer results-oriented programs that help struggling students succeed or provide enrichment to those who are advanced.

• Financial Matters of Franchises in the Education Industry

  Financial Matters of Franchises in the Education Industry

  The wide range of franchises in the education industry provides business opportunities across many investment levels. Initial costs vary by franchise, but typically include a franchise entry fee in addition to regular payments to the franchisor for items such as royalties and advertising. The least expensive options include franchises that allow franchisees to operate their businesses from home offices where they provide services online or travel to their clients' homes and businesses. In some business models, teams of instructors who provide on-site or online services are managed by a franchisee who oversees bookings and administrative responsibilities without personally providing instruction.

  Some franchises in the education industry are managed from permanent locations that are leased or purchased. These franchisees incur the same costs as any physical retail space with regard to monthly fees for rentals, utilities and physical maintenance of their building. Depending on the curriculum of a specific franchise, franchisees also may have to purchase equipment such as desks, computers and other instructional materials. However, the physical presence of a commercial space can provide ongoing benefits with regard to marketing and name recognition. It also can allow for servicing more clients, thereby generating more revenue at one time.

  Additional financial considerations related to the operation of a franchise in the education industry can include:

  • Education franchises operated as home-based businesses may qualify for tax deductions if your office is used exclusively for your business, subject to IRS laws at the time of your tax filing.
  • You may be eligible for group purchasing discounts negotiated by your franchisor for the purchase of materials and equipment.
  • As part of a franchise, you may present less risk to traditional lenders since your business plan is proven to be successful.
  • Your franchisor may assist you in financing your loan, securing third party financing or offering assistance in leasing equipment to reduce your initial purchasing costs at startup.
• Benefits of Franchises in the Education Industry

  Benefits of Franchises in the Education Industry

  Owning a franchise versus an independent business in the education industry reduces the risk of new business ownership because you'll be following a solid business plan with demonstrated results. You'll likely have the advantage of a geographic territory in which you are the only provider of your franchise's unique curriculum. You'll also have the backing and geographic reach of a national or regional franchise, which can help you grow and expand your business faster than you may be able to do on your own. Since the educational childcare market has high fragmentation and low market share concentration, analysts at IBISWorld report that franchises with solid reputations that are positioned closest to their target markets are best positioned for growth.

  As a member of a franchise family, you'll be entering into a partnership with your franchisor. Your business will help to grow the franchise by expanding market coverage, extending name recognition and maintaining the integrity of the franchise brand. This will help the education franchise increase its marketability to both new franchisees and potential clients. In return, you'll gain access to the support of the corporate franchise team, which has the experience and expertise to help you overcome challenges and optimize opportunities. These professionals can provide guidance in a wide range of services, including:

  • Identifying and securing an appropriate physical location
  • Fulfilling zoning, insurance and legal requirements
  • Finding, hiring and maintaining employees
  • Establishing the best strategy to attract your target market
  • Implementing systems to maintain franchise standards and procedures
  • Navigating franchise-specific challenges
  • Providing networking opportunities with other owners in your franchise system

  In addition, your clients also will benefit from working with a franchise in the education industry. As a franchisee, you will be able to offer potential students proof of your program's success with examples from other franchises in your network. With evidence of results, your clients will have the security of purchasing a reputable service with the backing of an established franchise organization. Even if your franchise name isn't recognized in your region, a franchise service can convey credibility versus a new independent contractor who must establish a reputation from the ground up.

• Important Considerations for Franchises in the Education Industry

  Important Considerations for Franchises in the Education Industry

  As a franchisee in the education industry, you can expect to encounter some challenges common to all businesses that operate in this market. As a service provider, your employees will be your most important assets. Hiring and retaining appropriate employees will be key to ensuring that your students have the best possible experience as a client in your franchise. In addition, franchisees that provide specialized curriculum will be further challenged to identify employees with the skills necessary to learn the franchise program and teach it to students.

  Some other common considerations for franchise owners in the education industry can include:

  • Ensuring that you and your employees establish a learning environment that encourages and engages students while yielding measurable results
  • Securing appropriate liability insurance and employee bonding to ensure the safety and security of your employees working in students' homes and businesses
  • Maintaining ongoing marketing programs to attract new students to replace those who age out or graduate from your programs
  • Avoiding guilt by association and protecting your reputation from problems at other locations in the franchise

  While your franchisor's reputation will provide valuable name recognition and credibility to start your business, your education franchise will earn its own reputation and following based on your clients' experiences. Encouraging satisfied clients to share their experiences, especially via social media, can help maintain a steady flow of new clients, according to the results of a Nielsen survey. In responses, 92 percent of adults surveyed said they had confidence in following referrals from people they know. In addition, researchers reported that consumers are four times more likely to follow through on purchasing products and services from vendors recommended by an acquaintance.

• Characteristics for Success: Who Should Consider a Franchise in the Education Industry?

  Characteristics for Success: Who Should Consider a Franchise in the Education Industry?

  Whether you're interested in working with young children or professional adults, you're likely to find a franchise in the education industry that matches your investment level and interests. While you may not need teaching experience in the curriculum offered by your franchise, you should be prepared for certain demands and challenges to help position you and your franchise for success. Having these specific strengths, or ensuring that your employees are able to provide the skills that you lack, can help you reach your personal and financial goals with a franchise in the education industry:

  • You're an expert in the subject matter in which you provide instruction. Having first-hand experience studying and applying the curriculum that you're teaching will enable you to better understand the learning process from your students' perspectives.
  • You have an education or experience in marketing or business management. Even if you are passionate about teaching your franchise curriculum, you'll have to maintain a profitable operation to remain in business.
  • You have patience and empathy. Whether you're trying to explain long division to school-age children or the benefits of day trading to a retiree, you'll have to work within the abilities and pace of your clients to help them achieve their educational goals.
  • You can hire and keep effective instructors. Your business will grow by word-of-mouth if your employees can encourage and engage students to produce measurable results.
  • You're comfortable working with children. If you have a franchise whose students are children, you'll have to be prepared to deal with the unique concerns and challenges of working with young clients, as well as their parents, to succeed in these businesses.
  • You're competent with technology. In areas ranging from online tutoring to skills assessments, it's likely that you'll be using technology in new ways to assess and enhance the educational experience you provide.
  • You have strong organizational and administrative skills, or are willing to hire someone who does. Tracking registrations, aligning schedules and overseeing a physical facility can take up more than a full day in a bustling education franchise. If you're a key instructor, you may benefit from handing over these tasks to appropriate employees so you can spend your time working with clients.