Franchising in Education : Buyer’s Beware

Franchising in Education

If you are planning to take up Franchise Offerings of Education Industry, be warned about the further repercussions.
Franchising word has become synonymous to ‘smart cheating’, by carefully utilizing the business & legal tools available, in present, so-called India Inc.
Most Franchisor / Franchiser, having instituted themselves as Corporate / Company / Trust / Professional Entity, in the garb of Franchising, simply starts the vicious cycle of cheating.
Franchising in present scenario, in Indian Education Industry is not contributing to the most essential element i.e “Quality of Education”.
Everybody knows that India is lacking Entrepreneurial skills and attitude, and Franchising in Education Industry, instead of promoting ‘Entrepreneur’ is basically killing both – Entrepreneur and Education.
Some of the Major Question which shall immediately come into the mind of those who are interested in taking up Franchise Offerings are :
1. Is this a unique Business Offering?
2. Do a breakup of Business Offerings you are receiving like – Whether you are receiving Interior Decoration Ideas, Toys and Equipment, Books, Printed Materials, Curriculum, Training, and anything else…
Now, measure such received things against the payment (Initial Payments, Royalty and other payments) you are making to them.
3. If Franchisor / Franchiser, tells you that they are going to ‘SUPPORT’ you throughout the Year, ask them specifically as to what are those ‘SUPPORT’ which they intend to provide you and ‘HOW’.
4. Ask yourself – Such Business Offering will do well under a ‘Enthusiastic Entrepreneur’ or a ‘Humble Franchisee’?
5. Answer to yourself as to What Kind of Support Franchisor / Franchiser will extend to me, which in actuality, will help me to conduct the such VERY SPECIAL BUSINESS (The Franchiser must be telling you that their business is very special that’s why they are Franchising), which Franchisor / Franchiser is franchising to me.
6. Check also – Have I met the Team Members / Managers / Coordinators, and Have I found them competent enough to support me in such ventures? (beware most the time Franchisor / Franchiser will tell you that – we are a big team, we are so many people, we all will pull you together, but, always try to visualise : What basically happens in practical situation)

Some Illustrations :

Preschool Franchise –

Unique Business Model –

When the Franchisor / Franchiser says UNIQUE Business Model, scratch beneath the surface…
In any Education business the uniqueness naturally has to be related to Education, so it could be either UNIQUE Teaching Methodology, UNIQUE Curriculum, UNIQUE System to Train Teachers. Ask your Franchisor / Franchiser that What UNIQUE Features they are providing and do not Forget to ask HOW.

No need to Market the brand –

If you are taking up an EDUCATION Franchise Offering on the premise that there would be no need to market the brand (the franchise brand you are bringing in your geographical location), then please remind yourself whether you are bringing an EDUCATION Franchise or RETAIL Franchise.

Well known Brand –

Any Preschool / School seeks students from vicinity i.e. immediate neighbourhood   And, in neighbourhood even the normal Kirana Shop, Milk Parlor is always well known Landmark. The point is how a “well known brand” going to help your student and to your business? seek the answer from your conscience…

Have been successfully running for last so many years –

Some MLM and Ponzi scheme ran for more than 40 years, does that justifies their modus operandi?
Now next, what has been running successfully – The Company or The Preschool
Where it has been running successfully?
How it has been running successfully (just because of Demand Supply equation or real good reason?
And, “Running Successfully” in any Education Business should necessarily mean, both of the things, the Quality of Education is Good and also, the Total Numbers of Student is Good.
Preschool Education business is a Service Business. So, like any Services Business, operational excellence is the only requisite element for success in Preschool Business.  
Do not forget to check, whether taking of Franchise Offerings will provide you with such required “Operational Excellence”.

Materials, Toys and equipment –

Franchisor / Franchiser will tell you that they are providing you with properly sorted Toys and other materials at best available rates. Whereas, many toys and Materials might not be required and if you negotiate directly with suppliers / distributors in a proper sense, you will be able to get better rates by at least 30% to 50%. 

Trainer –

The quality of Trainer, who is going to train your Teachers is the most essential element you should always look for. Poor trained Teachers will perform poorly.

 

 

Marketing Materials –

The Franchisor / Franchiser will tell you that they will supply Free Marketing Materials (in all such cases basically the cost would be disguised) or that they are capable to supply you at far more lower rates then available in market, which again you will be able to cross check with your nearest printers / suppliers. However, if you are a person who do not know much about Offset Printing, 5 Color Options, 3 Color Options, and do not understand your neighbourhood, you will surely like such offers of Marketing Materials.

Just the Local awareness is required –

When the  Franchisor / Franchiser tells you that their Brand is already popular and now only Local Awareness would be required, are you not able to think that even in a case of any XYZ School only Local Awareness is required. Any Preschool attracts students from vicinity, so for good or bad, in all case, only Local Awareness is required. 

Interior Decoration and Design –

Having a Fixed design of preschool is no good for the Child. Everybody knows child gets bored with things very soon, do keep in mind while receiving any design from the Franchisor / Franchiser.

“Sameness” throughout the Network –

Such “Sameness” is not going to help child, so why YOU are getting attracted to it? Remember you are starting an ‘Education’ Business not a ‘Retail’ Business.

 

Part of a BIG CORPORATE / LARGE COMPANY –

When your Franchisor / Franchiser tells you this, Ask yourself these :
How does this Association going to help your ‘Students’ at your ‘Preschool’?
How does this Association going to help you Preschool at your geographical location’?
How does this Association going to help the EXACT PRESCHOOL PROJECT for which you are going to seek franchise? Do not get swayed by out of place statements by the Franchisor / Franchiser?

The one and most important thing around which each aspect of preschool  revolves is the Curriculum and this is entirely missing from all Preschool chains and Preschool Franchise offerings.

 

 

IT Education Companies – 

 

Software –

Franchisor / Franchiser might tell you that the Software which they are providing you with, has now costing you less, since you are taking their Franchsiee. In fact, you may contact Company / Company Authorised Reseller directly, and in most of the case it would be too much economical to purchase directly from Company / Company Authorised Reseller / Distributors.

Study Material –

Most of the Study Material would be copied work of Software Tutorials (in built in software) or some popular book in market, and MOST of your enquiry / students would be knowing this fact (this will lower down your Admission).

Trainer – 

Franchisor / Franchiser will tell you that they have Superior Quality Trainer / Manpower, but the fact is that in maximum number of cases you will able to hire better manpower / trainer / consultant, than the Franchisor / Franchiser.

Economical Marketing Materials – 

Franchisor / Franchiser will tell you that they will supply Free Marketing Materials (in all such cases basically the cost would be disguised) or that they are capable to supply you at far more lower rates then available in market, which again you will be able to cross check with your nearest printers / suppliers.

 

Below mentioned Information, would specially benefit you, if you are planning to take up Franchise of any of the below mentioned businesses of Education Industry:

 

1. VSAT based Education Center

2. Preschool

3. School

4. IT Education (all types)

5. Finance, Retail, Spoken English Institute

( Note: Investors are referred as Franchisee and Company/Individual coming up with business/Franchise offerings are called as Franchiser.)

Investors shall specially be careful about taking Franchise Offerings from some most popular names and big companies (in terms of revenue and net worth) of Education Industry.

Important Points to understand:

1.Business proposals and offerings are poorly made.

2.Franchiser don’t have any good business model, or good technique, which shall be available for replication.

3.Only oral promises are made by franchiser,and written agreements are made in such a way to favour only the franchiser.

4.In cases of Franchiser conducting programs/classes (VSAT or technology based education) many of the programs are not even launched and Franchise Fee and other amounts are taken well in advance from franchisee.

5.In many of the cases, ‘Fee’ is collected from franchisee, even Six months or One year prior to starting up the business.

6.In past (i.e. Some time before) few names fared well because of the benefit of “Marketing expenses cartel” getting transferred to franchisee, and not because of “good” business model or “good” name.

7.Entire education system, is dependent on the quality of manpower / teacher, for which franchiser don’t have any plan. Very little training is provided by franchiser and even the Trainer / Manager, coming from Franchiser are of very poor quality (as franchiser keeps an eye on saving on salary and not keeps an eye on quality or benefit of franchisee)

8.Service delivery to the end consumer is so poor, that along with franchiser, franchisee also starts the same “cheating” cycle started by franchiser. (Investors shall think, whether they wish to do sensible business or cheating business)

9. Agreements are made for a very short duration (3-5 years).

10.Franchiser enters into an agreement with franchisee, only with a intent of his own benefit and Franchisee are made to suffer loss at all stages.

11.Franchiser is fully aware that due to very long and tardy legal process, none of the franchisee will ever go to court. Courts also end up favouring franchiser, as franchiser has meticulously planned the entire steps, which humble franchisee lacks (most investors who are not self starters and has very humble background takes up franchise business)

12.Employee / Manager of Franchiser are kept under such control and directed in such a way, that they lie in most possible ways (most of the employees even don’t understand that by working in a manner as directed by their employer, they are committing “fraud” punishable offence under IPC)

13.No support or very poor support comes from Franchiser

14.Instead of making collaborative approach, extortioner approach is used by Franchiser with Franchisee

15.Franchised brands are build on the Investments made by Franchisee (investors), for which investors don’t get any reward, directly or indirectly. Rather pioneer investors are always at loss as they are made guinea pig, and also face the brunt of untrained managers, overly greedy franchiser and poorly planned business proposals.

16.Royalty and Franchise Fee are generally kept so high that, investors end up earning nothing or earning losses.(because no or poor service is provided by franchiser)

17.When Franchisee’s business goes under troubled phase, franchiser has the most proper way and guts to convey to franchisee that, all losses and problems are due to franchisee only. (please think if any Investor / Franchisee has all possible means to do business himself/herself, why he would have decided to take up franchise from the Franchiser/Company)

18.Investors are also very confused regarding the taste and choice of end customer and they think that by taking up franchised business, they will attract more customers and deliver good quality, which is not at all true.

19.In the name of Corporate ladder/ structure, franchisee is not allowed to meet Real promoter, before signing up the agreement.

Article is written with a intent to help and warn investors and clean up the Franchised Education Industry.

“I am NOT against  FRANCHISING  but  POOR  FRANCHISING, presently being practiced”

 

Let us Stop this Vicious cycle of ‘Franchising’ and Start the Virtuous cycle of ‘Entrepreneur’.

Writer Rewati Raman Vishewar is a Business Consultant to Education Industry.

© Copyrights Reserved with Writer Rewati Raman Vishewar