Play School Franchise Opportunity
ROAD MAP TO FRANCHISE NETWORK
The Keys to Successful Franchising:
The primary keys to becoming a successful franchise are to have an effective system in place, and to avoid the most common mistakes.
Knowing how to sell our franchise is another important key, just as knowing the other available options in franchising and business growth.
It's not just about timing, it's about knowledge.
"Determine Franchisability, convince the franchisee and build a franchise network"
Whether or not to franchise isn't an easy decision. We need to convince the franchisee that all the business issues and weighing the pros and cons are from an informed perspective.
Franchising as a rapid expansion tactic is one of several options to be considered for it's tremendous potential to grow the business tremendously.
How does franchising work? The key is in the creation of systems which can be duplicated through training and support.
Other characteristics attractive to potential franchisees include businesses:
- With a good track record of profitability.
- Built around a unique or unusual concept.
- With broad geographic appeal.
- Which are relatively easy to operate.
- Which are relatively inexpensive to operate.
- Which are easily duplicated.
REALISATION AND DELIVERABLES OF THE ROAD MAPS
Play school franchising has become one of the most sought after forms of educational franchises. Every prospective school franchisee should have a proper business plan for school franchising that should elaborate upon some fundamental issues. A prospective school franchisee can seek the help of a franchise consultant when creating a business plan for school franchising.
Business plan for school and Franchise Agreement
A franchise agreement is a legally binding document that describes the relationship between franchisor and franchisee. For any prospective school franchisee, it is imperative to have a proper business plan. A business plan for school franchisee needs a well-defined franchise agreement that explains the franchisor's expectations from the franchisee with regards to the acceptance of a certain business format and future growth prospects.
The franchise agreement is designed in such a way that it lists all the privileges a prospective franchisee would enjoy. When the franchisee makes a business plan for school franchise, he can check out the franchise agreement to measure the extent of help that would be provided in terms of infrastructure, advertising, marketing and management for the proposed playschool/school and effectively calculate his level of involvement and probable costs that would be incurred.
Business plan for school and FDD
Disclosure Document. FDD is different, as it is a legal document that has to be provided by a franchisor to the prospective franchisee before any document of sale is signed or finalized. The business plan for school franchises would depend upon the FDD for providing the relevant information that helps the franchisee in making an informed decision about the school/playschool brand's market worth. The FDD is provided before signing the final documents.
FDD and Franchise Agreement
A business plan for school franchising would include a FDD that would also provide comprehensive information about the franchisor's financial background. The franchisor has to disclose lawsuits or bankruptcies in this FDD. Whereas, a franchise agreement is important to the business plan for school franchising because it outlines the franchisor's expectations and responsibilities. It consists of-
- Explanation of Contract
- Operations Manual
- Proprietary-related statements - they directly affect a franchisee's method of operation. A prospective school franchisee would need to know the marketing/advertising procedures advocated by the franchisor when creating a business plan for school franchising.
- ngoing support from franchisor
DEVELOP THE BEST PLAY SCHOOL FRANCHISE NETWORK IN INDIA
Many playschool chains in India try and put forth the image that theirs is the best playschool network in India, but the reality is quite contrasting. Most of these playschools aren't professionally-managed or administered in a manner that can promise the quality of playschooling to be maintained across their branches/franchises. In order to become the best playschool network in India, it is important that the playschool's franchise relationship and expansion set-up is exemplary.
Business & Franchise Model
There are three basic types of business that qualify for expansion through the Franchise model. These three are the distributorship, brand name licensing and business format franchise. Out of these three, playschool networks have been established on the business format type of franchises.
Business-format franchise - this is the most common of all franchise formats where the Franchisee acquires the right to own a business system that has been set up by the franchisor. The franchisee pays because the franchisor already has an established brand name and an enviable track record. The payment is done in the name of a pre-determined royalty fee which is mentioned in the franchise agreement. This format is special because the franchisor-franchisee relationship doesn't end with the financial aspect of the dealing. Rather, the franchisor is supposed to provide continued training, sales support, cost-cutting through bulk purchasing and marketing, advertisement support.
A reputed playschool network is more likely to have a master franchise or the presence of a regional director who are supposed to exude the attitude of the actual franchisor. In order to establish a good network in the country, a franchisor needs to maintain smooth-running relations with the franchisees. This isn't an obligation that is being considered by the franchisor, because a better-performing franchisee essentially translates into better-earning franchisor, i.e. the franchisor earns through the royalties collected.
Franchisee Initiative - some people may mistake that all the professional obligations rest with the franchisor. In fact, the initiative taken by the franchisee plays a pivotal role in making a chain of playschools the best playschool network in India. This could be done through a number of means,
- Extending the public relations of the franchisor through business/formal or social networking.
- Giving ideas for improvement of curriculum of that brand of playschool.
- Helping the franchisor gain a realistic picture of what the client is expecting.
BUT, THE BUSINESS NOT A CHILD'S PLAY
There is enough demand for playschools. However, the model is fraught with risks including the inability to attract playschoolers beyond area of 2km, high lease rentals, intense competition from the unorganized segment (at considerably lower cost to customer) and increasing competition among organized players.
a. Limit to lever infrastructure for playschool children
Any playschool, however strong the brand, ideally has a customer pull within a 2km Radius.
Also, the segment caters only to customers who can afford annual fees of Rs20,000-45,000, which further limits the scope of the market.
a. Limit to lever infrastructure for playschool children
Playschools are currently being run primarily on the franchisee model, which has so far evolved largely on the back of two factors - low cost of setting up a franchisee, and housewife occupation that typically does not consider the opportunity cost of lease rentals (schools are being set up on existing premises which otherwise also do not generate returns).
Considering the economics of the playschool business, lease rent forms the largest expense for running a playschool and can eat into profitability of the business.
| City | Increase (%) | Average rent (Rs/ sq. ft/ month) |
| Bangalore | 5-20 | 27-70 |
| Mumbai | 45-60 | 290-400 |
| Delhi | 35-70 | 159-317 |
| Chennai | 15-30 | 33-65 |
| Hyderabad | 10-45 | 35-50 |
| Gurgaon | 70-75 | 110-120 |
| Noida | 18-20 | 45-50 |
| Pune | 15-40 | 30-70 |
c. The unorganized neighbour
With more than 80% of the target market still with the 'trustworthy' neighbour, it may take some time before organized players are able to establish the importance of a quality playschool education.
d. A non-regulated market - low entry barriers
The playschool market is non-regulated and hence entails no regulatory barriers for new entrants. Given the relatively low investment required, competition is intensifying in this segment.
e.Economics of a playschool
Except for a few playschool chains all other players have opted for the franchisee model to scale up. Under this model, a franchisee has to pay a brand/ franchisee fee as also some part of the revenues to the franchisor in lieu of using the latter's brand name and for the handholding required to run a playschool.
Franchisee model the most favoured. .with one-time capex requirement of ~Rs500,000 At annual fee of Rs25,000 and lease rental of Rs70 per sq ft, breakeven at 70% occupancy
IQ: HIGH
A non-regulated space, playschool chains have largely grown using the franchisee route. Low upfront investment requirements by a franchisee (ideal for housewife occupation) and an underpenetrated market have led to the emergence of a highgrowth market.
Globally, Kinder Care (USA), ABS Learning Centres (Australia, New Zealand and UK) and Bright Horizons (USA, Europe and Canada) are a few scaled-up success stories among playschool chains. But these models cannot be superimposed on the Indian market as the cost structure and business models are quite different. Globally, playschools are primarily day-care centres while in India they are perceived as early training grounds for children to develop skills and secure admission into a good school.
"Franchising avoids the problems of slow growth, the problems of outside capital, and the problems of finding the right employees. In short, franchising solves the problems of Money, Time, and People. And it does so in creative ways "
Money
Franchising transfers almost the entire cost of expansion to franchisees. Franchisees build the building or pay the rent, buy the inventory, pay the employees and provide the working capital until sales make the business profitable. And the growth of a franchise is limited only by the number of people willing to buy the franchise and the number of locations that can be sold. What is the cost to the franchisor? Often it is no more than it would cost to establish a single new company-owned unit.
Time
Anxious to move quickly before the competition catches on? Got a hot, new concept? Want to exploit a new marketing opportunity? Franchising is the one growth system that allows businesses to expand exponentially. A franchise can grow fast simply by selling individual units. Some franchises can grow even faster by selling multiple units or territories to sub franchises. Either way, it is usually faster to open franchises than company-owned units.
People
"A good manager is hard to find." Not exactly an original idea. Studies show that franchisees make excellent managers. Why? Because they have a vested interest in the business. They own it. Through franchising, a company gets both dedicated managers and relief from the problems associated with hiring and firing personnel.
