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Jul, 07 2014

Investment Guide for Edupreneurs

With parents focusing on quality school education, the young and flourishing educational institutes are booming. Thus, more and more brands are making foray into franchising. Read on to know what lucrative opportunities these brands have to offer its pote

India, being one of the largest networks of higher education system in the world, comprises about 500 plus universities and over 35,000 colleges, offering education and training facilities in almost all aspects of human creativity and intellectual endeavour. The country has an annual enrolment of over 25 million students (including enrolment under open and distance learning system). India has claimed 10 of the top 100 places in Times Higher Education's BRICS & Emerging Economies Rankings 2014 the world's first ranking of universities in Brazil, Russia, India, China and South Africa, as well as 17 other emerging economies.

Nelson Mandela once said: “Education is the most powerful weapon which you can use to change the world.” It is a well accepted fact that providing the right knowledge and skills to the youth can ensure overall national progress and economic growth. The Indian education system distinguishes the role of education as a progressive institution that plays a distinct role in nation building and economic growth. These days education isn't restricted to impart knowledge and academic qualification to students only but has opened gateway for young entrepreneurs and investors via franchising of the educational brands. 

Market Size

The private education sector is estimated to reach US$ 115 billion by 2018, according to consulting firm Technopak. Technopak sees enrollments in Kindergarten-12th grade (K-12) growing to 351 million, requiring an additional 34 million seats by 2018.

According to a report 'Education in India: Securing the demographic dividend', published by Grant Thornton, the primary and secondary education, or K-12 sector is expected to reach US$ 50 billion in 2015 from US$ 24.5 billion in 2008, growing at an estimated compound annual growth rate (CAGR) of 14 per cent.

Also as per the report '40 million by 2020: Preparing for a new paradigm in Indian Higher Education' released by Ernst & Young, the higher education sector in India is expected to witness a growth of 18 per cent CAGR till 2020. At present, the sector witnesses spends of more than Rs 46,200 crore (US$ 7.68 billion), which is estimated to grow over Rs 232,500 crore (US$ 38.69 billion) in 10 years.

Opportunity beckons 

With the mushrooming of educational institutes and other academic supplies, the Indian education sector is termed as one of the prime industry for investments. The sector has attracted foreign direct investments (FDI) worth Rs 4,736.88 crore (US$ 788.43 million) during April 2000 to September 2013, according to the data released by the Department of Industrial Policy and Promotion (DIPP). Just like established brands like Eurokids, Time, Career Launcher, IMS,Kidzee, Mother's Pride, Jetking, Kangaroo Kids, Podar Jumbo Kids and many others, even investors from youngistan are all set to acquire flying colours. Brands like Veta, Aloha, Safari Kid, Brainkey, Foster Kid, MRV International, Gurukul, Serra International etc are offering great business opportunities to young brigade to achieve success via the franchise route.  

Brain Wonders, an ISO 9001:2008 certified company that works towards child development and learning is among those flourishing brands that has aggressive expansion plans in India and abroad. Having started franchising in the year 2012, the brand has grown to more than 70 centres across India and four international centers.

Manish Naidu, Founder, Brain Wonders says: “We chose franchising because that's the only viable option to expand in a more systematic way. We have since our inception reached out to more than 1.3 lakh customers which wouldn't have been possible if it weren't for franchising.”

Opening the doors

Talking about the fast growing education industry, IBT Institute Pvt Ltd is among those young and flourishing franchising brands that offers very low cost and high profitability franchise model. With just an investment of Rs.1 lakh one can have an opportunity to earn in lakhs every month, the brand offers coaching in government banking and the SSC examinations.

“We started the IBT in 2009 from Jalandhar (Punjab) with around three students for the preparation of SBI Exam. Than later on after getting good selection rate we started expanding via franchise model. We have trained more than 12,000 students till now and more than 6100 selections are there. We are into the franchising business since 2009. We don't charge any royalty and leave maximum part of the profit with franchisee so that he should re-invest the same in market and generate maximum business,” says Pradeep Singh, Director, IBT Institute Pvt Ltd.

Another homegrown brand Genius Abacus & Vedic Maths is a great example to young franchisors, as they have trained 2,50,000 students across India and overseas since their inception in 2006 via 350 franchisees. 

 “In spite of the fact that franchising system is only the best way to reach the small investors, unemployed, teachers and even housewives. I have thought for several days about expansion of my business into the gross roots level targeting teachers, schools and unemployed. My plan was worked out and now we are one of the leading Abacus & Vedic Maths institutions in India and abroad too. Now we are giving free training and issuing free franchise on Genius Abacus and not collecting even royalty from adopted schools. We are planning to expand our business through franchise business model,” Raji Reddy Katukoori, Founder, Chairman and CEO, Genius Abacus & Vedic Maths.

However, Brain Wonders offers three different franchise models for investors that includes,   Normal Unit franchisee, ideal for someone who has a small setup in education or counseling related domain, Area Business Partner, ideal for someone who has a stronghold in a particular area and has a strong student strength and third is the  Master Franchisee that is ideal for someone who has a strong network in their own city/state. “Generally, pre-school owners, school owners, educational institutes, H. R organisations go for this option. We give our franchisees a comprehensive training conducted by international trainers followed by international certification directly from professor himself. We have a strong belief that counselling is a very important and we take all the efforts to handhold them and give immaculate counselling techniques to our franchisees, the results are there to be seen as each counselling gets our franchisee atleast two more references which has further bolstered their confidence and faith in the brand,” adds Naidu.

Garnering funds, a challenge

To start any business in itself is a biggest challenge specially, the capital connection. Talking about those challenges, Singh adds: “I agree that generating funds is a challenge infront of young individuals who wish to become entrepreneurs but as our model is of low cost, anyone can afford to run this business.”

Similarly, Katukoori believes: “It's correct to say that funds are the biggest challenge. But small entrepreneurs like I will be depending on other sources like using social networking, email campaigns, bulk SMSes and free classified websites. According to me, it's better to participate in Business Opportunities Show, Expo and others.” So does Naidu opines that garnering funds has been an issue facing young franchise brands, but the crux of the matter remains on the core competency of the management and the far sightedness of the young brands. “With a real good unique concept, it has never been a problem to garner funds for young entrepreneurs. Being a strong financial entry ourselves, we have never faced funds to be a major issue. Having said that we are in talks with couple of very reputed venture funding firms willing to invest in our international expansion which is going to be the next big leap for us,” he says.

 

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