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Apr, 06 2012

LEARNING TO EARN PROFITS the international way

In India, foreign education brands look upon child enrichment and preschool education as the two most lucrative segments. Since these segments have low barriers to entry, both originality and adaptability are critical to outgrow competition.

WITH the wave of globalisation spreading across India, people are more exposed to the international trends in education. This has led the Indians to look for world-class education and teaching for their children. Such an attitude among the Indians has created big demand for quality education and training in the market that has enthused reputed international education providers to bring in their concepts to India in the preschool education and child enrichment segments. Currently, these segments are quite fragmented and are dominated by a few players. Franchising is a way to give a boost to the supply to reduce the need gap. Moreover, it provides good investment prospects for interested entrepreneurs.

The article explores business opportunities that arise when recognised international preschool and supplementary education brands enter into the Indian education market, and it highlights the key differentiators responsible for their success in India.

Entry mode

The international brand may look for a joint venture or prefer franchise model to enter India. Singapore-based EtonHouse, which has 52 international schools and preschools in countries like Singapore, China, Indonesia, Japan, Korea, Malaysia, Vietnam, and India, has set up Serra International, a preschool chain, by joint venturing with Pune- headquartered Edvance Preschools Pvt. Ltd. Serra has opted for the franchise growth model to scale up across the country. Where as Maple Bear, a preschool brand and supplementary education concepts namely Kinderdance, FasTracKids, KidzArt, Kidville and apple seeds, have entered India through franchising. However, the growth and success of these brands are influenced by key factors such as their uniqueness, adaptability and lucrative proposition.

Key factors for success

For a brand foraying into a diverse market like India, the key differentiators for its success include factors such as the unique selling proposition (USP) and customisation to the local market. An investor prefers a business model which is strong, easy to operate, and lucrative.

Unique selling proposition

With several players promoting similar services with minor differentiations, it is the brand’s USP that makes it attractive to consumers. SERRA and EtonHouse offer just that. Ranjan Goyal, CEO, Edvance Pre-Schools Pvt. Ltd, shares: “Inspired by the renowned Reggio Emilia educational approach of northern Italy and early learning goals in the UK, ‘SERRA International’ aims to deliver quality preschool education in India. EtonHouse extends its brand goodwill and expertise, thus giving SERRA its global edge.”

The desire to contribute in the field of education and the lack of world class preschools and places for young children drove Shreena Doshi to launch ‘The Big Umbrella’ (TBU), a preschool venture. Mumbai-based TBU has collaborated with apple seeds, which is New York’s premier activity centre, targeting from newborns to five-year-old children. It helps children develop their gross and fine motor skills and practical life skills. Shreena Doshi, Master Franchisee, apple seeds, says: “The brand is known for the most stimulating curriculum, creative space and warmth that every child needs. There are no activity centres of this quality in India, and hence the question of a local partner was never there”. TBU has secured master franchise rights for apple seeds for India, Bangladesh, Nepal and Sri Lanka.

Customise for wider consumer-base

To establish itself in the new market and reach a wider consumer-base, the brand’s curriculum or services should be flexible enough to adapt to the local market conditions, if required. Otherwise, the brand may fail to connect with the targeted consumers resulting in a loss of market share. US-based Art franchise ‘KidzArt’ has signed a developer agreement for the state of Maharashtra. Franchising since 2002, the brand’s concept incorporates different styles of Indian folk paintings and it is considering artworks for famous Indian festivals. Now the brand better understands the expectations of the Indian parents.

Canadian education brand Maple Bear, operating since 2004, has found much success in India. The preschool today has a total of 28 locations across India. All of them are franchised. The brand’s curriculum very much aligns to the national curriculum framework of NCERT. Since the same curriculum is offered across its global franchise system, Maple Bear has kept it very prescriptive. Thus, very little tweaking is required locally and there are no costs for customisation. Addressing its franchisees for local needs, the brand endeavours to constantly update its curriculum in line with the latest trends in early childhood education worldwide.

Lucrative quotient

Ideally, an investor scouts for a lucrative and sustainable venture. Many franchisors offer business models with multiple revenue streams allowing the local partner to tie up with preschools, elementary schools and community centers to either supplement or supply their education programs. Kinderdance, a 32-year-old company based in US, provides structured movement program for the young. The brand has signed up with Learning Parachute India Pvt. Ltd (LPIPL) as its master franchisee for India. Its owner Krithana Ramarupu is also the Executive Director of Kinderdance India. About the programs being run for children she states: “Our programs for schools, preschools and the group dynamics are very well-designed with the structure and plans for 10 years. Every year we add new dances and supplemental programs so that our franchisees continue to increase their revenues”.

Through franchising the brand has launched itself in Pune, Chennai, Mumbai, Hyderabad and Bengaluru. The concept of Kinderdance is unique and it is a low-cost business model with flexible work hours. Its franchisees may offer programs in heritage centres, enrichment learning, activity centres, etc., for increased earnings.

Kidville, a preschool concept from the US, has suitably tailored its curriculum by combining play way methods with the Indian standards, culture and heritage. It made its debut in India through Kwakids Learning Pvt. Ltd. that holds the master rights for Kidville - pan India. Moreover, Kidville India recently tied up with Kidology, a local brand which designs and manufactures occasion-wear clothes for children. It will also house other Indian brands in its boutique. Rosenyn Kapur, brand’s Master Franchisee, says “Our tie up with Kidology is also an adaptation that will indirectly add to the success of Kidville. We will study the markets carefully and make changes accordingly while expanding regionally, either through corporate locations or able partners. Our prospective franchisee can expect to take advantage of all the tie-ups we have developed with various quality manufacturers and wholesalers, for the Indian market”, concludes Kapur.

With 330 operating franchisees across the world, FasTracKids International reflects its global malleability and success in the field of supplemental education. Established in 1998, in the United States, FasTracKids International created a revolutionary concept in early childhood education that encourages the 5 C’s - creativity, critical thinking, communication, collaboration and confidence. The brand’s Area Developer for western India and multi-unit operator, Taral Patel, declares: “Our programs blend very well with the Indian conditions. However, some of the programs have been made slightly flexible to adapt locally, which positively affects the enrollments and improves the profitability of the franchisees”.

apple seeds provides value-addition right from inception to execution. It has a very professional approach to franchising and gives the best of training, administrative modules and support to its franchisees.

The franchisees of Serra International get to leverage the global brand value of ‘EtonHouse’; and they are rewarded with handsome ROIs, a smaller timeframe to break-even and practically a recession-free business.

Opportunity in the market

Though the established players are continuing to saturate the preschool and supplementary education market in India, the sector is also attracting investments from new entrants. KidzArt is offering several partnership options such as master franchises, area development and single-unit franchises to spread further in India. Meanwhile, the brand’s sole multi-unit franchisee in Mumbai, who is also an Area Developer for the entire Maharashtra, is planning to expand the brand across the state through sub-franchising.

The Big Umbrella and apple seeds offer several franchise models. One could franchise just the Indian preschool concept (TBU) or sub-franchise the international activity centre (apple seeds) or both. They could look at exclusivity for a city or even a state or region. These brands plan to expand in Mumbai, Bangalore, Delhi, Kolkata, and Jaipur. The investment requirement depends on the location and the model.

Serra International, with its own flagship located in Aundh, Pune, expects to reach 100 preschools in the coming months. Presently, it has 35 franchise partners from across major cities such as Mumbai, Pune, Delhi, Bangalore, Kolkata, Indore and Ahmedabad. It is seeking franchise partners who are passionate about providing quality early childhood education, and can invest in the range of Rs 12 -18 lakh with a minimum build-up area of 2,000 sq. ft.

Kinderdance India offers three franchise models namely bronze, silver and gold partners requiring investment of Rs 2.25 lakh, Rs 3 lakh and Rs 11 lakh, respectively. The franchise is planning to foray into 15 major cities like Chandigarh, Ahmedabad, Delhi, and other parts in Mumbai, Chennai, Lucknow, Kolkata, and Goa. It aims to offer the concept as part of the curriculum in the top 10 schools in each of the major cities.

With one operational location in Mumbai and second facility expected to open in mid 2012, Kidville India plans to open 100 locations across India by the end of 10 years. The proposed openings will be through a mix of corporate owned and sub franchised locations.

For a FasTracKids franchisee, the investment starts at USD 10,000, which varies depending on the nature of the business. Schools and children’s education businesses with existing facilities and equipment will have a lower initial investment.

New concepts like Art education brand such as Young Rembrandts from the US and Dubai’s preschool brand British Orchid Nursery are also looking for entering the Indian market through the master franchise route.

Bottom line

In view of the rising demand and affordability for quality education in metros, tier II and III cities, it can be said that the preschool concepts can access a large pool of consumers. However, the supplementary education providers may need to educate the consumer in smaller cities about the benefits of such programmes. Once it is done, they can create a promising market for themselves. Presently the Indian preschool market is highly unorgansied and under-penetrated. Therefore, in spite of competition from leading Indian brands, there is sufficient room for foreign brands to break in and grow profitably.

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