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Both preschool and senior secondary school franchising has become one of the most sought after forms of educational franchises. Every prospective school franchisee should have a proper business plan for school franchising that should elaborate upon some fundamental issues. A prospective school franchisee can seek the help of a franchise consultant when creating a business plan for school franchising.

Business plan for school and Franchise Agreement

A franchise agreement is a legally binding document that describes the relationship between franchisor and franchisee. For any prospective school franchisee, it is imperative to have a proper business plan. A business plan for school franchisee needs a well-defined franchise agreement that explains the franchisor’s expectations from the franchisee with regards to the acceptance of a certain business format and future growth prospects.

The franchise agreement is designed in such a way that it lists all the privileges a prospective franchisee would enjoy. When the franchisee makes a business plan for school franchise, he can check out the franchise agreement to measure the extent of help that would be provided in terms of infrastructure, advertising, marketing and management for the proposed preschool/school and effectively calculate his level of involvement and probable costs that would be incurred.

Business plan for school and FDD

Some people might confuse a franchise agreement with a FDD — Franchise Disclosure Document. FDD is different, as it is a legal document that has to be provided by a franchisor to the prospective franchisee before any document of sale is signed or finalized. The business plan for school franchises would depend upon the FDD for providing the relevant information that helps the franchisee in making an informed decision about the school/preschool brand’s market worth. The FDD is provided before signing the final documents.

FDD and Franchise Agreement

A business plan for school franchising would include a FDD that would also provide comprehensive information about the franchisor’s financial background. The franchisor has to disclose lawsuits or bankruptcies in this FDD. Whereas, a franchise agreement is important to the business plan for school franchising because it outlines the franchisor’s expectations and responsibilities.  It consists of—

• Explanation of Contract
• Operations Manual
• Proprietary-related statements —they directly affect a franchisee’s method of operation. A prospective school franchise would need to know the marketing/advertising procedures advocated by the franchisor when creating a business plan for school franchising.
• Ongoing support from franchisor

The business for school and education in general has seen a monumental increase in India. The present scenario is witnessing a never-seen-before proportion of investments from private corporates and foreign investment firms. The business for school in India has gone beyond the realm for just boarding schools or international schools. Now, many city-based (10+2) schools are being financed by a number of corporates and have become an integral part of the Indian higher education. This change has come about with the government lifting many hurdles that used to hinder foreign investments. However, currently, there are still some legal issues that inhibit the business for schools from expanding across the nation..

For example, it is still not possible for the non-profit companies that are covered under Article 25 of CRA — Companies Registration Act, i.e. including industry associations from setting up institutions or get a recognised university prominence/recognition from the UGC — University Grants Commission. By adhering to such policies, business for schools is being hampered which eventually limits the spread of quality educational institutions in the country..

Limitations to Business for Schools in India

There are still many reservations towards the expansion of business for schools in India regionally, i.e. some of these limitations are state-based and some of the restrictions have been levied by the central government itself. For example, educational institutions can be set-up in India only by recognised trusts/societies/charitable companies. However, the profits earned from such business from schools can’t be diverted outside the organization and have to be reinvested to a certain extent..

Now, these sorts of laws only hamper business for schools from further developing. This has a two-pronged negative affect on the education business scenario in India..

This sort of restriction hinders the educational institutes from spreading out and instead encourages the investors to delve into falsified accounting methods to spread out their profits from the established institution. Further, such policies discourage foreign investments. There are some states that are working towards answering this issue. For example, the state of Maharashtra is making sure that it encourages the business for school in their urban and semi-urban centres as it plans to limit the application of the above-mentioned clause. This would mean that the non-profit, Section 25 companies would be allowed to set-up educational institutions in India. This clause alteration still doesn’t affect the primary education sphere.

Many preschool chains in India try and put forth the image that theirs is the best preschool network in India, but the reality is quite contrasting. Most of these preschools aren’t professionally-managed or administered in a manner that can promise the quality of preschooling to be maintained across their branches/franchises. In order to become the best preschool network in India, it is important that the preschool’s franchise relationship and expansion set-up is exemplary.

Businesses & Franchise Model
There are three basic types of business that qualify for expansion through the Franchise model. These three are the distributorship, brand name licensing and business format franchise. Out of these three, preschool networks have been established on the business format type of franchises.

 Business-format franchise — this is the most common of all franchise formats where the Franchisee acquires the right to own a business system that has been set up by the franchisor. The franchisee pays because the franchisor already has an established brand name and an enviable track record. The payment is done in the name of a pre-determined royalty fee which is mentioned in the franchise agreement. This format is special because the franchisor-franchisee relationship doesn’t end with the financial aspect of the dealing. Rather, the franchisor is supposed to provide continued training, sales support, cost-cutting through bulk purchasing and marketing, advertisement support.

A reputed preschool network is more likely to have a master franchise or the presence of a regional director who are supposed to exude the attitude of the actual franchisor. In order to establish a good network in the country, a franchisor needs to maintain smooth-running relations with the franchisees. This isn’t an obligation that is being considered by the franchisor, because a better-performing franchisee essentially translates into better-earning franchisor, i.e. the franchisor earns through the royalties collected.

Franchisee Initiative — some people may mistake that all the professional obligations rest with the franchisor. In fact, the initiative taken by the franchisee plays a pivotal role in making a chain of preschools the best preschool network in India. This could be done through a number of means,
• Extending the public relations of the franchisor through business/formal or social networking.
• Giving ideas for improvement of curriculum of that brand of preschool.
• Helping the franchisor gain a realistic picture of what the client is expecting.

Franchises in Delhi

The national capital of India, Delhi, is a trade and commerce hub and there have always been ample opportunities for the entrepreneurs and investors here. Some great industrialists and business corporates started from this place only. Recently, the metropolis has witnessed a number of business activities and franchising is one among them.

What has helped franchising to grow in and around Delhi?

There are many factors responsible for the growth of franchising business in and around Delhi, like:

• Delhi is an important trade and commerce centre in North India. There is availability of plethora of resources needed to develop infrastructure. Building costs are much affordable.
• There are numerous financial institutions that help in providing the capital to entrepreneurs and investors in their projects.
• Man power and professional workforce is also one of the reasons making it a good destination for franchisors and investors.
• There is a huge population that has to be supported in the vicinity. With over 1.6 crore population, the city has to provide amenities to its people. 
• The accumulation of wealth is also one of the reasons for new startups that emerge now and then. 
• Foreign brands and services have made successful entry in the metropolitan cities, including Delhi. Thus, many service providers from outside India have been pouring into the city.

Popular Franchises Available in Delhi
So far the most happening industries and services for franchising near Delhi have been those of restaurants, food joints, clothing, retail shops and education institutions. The competition in most of them has reached to a critical mark, except school franchising. School franchising stems out of the education services and there are still a lot of opportunities available.

Advantages of Franchises in Delhi
Franchising is a proven business practice and is less risky than starting a project independently. Unless one is very much sure and confident of the success of the business proposal, there is always a risk of failure with early setbacks. However in business franchising, everything has already been put to practice and tested.

Understanding the Brand Value

Brand equity or value is basically a measure of the total value of a particular brand, i.e. this kind of evaluation is done in a very comprehensive manner. A brand could be in the form of an indefinable asset and the established market value of a franchisor could be more than the countable/physical assets like land, employees, machines, etc. Brand value is decided mainly by the market demand and in that regard, by the customer loyalty — the extent of customers who repeatedly by goods of the same brand. Therefore, brands offering their franchise merely aren’t offering a business opportunity but also the market goodwill and reputation that have been established over the years. A franchisee in turn benefits from immediate recognition as the brand already has a market presence which translates into immediate customer presence and thus, the profits begin pouring in much sooner as compared to a traditional business venture.

Regional Factors — brands offering their franchise have to be very careful about the regional, geographical locations proposed by the franchisee for setting up a branch. This is because of several factors.

1. The franchisor’s brand may be very market specific. For example, luxury brands like the very high-end watch segment has a very limited and highly profitable customer base. Now, these customers would usually be found in the most reputable urban locales. If the franchisor decides to open a branch in semi-urban, rural or township kind of an area, the credibility and the exclusiveness associated with the brand would dip. This would mean that the existing customers would associate the brand with lesser prestige value. Combined together, these factors would eventually lead to erosion of the brand’s worth and demand.
2. The franchisee location is very important for brands offering their franchise with regards to the concentration factor. For example, in the southern part of a city a company may already have two fully-functional and profitable franchisees. Now, if the parent company decides to award a third franchise opportunity in the same area, it could eat into the profit margin of the existing franchisees. This also means less-than-expected returns for the new franchisee. The density of a brand in a region also decides the exclusiveness of a brand. There is a thin line separating exclusiveness and availability and the franchisor has to take care of that.
3. Brands offering their franchise have to take calculate the future prospects of a given region. For example, in India, there are many semi-urban areas that cannot presently offer the customer volume of a metropolitan but in the near future have the potential to provide greater customer numbers. It makes sense to establish low-profit oriented but growth-assured kind of franchises in such areas.

For potential investors and businessmen, the education franchising sector offers immense growth opportunities. However, once a decision to buy a franchise has been made, the potential franchisee needs to clarify some points necessary to become a successful franchisee.

How Franchising Works?
In order to become a profitable franchisee, it is better to have a grasp over the basic franchise concepts. To buy a franchise may appear like a simple task to accomplish, but it isn’t that straightforward. There are many different franchising formats. For example, an investor has to decide which franchise format would be easier to manage and more profitable. There is a choice between manufacturing and business-format franchise. Some people are content with selling a brand, i.e. brand franchising.

A potential investor should know about:
•    Franchisee-franchisor relationship
•    Limitations in a franchise set-up

How to Buy a Franchise?
The most important evaluation has to be about an investor’s individual financial status. Other important aspects of planning to buy a franchise include:

•    Financing options — these options could be provided by the franchisor himself. Usually, once an investor is related to a particular brand, it becomes easier to avail finances from banks and credit institutions.

•    Franchise agreement — this is the defining document and the very sole of the franchise-franchisee relation. The agreement incorporates everything from the franchise fee to the extent of a franchisee’s rights.

•    Franchise consultants — some people are confused about how to buy a franchise. Such potential investors could seek the help of a professional like a franchise consultant.

Buy a franchise or franchisee?
Some people prefer to buy a franchise opportunity directly from the franchisor and establish their own business, i.e. a new business set-up. This offers the opportunity to start fresh with your own space and infrastructure. On the other hand, there are investors who seek to buy a franchise that is already in operation. The investor benefits from a business format and infrastructure that has already been created and is actually in operation but to buy a franchise in the form of an existing franchisee has greater risks attached to it. A franchisee-owner selling his business has to explain the reasons for such a sale and his financial liabilities.

Business franchising has proved to be a successful model to expand vigorously and in a small time period. We now have both product franchise and service franchise, made popular by the franchisors and the franchisee that work for common goals. As any popular brand decides to go for franchise model, the provider or franchisor often conceives the idea of a good franchisee.

Most product and service franchisors favour the qualities and attributes of the franchisee that is hard working and honest. But that is not all. A franchisee that likes and endorses the business model personally is deemed to prove a good one. Unless the franchisee loves the business he is into, the growth opportunities are apparently limited.

After personal endorsements and liking comes the commitment. The franchisee must be committed to make his business a success story. Sometimes it happens that franchise owners are too much disinterested and are entirely dependent on franchisor’s support and assistance. Such franchisee makes little progress, as the motivation and drive to excel regardless of assistance and support is missing.

Franchisee must also be straightforward and honest. Attritions between franchisee and franchisor results in acrimonious relations, which is not a good sign for the healthy development of business for both the parties. The two have to have a mutual consensus and work for the benefit of all.

Here is a checklist to help while awarding franchisee the opportunity to represent the brand:

Past record or experience in the same or similar business
Relations with previous partners or employers
Individual financial strength of the one claiming franchisee
Awareness about and inclination towards particular service or product
Affinity for particular brand

Business franchising is one sure shot for success. Those who miss do not aim for the right spot.