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Apr, 01 2005

The franchising pioneers

There is an enormous potential in the education sector with a wide range of education services available today. Traditional values and approaches have been replaced by new goals, policies and practices that relate more to market -driven set ups. Globalisa

ONE segment that is witness to the growing needs of the population of India is the education sector. India has a large population, 56 per cent of which is below the 25 years mark. That well adds up to about 50 crore of population which requires education in one or the other stream be it basic, career oriented or specialised.

The significance of education in our lives cannot be denied in any form, and can be judged from Derek Bok’s quote, “If you think education is expensive, try ignorance”.

There is no doubt that this sector is seen as having enormous potential with regard to the Indian scenario. Education plays a significant role in the life of an individual right from age four as a child to a student preparing for an entrance examination or looking for career prospects in various fields. With the wide range of education available today, even the children’s section varies from playschool and computer basics to school time education.

Today, new goals, policies and practices have replaced traditional and well-established values, concepts and approaches. Marketisation has become the buzzword. Social democratic visions are being replaced by market-driven policies. Globalisation has also hastened the spread of new values and approaches into the societies that were vehemently opposed to market or capitalist views on education.

Under such prevailing global trends in the education sector, India’s education system has also been affected. In today’s competitive knowledge society curriculum-based inputs are not sufficient enough to achieve success, rather, it requires some extra efforts along with the right attitude, skills and knowledge.

However, there has always been a demand for good educational institutes on account of poor government spending, lack of adequate infrastructure and new generation of upwardly mobile parent’s desire to give their children only the best. According to the Global Monitoring Report, 2003-2004, the percentage of private enrolment in the year 2000, was 3 per cent in pre-primary education, 16.5 per cent in the primary education and 42.4 per cent in the secondary education of the total enrolment in India. However, the total expenditure on education as percentage of GNP in the year 2000 was 4.1 per cent.

The UNESCO Institute for Statistics in their education survey conducted in October 2004 shows that the public expenditure on education in India, as percentage of total government expenditure in the year 2000-2001, was 12.7 per cent.

Being the vast country that it is, India naturally needs large number of educational institutions and the only safe and viable option for the growth of education seems to be franchising.

Franchising in education vis-s-vis others

Although entrepreneurs in sectors like textile and apparels, food and beverage, health etc., have adopted to the franchise route, but in India it is the education sector that dominates the franchise industry. Mr M Chackochen, National Manager, CADD Centre and Mr Mohit Satyanand, Director, Inlingua, New Delhi holds that though the concept of franchising is in its nascent stage, franchising in education business has been dominant for long, and has been at the forefront of the franchising movement in India. Elaborating on these views, Mr C. Murugan, Product Marketing Head, NIIT Education, says that the fact that so many companies tried to replicate NIIT’s model (who pioneered franchising in IT education in India in1986) is a proof of the success of franchising in education.

Though, Ms Madhumati N, Promoter Director, Aspire Learning, believes that franchising in education is highly evolved in India with IT education creating systems and processes for the same, Mr Prajodh Rajan, Vice-President, Project Head, Eurokids, opines that franchising in education is still in the process of evolution, and will take a few more years to evolve to its full potential.

Expressing similar views, Mr Sanjay Shivnani, Vice-President Sales, Career Launcher, adds that even though franchising in education has had an earlier start it is yet to develop as compared to the other sectors. Giving the right recipe for its fast paced growth, Mr A. K. Khetan of ZILS, lists the ingredients as, higher budgetary allocation by the government, huge population, increased per capita income, globalisation of education, purchasing power parity, growing urban population and swelling disposable income.

An attractive sector

Taking advantage of the prevailing trends and circumstances, franchisors are striking gold by investing in various sectors in India. Today, businessmen of every hue, be they retailers, traders, hoteliers, industrialists, NRIs, franchisors, are setting up educational institutes. Nearly, 65 per cent of the franchisors in the country operate in the education sector. Corporates have long been involved in school education, but now they are enlarging their scope to include all trends of education, like, management, IT training centres, vocational education institutes, coaching institutes, language schools and immigration consultants.

Companies initiation into education

Through this article we are bringing to you the top franchising companies in the education sector, broadly categorised into seven segments.

Coaching Institutes: Today being a competitive world, one needs to prepare accordingly for the tough contest which can be achieved through good coaching provided by various institutes. With the increase in demand for such institutions franchising offers a good scope. The category includes institutions that provide coaching to the students of 10th and 10+2 level, and for various entrance tests like medical, engineering, MBA, GRE, GMAT, IELTS, TOFEL, hotel management, law, fashion designing and main exams of actuarial science. Major players in this category are Career Launcher, FIITJEE, TIME, Trump & Gates and Aspire Learning.

Career Launcher, one of the earliest to start franchising in this sector has over 35 franchise locations in India, and is expected to grow to 45 by the end of 2005. Targeting pre final and final year graduate students from arts, science, engineering and commerce backgrounds the institute offers high quality support with the type of intellectual and knowledge capital and manpower available. Risks and challenges are reduced by the kind of business model that the institute adopts and also by very sharp selection of the franchisee profile. From the franchisee an investment of Rs 3.5 to 5 lakh and a well located space of 800 to 1,000 sq.ft. is required.

Aspire Learning with its mission of building core science and math competency in school students, achieves growth through franchising not just in A and B category towns in south India, but also in smaller towns which actually require this kind of education. A prospective Aspire franchisee is required to invest in Rs 1 to 12 lakh. The company works more on pay back and on an average, the pay back would be anywhere between 13 to 18 months. The risks are primarily on the IPR arena.

Trump & Gates, an IIM Alumni, has been in the teaching field for the last two decades with a group networth of over Rs 20 crore. The institute offers coaching for various entrance exams and uses multimedia aids, speed-reading software, speed maths, and memory-based vocabulary building as its teaching techniques. T&G provide total setup, operational, promotional and logistic support to the franchisees.

Computer Education Institutes: After a period of drastic downtrend in computer and IT sector, the situation appears to be improving. Thousands of computer training companies have mushroomed across the country with prominent ones being NIIT, Aptech, MITech, St. Angelo, SSI and STG.

NIIT successfully introduced and implemented the franchisee model not only in India but also in 32 other countries in the world. Through its strong focus on instructional design delivery and education process management, the company has expanded its global education network to close to 3,500 training centres. NIIT has created a groundswell of thousands of computer professionals through the efforts of its local business partners. It provides one of the most comprehensive range of learning offerings. NIIT’s criteria for selecting a business partner includes highly motivated, first generation educated entrepreneurs. NIIT has been able to create an innovative and successful franchise model in education because of its strict selection of business partners, stringent but replicable processes, and adaptation to different markets and conditions. NIIT is continuously innovating and fine-tuning the model with the experience it gains from different locations.

To add to the list is MITech, a leading IT educational institute spread across 27 districts in Maharashtra with 1.76 lakh students and more than 157 franchisees running successfully, requires an investment of Rs 12 to 14 lakh and an area of 2,500 to 3,000 sq.ft.

Another is St. Angelo’s computer education world’s largest online education company in the field of computer and management education, and requires low investment, providing handsome profits.

Language Schools: Market survey suggests a great gap in the availability of English teaching institutes and its ever increasing demand fuelled by an increase in the international business and job opportunities available, especially with call centres and BPOs. Prominent among these institutes are British School of Language and Inlingua.

Inlingua is promoting a unique, transparent “licensing” model with a fixed annual fee, exclusive territory and significant upside for the entrepreneur. Its target segment is the young adults (students and professionals). The institute comprehends maintaining quality while building the consumer image of the brand as important. The company has a network of 300 independent centres in 30 countries teaching 20 languages to over 5 lakh individuals every year. Inlingua has two centres in Delhi, one each in Noida and Gurgaon. Inlingua also has its centres in Kolkata and Chandigarh and is likely to have one in Varanasi shortly. The RoI depends upon the business acumen of the entrepreneur.

IT Training and Services Centres: The Indian software and services exports are likely to grow in 2005 with large companies bagging bigger contracts and driving new projects and development work. Top IT companies are also shifting operations to cities other than the metros, such as Cochin, Pune, Chandigarh, Vishakhapatnam and even Goa. By the year 2008, IT is expected to create employment for 2.7 lakh people.

Perceiving this increased demand for career opportunities in software, IT and call centres there seems to be an increased scope for companies providing training in such fields through the franchising route. The prominent among them are CADD Centre, Hughes, GurukulOnline Learning Solutions, Akiko Callnet etc.

CADD Centre, a CAD/Grafx training institution, has a network of 90+ centres in India and three overseas. The company seeks graduate franchisees in engineering or management with experience for project managers and for interior architecture design course the company looks for house wives, interior designers, architects or any creative person willing to become a good interior designer. The company requires an investment of Rs 8 to 20 lakh based on the size and market potential of the centre.

Hughes Escorts Communications Ltd. (HECL), provides turnkey networking solutions for corporate enterprise in India, primarily using the satellite medium. DiRECWAY, Hughes’s latest offering in the satellite broadband space, is a leading broadband by satellite service for consumer, small business and enterprise markets. Currently, the company has about 150 franchisees signed up, 32 operational franchisees across 23 cities with 16 to be operational shortly. The company expects from its franchisee a retail space, and an investment for setting up the retail front. The institute has 42 centres in India.

Looking at the required demand for 20 lakh professionals by year 2008 Gurukulonline Learning Solutions (GOLS), has launched a programme to test, train, interview and recruit professionals for the BPO industry through internet called Smartel.

Akiko Callnet, a Sherman Group Enterprise, is looking for business partners all over India. The company requires from its franchisee a space between 1,200 to 1,500 sq.ft. with two class rooms, 10 to 12 computers and an investment of Rs 12 to 14 lakh.

Also on the list is Singapore-based Savant Academy with operations in Malaysia, China, UK, New Zealand and India, which is looking for franchise centres for call centre training at all state capital and major cities.

Schools: The present age schools have become something more than just teaching institutes. The next door neighbourhood play schools have given way to fancy air-conditioned schools. Besides teaching the syllabus, these modern day schools take extra efforts to bring out the overall development of the child. What makes the pre-primary segment so attractive from franchising aspect is the relatively hassle-free rules. Some of the key players in the pre primary, and primary education franchising are Eurokids, Kidzee, ABC Montessori, The Pinnacle Kids, Bachpan etc.

EuroKids, with over 175 pre schools spread across 78 towns and cities in India, has been the pioneer in franchising in the pre primary segment, assisting entrepreneurs in starting an educational venture of their own. The company's growth is a testimony of its contribution to this sector. EuroKids regards the choice of the location and availability and retention of good quality teaching as very important. One of company’s USPs is its unique three-tier marketing support plan coupled with the specialised business-cum-academic training that the company offer to its franchisees. This is the dual programme of pre-school and kindergarten for children in the age group of 2 to 5 years.

Kidzee, the pre-primary school brand and an arm of Zee Interactive Learning Systems LTD (ZILS), was launched about a year-and-a-half back, and today has approximately 200 plus Kidzee centres in India and a few overseas under an effective franchise model. Kidzee is aiming to provide education in the pre-primary segment for the all round development of a child’s personality. Its Activity Centre, run in the post lunch sessions, caters to the age group of 3 to 12 years. The business model involves little risk. The only requirement from a franchisee is keen interest in kid’s education, compassion and tolerant temperament. Kidzee pre-school education project is best suited to educated women who have 1,200 sq.ft. place of her own, and an investment of Rs 5 lakh onwards.

To add to the list is ABC Montessori, which is all set to launch Montessori schools in India, provides training to franchisee heads and requires an investment of Rs 4 lakh, and a space of 2,500 sq.ft. in environmentally congenial surroundings at Goa, Pathankot, Ludhiana, Guwahati.

The Pinnacle Kids is another name in quality education and seeks franchisee to invest Rs 8 lakh and a space of at least 2,000 + sq.ft.

S. K. Educations Pvt. Ltd., a promoter company of Heights Institute of Fashion and Technology, has 35 Bachpan play schools across 20 states in the country.

Study Abroad and Immigration Consultancy Institutes: There is an increasing craze among Indians to go abroad. No matter what the age, what the purpose and whatever amount of money is required, people are ready to pack their bags and move abroad. Cashing in on this increasing craze a large number of study abroad and immigration consultancy institutes have come up, thus increasing the scope of entrepreneurs to franchise in this sector.

Canam is recognized as the first choice brand with proven and complete turn key operations. The franchisee is expected to have 1,200 to 1,600 sq.ft. of office space at a premium location, equity investment potential of Rs 5 to 7 lakh.

Can-Asia, a Government of India, Ministry of Labour approved company, which deals in travel education, study abroad and immigration and has its placement services in Canada, Australia and New Zealand, for early settlement of the immigrants. The company seeks young, motivated entrepreneurs with a commercial area of about 800 to 1,000 sq.ft. in the heart of the city and equity investment of Rs 1 to 4 lakh.

Vocational Education Institutes: Looking at the increasing demand for job-oriented courses a large number of vocational education franchise institutes are coming up in the areas of fashion designing, sales management, interior designing, animation etc. The Indian animation industry alone is worth Rs 220 crore and is targeted to grow to Rs 440 crore in the next two years.Maya Academy of Advanced Cinematics provides multiple courses and related training in the areas of 3D generated computer graphics and animation, visual effects for feature films, films scanning and recording, composing and editing. MAAC has 30 academics across India. The company expects its franchisee to invest Rs 18 to 20 lakh including a franchisee fee of Rs 5 lakh.

In the management franchise category Trade Wings Institute of Management Ltd., Mumbai, popularly known as TIM, has over 75 learning centres across India. The company invites national and international franchise partners.

In the fashion education, International Institute of Fashion Technology is a prominent name offering courses in various forms of designing and management, commercial art, CAD courses and modelling. The company has more than 65 franchisees all over India and abroad and is aiming for a minimum 25 franchisees in 2005. IIFT franchisee needs to have a minimum area of 2,000 to 2,500 sq.ft.

Heights an institute of fashion and technology, is another name in the category having more than 150 centres all over the country.

Impact of franchising on the Education Sector

Franchising has had a sizable impact on the education sector. It has increased competition among entrepreneurs leading to refined quality of education being imparted to the students.

Mr Prajodh Rajan says that Eurokid’s preschools has been able to change both the quality of infrastructure as well as the content, thereby heralding a new beginning in the pre primary segment through the franchise route. Agreeing with Mr Rajan, Ms Madhumati N of Aspire Learning, opines that franchising has been the best way to introduce quality into the nook and corner of the country.

Responding on the same lines, Mr Sanjay Shivnani, of Career Launcher, says that franchising ensures that quality education reaches the interiors and with equality, thereby giving the opportunity to everyone to derive the benefits, irrespective of their background.

Mr Chackochen says that franchising will help franchisors reach the masses and added that each franchisor must ensure strict quality norms which should be followed by the franchisee to give quality education even at a smaller location.

Mr C. Murugan substantiates that while franchising helps in reaching a much larger number of people, it also increases brand awareness and enables development of the local skill base. In order to protect their brand name, the companies have to ensure that they offer good quality products, he cautions.

With a large population, it is difficult for educational institutes to set up their infrastructure in every part of the country. Mr Khetan says that franchising bridges this gap by making available quality education in these areas. The market forces will ensure the survival of brands, which are quality conscious and deliver what they promise. Getting the access to quality education this way will benefit the end user in meeting career aspirations.

Mr Mohit Satyanand confides that franchising in education has the ability to deliver standardised, international quality across the nation.

Without doubt, it is now established that franchising is the best way to reach the masses, even to the smallest of towns. Franchising will not only give the franchisee a ready made system to work under, but it will also tap local talents, thus offering job opportunities.

The one word of caution that all respondents have voiced is that in no way must the quality of the education be sacrificed, because this would lead to brand loss and in turn affect the franchisor and the franchisees.

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