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Last Updated:- 2020-11-04
The most common refrain from all preschool franchisers is usually to go to great lengths to explain how they view franchisee businesses as partnerships and not anything else. The problem is that with any royalty based support structure, the partnership is just lip-service, nothing more! That's why we bring on the table - Nonfranchise preschool model
The modern revolution of preschools in metros and Tier B cities in India over the last decade has greatly elevated the importance of early childhood education as far as perceptions are concerned with the modern Indian family. With a shockingly low preschool enrollment record (at around 3% nationally), India has a fair distance to travel before perceptions translate into actions. What can make playschool education in India really more popular amongst parents in Tier C and even smaller cities would be if really high-quality preschool education is made available at a far more affordable cost through innovative business models by edupreneurs across the country.
Before we head to a solution, let us understand the problem. Why is preschool education in metros and non-metros so expensive? A major cause for the same is high cash overheads and an obvious contributor to this are high rentals for properties that are in close vicinity to residential catchment areas. A slightly less obvious reason is –royalties that preschool franchisees in India have to pay to their franchisors. Let us understand this in detail.
A preschool franchisor is expected to bring a solution to the table – business consultancy, a package of best practices for running a preschool in India, a credible preschool curriculum, teacher training, relevant teaching aids and equipment, marketing and operational support, and a proven business model. In lieu of all this, preschool franchisors in India do take their proverbial pound of flesh – a hefty franchise fee inflated costs on equipment and furniture that entrepreneurs have today easy access to, a renewal fee at the end of the franchisee term (usually 2-5 years) and the bane of all preschools – ROYALTIES.
A royalty is a margin that franchisors earn on every admission a preschool gets. It ranges from 10%-25%. Some leading preschool franchisors in India take this upfront with every admission! To get a real sense of this to assume this –
A franchise preschool in Kolkata charges approximately Rs 30,000 to Rs 45,000 from parents during the course of the year. The preschool, in turn, forks out between Rs 4,500 to Rs 11,250 to franchisors! That is a lot of money for very little in return. This, in turn, makes preschools charge that much more from parents to keep their businesses relevant and profitable.
Experienced preschool operators will tell you that these royalties really pinch and make the task of offering high-quality preschool education at an affordable cost a difficult proposition.
There are alternatives available in the industry though. Over the last 4-5 years, the industry has seen a slew of preschool franchisors mushrooming across the country promising a preschool franchise without royalty or a no royalty preschool franchise. Some have become successful but most have, unfortunately, turned out to be very poorly oriented towards academics and non-committed to business partners. It is almost to suggest that the non-payment of royalties should be viewed in conjunction with poor service.
This is what one expects from a partnership. You contribute, you earn. We set exceptionally high standards for ourselves and believe honestly that we can deliver service that you’d happily pay for. That’s the bedrock for the kind of partnership that WE KNOW will last! It will keep our team on its toes to provide service to you and will align you to deliver a world-class curriculum at your ILC.
I would encourage you to read a little bit more on why we genuinely feel that franchising, which although is an amazing business growth strategy for many different businesses, for the education industry and specifically pre-schooling segment, it is the wrong strategy for the long term. No wonder, there are so many fly by night preschool franchisers operating today with the focus squarely on selling solutions is disappearing!
More on this on our blog article which was written a long time back reproduced on the teeny beans forum more recently.
That's it from me for now. Happy schooling!
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Published By:- Teeny Beans