EARLY PROFITS IN EDUCATION!

ANALYSTS and education experts are bullish on the education sector, especially the preschool segment. In India the preschool market leads the pack in the franchise industry. Out of four main verticals in the education industry, preschools, K-12, vocational and supplementary education, organised preschool players share the largest pie. The Indian education industry is poised for rapid growth. This sector is changing rapidly with more private players entering the field. The private education industry in India is currently estimated to be between $5,000 million and $6,000 million, of which the preschool segment constitutes $985 million and is likely to touch $3,426 million by the end of2012, a growth of 28.3% per annum, according to the brokerage firm, CLSA Asia Pacific Markets.

As India is home to world's largest number of children in the age group 0- 5 years, catering to the same age group offers many opportunities. But there is still a dearth of players in the preschool industry. It took nearly a decade for organised players to systematize the unorganised format of preschools. These players have revamped the way education was imparted. When asked about the success mantra behind making this industry organised, all education honchos revealed that ‘Franchising’ is their guidebook of success.

Growing tribe of edupreneurs

If we see the trend, franchise players have made successful inroads into this huge market. But their presence is still limited to the metros and a few select tier-2 cities. The potential of India's preschool education market is still largely untapped, and it hasn't reached even a tenth of the child population in the age group 0-5 years.

Looking at the potential, Arun Khetan, CEO and MD,

I Play I Learn, New Age Knowledge Solutions (NAKS), said: “Franchising is an excellent model to adopt to quickly increase access and supply of quality preschools across the country.”

Looking at the Indian demography with its complexities, quality franchising with appropriate franchise model is the right way to quickly expand access and increase the supply of good quality preschools across the country. The preschool industry is stepping up the ladder of getting organised.

The key players in the organised sector include Eurokids, Kidzee, Shemrock, Golden Bells, I Play I Learn, Podar Jumbo Kids, Tree House, Kangaroo Kids, etc.

Commenting on the potential growth in the preschool industry, Harsh Podar, MD, Podar Education Network, said: “The franchise preschool market in India is a relatively new market. Keeping in mind the growth trend of any emerging market, it would boom then bust, and then the brands would emerge to sustain the market growth. In the next five years, weak, unorganised brands will go bust, newer brands will boom, but only the strong, organised, strategic growth- based brands will survive and prosper. Presently, the preschool franchise industry is poised for strategic growth and multiplying returns, and this is the right time to expand across the country.”

On taking the franchise route for expansion, SK Rathor, Director, SANFORT Group of Schools, which is based on the UK concept of preschool chain, said: “In 1999 we established our first playschool with a bouquet of attractions, concepts and role-play models for tiny tots. We launched our franchise model in December 2009, and started its first franchise branch in February 2010. Several parents approached us as the interested franchisees. Hence, we realised that franchising is the best way to increase our network across India without compromising on the quality.”

Franchise report card

A few education experts believe that the Indian preschool industry is on the verge of becoming the largest in the world. In India the market size of preschool industry is huge with 25-30 lakh children between two and five years in urban India. Therefore, there is a scope for 25,000 preschools. Looking at a bagful of opportunities, franchisors are modifying their expansion plans.

SANFORT, which is present in more than 10 cities and four states, has over 45+ branches. The brand is looking for strengthening its presence across all major cities in India.

Podar Jumbo Kids, which is part of the Podar Education Network, has been in the field of education since 1927. Podar Education has schools across India and educates more than 50,000 students annually. Talking about their presence and growth so far, Harsh Podar said: “We are present in Maharashtra, Karnataka, Uttar Pradesh, Gujarat, Rajasthan and Andhra Pradesh. Out of 115 centers, 75 are franchised and 40 are owned. Presently, we would like to expand further in the territories where we are already present and then target Kerala, west Bengal, the NCR and Punjab.”

For I Play I Learn, which has been franchising since its inception in July 2009, has signed 150+ franchises so far across the metros, semi-metros, and state capitals in the domestic market only. On the same, Arun Khetan, said: “We plan to strengthen our presence in all metros, semi-metros and state capitals. We also intend to expand our network in tier II cities across the domestic market. Our focus is primarily on the metros and all major cities, including A&B townships, and we hope to touch 225+ outlets by 2013.”

Another major player in this segment is Kangaroo Kids, franchising for 13 years now. The brand has 55 franchisee- run preschools and is aiming to set up 150 Kangaroo Kids across tier I cities and all metros in the country. When asked about their international expansion, Lina Ashar, Founder, Kangaroo Kids, said: “We are also looking at building our overseas presence; we are looking at expanding into developing countries that have a similar cultural/ demographic makeup like India.”

Invest in training and support

Training and support are must to run a preschool franchise, and to have standards to avoid brand dilution. Majority of franchisors in this industry train their franchisees on the business process, counselling, recruiting, teacher training, parent orientation, classroom management, and curriculum implementation. Not only this, investors are also given guidance regarding selecting the right location and providing assistance in getting the site ready and a host of other areas.

For effectively running their franchise, SANFORT offers guidelines for all domains, right from school designing, recruitment and training of counselors, teachers and centre head to procurement of furniture, toys, teaching aids, play equipment, etc. They also offer support in market planning, appointing teachers and curriculum.

Challenges and strategies

This sector has immense potential. Five years down the line, a majority of standalone preschools would either be a part of the organised brand or in itself become a big brand. There are a few challenges that a franchisor faces from the franchisee's end like compromising on quality and safety standards, expecting too much too soon, no staff training and substandard staff, once initial investment is done then reverting to pocket-tight syndrome, and many others.

To overcome these challenges franchisors have developed special audit teams who keep an eye on the franchisees and conduct regular checks. Also, many franchisors have now started research practice before giving the franchise of their brand. To have a smooth partnership and to be on the safer side majority of the franchisors prefer their franchisees from the same background or are interested to expand via multi-unit franchises

Factors driving preschool industry

= Increasing demand for quality preschool education

= Low investment

= High returns, high disposable incomes

= Urge to provide strong academic foundation.

Pre-schools in franchising & their expansion plans

Brand Name Franchise units Expansion plans

Shemrock 159 Pan India

Kangaroo Kids 55 Pan India & Overseas Expansion

Podar Jumbo Kids 75 Existing territories, Kerela, West Bengal, NCR & Punjab

I Play I Learn 150 + (signed up) Pan India

SANFORT 45+ Pan India