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Nov, 08 2010

Growth in education

The charm of owning a low-cost education franchise is relatively high, as break-even happens in few months' time. Apart from first-time entrepreneurs, franchising is a great business choice for existing education owners too.

LOW capital investment, timely break-even, high profits and low operating costs. These are the factors which make pre-schools, coaching centres and vocational training institutes a high worth, low-cost business opportunity.

Business potential

By unwrapping the viable business idea, the education and training industry is all geared up to cohort with anyone, who has requisite entrepreneurial dexterity, willingness to invest time and money and work aggressively towards replicating the business guidelines.

Flip side

Dearth of skilled manpower, sky-rocketing real estate prices, concerns regarding partnering with right franchisee, enrolling requisite number of students, choosing the right location, replicating the business guidelines, intense competition in terms of fee structure offered by local players, recruiting the right faculty, raising capital, staff crunch and maintaining standardisation at all franchised centres are the key challenges that franchisors confront while managing the business. Arun K. Khetan, CEO and Managing Director, New Age Knowledge Solutions Ltd, says, “Lack of adequately trained and skilled manpower, which is going to get acute in times to come, and soaring reality prices are turning out to be both a boon and a hurdle.” As per Major K.V. Rajan, Executive Director, Amoha Education (P) Ltd (Veta), “The trainers' attrition and reliability, prevailing job market scenario and escalating rentals are the main challenges of the sector.”

Such challenges can be overcome by retaining the faculty through different strategic measures, fixing the criteria for hiring the staff and providing complete training and support to franchisees and their staff in managing the centre's operations well. From taking up the franchise of a well-known centre to recruiting and rendering training services to the faculty members for accurately managing the franchised centre is quintessential for the success of any business other than education sector.

Franchisability

Rather than starting one's own business, nowadays education providers prefer franchising to make a quick mark in untapped regions. Believing that franchised business can bring in high returns in few months' time, Khetan claims, “Looking at the Indian demography with its own complexities and limitations, quality franchising with appropriate franchise model is the right way to expand access and increase supply of good quality pre-schools across the country.” On ensuring standardisation, EuroKids imparts extensive training to each franchisee and his staff that revolves round the year. The company also invests in marketing efforts nationally and regionally from time to time as per requirements. Santosh Choubey, Chairman and Managing Director, AISECT Ltd, informs, “We support franchisees through course content, faculty training programmes, corporate and university tie ups, year round advertising and PR support and assistance in student placements.”

In the franchise business, prospective franchisees are chosen on the basis of their educational and professional qualification. From taking up the franchise of a pre-school to a spoken English institute, coaching centre or any other vocational training institute, the selection criteria of franchisees generally depends on the type of low-cost franchise in the education sector they pick to operate. For instance, AISECT chooses to offer their franchise to existing players in the same field, mostly individual centres operating in the field of vocational education. The benefits of extending franchise to an existing centre in the same field are availability of students right from the beginning, leveraging individual centre's popularity for a brand, easy availability of labs, faculty and other infrastructure and rapid expansion.

Expansion

Deepanshu Khurana, CEO, i360, enlightens, “We intend to reach 100 centre mark by March 2011. We have worked out the geographies on the basis of potential and are actively running campaigns to set up franchise in the same.” Veta is planning to open 100 more centres and is targeting major towns of Maharashtra, Rajasthan, Punjab, Delhi and UP. Choubay asserts, “We plan to touch about 10,000 franchisee centres by end of this financial year.” Abacus training provider, Aloha India's Chief Executive Officer Kumaran K. states, “We are looking at more than 2,400 franchisees by year 2012.”

Amit Singh, National Business Manager, EuroKids International Ltd, notifies, “We have a plan to add another 300 franchisees within the next one year. Our aim is to have a network of 1000+ franchisees in two years. Additionally, we have plans to increase our presence in the SAARC nations and start operations in south-east Asian nations and Middle East countries in the near future.”

“Our focus is primarily on metros and all major cities, including A&B townships, and we hope to touch 350+ outlets by 2012. Largely, these centres would be franchised but simultaneously, we will also be planning to have at least five per cent of them as company-owned centres,” adds Khetan.

Exit option

Says Singh, “Franchise contract with EuroKids is non-transferable. This means that an existing franchisee does not have the option of selling business on its own. EuroKids reserves the right to take over his business.” AISECT's Choubay explains, “If the franchisee wants to sell his centre, he is free to do so. However, the new centre manager/entrepreneur will have to go through a formal process of inspection and registration to get himself inducted as an AISECT centre. There is a negligible number of people who actually want to sell their centre.”

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