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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

Break-even analysis is an important calculation used in business ventures like running a preschool. Break even analysis of a preschool is reached when its revenues equal the sum of all the expenses. At the break even point there is zero profit, but it also means that the business is no longer running losses and from here on it would begin to incur profits. A break-even calculation makes a lot of sense for the preschool owner because it helps to calculate the level of child enrolment that is necessary to avoid operating in a loss. However, break even breakdown is more of an indicator rather than a science of exact calculations.

For example, the childcare provider could choose not to add more children to reach the break-even point. Instead, the fee for new enrolments could be raised or the staff/child ratios could be altered. Thus, this analysis is indicative of how the preschool business set-up is operating in terms of finances and the changes it needs to make. Revenue projections can also go awry if there is a high rate of children dropping out of the preschool, right in between the semester. Preschools could solve this problem by making the parents sign a payment agreement. The agreement could be prepared in such a manner that the parents have to either give a two-week notice before taking out their child or pay one week of tuition fee in advance.

Costs
In order to effectively control and budget the cost, expenditures, etc. the preschool management should have a good understanding of the various kinds of costs that are incurred when running the business. The break even analysis of a preschool factor in various kinds of costs likes,

• Fixed costs have a near-negligible tendency to change over a period of time. These costs do no undergo any kind of variation irrespective of the total number of teachers employed or the number of children enrolled. These include costs incurred in the form of land rent, insurance payments, etc.
• Variable costs tend to alter over a short or longer period of time. For example, costs incurred due to the money spent on food provided to the children would alter in proportion to the number of children enrolled.
• Step-variable costs are those costs that do change with a factor like the number of children enrolled but tend grow to a larger extent than the cost of preschooling calculated on a per child basis. A common example of a step-variable cost is teacher salaries.

Break even analysis of a preschool also need to factor in
• Average revenue per child.
• Margin created per child.
• Personal expenses debited from the preschool’s business account.

Schooling has turned into a major business sector in India. Securing admission in a reputed senior secondary school is often linked to the quality and brand name of the preschool or playschool that he child had attended. Parents are often faced with preschools/playschools that advertise themselves as the ‘best preparatory school for children’. Many policy changes have been made regarding the admission process in the preschool sector but these guidelines are being openly flouted by the preschools that might market themselves as the ‘best preparatory school for children’.

Again, the interviewing of the parents in the senior secondary schools has also been abolished. This was to ensure that the blatant commercialisation of the preschooling sector in India was abolished. This is because often the interview process would grind the parents regarding the preschooling options they had made. Just to give an overview, with these policies in place, even parents seeking admission to the supposed ‘best preparatory school for children’ were often humiliated in terms of their qualifications and financial status.

However, there are some worthy play schools that are truly preparatory schools and have positioned themselves as a means to bridge the gap before leaping into an environment for senior secondary or formal education. Some people have suggested that a ‘play school’ is actually a misnomer as the curriculum of preschools isn’t about random playing and is based upon certain theme-based, purposeful interactive sessions that endeavour to ensure a child’s holistic development.

Play Schools – the urban connection
Play schools are just entering the semi-urban areas or industrial towns. Presently, there are largely looked upon as an urban need — an urban phenomenon. This is largely due to the fact that the disposable incomes are higher in the cities and the number of nuclear families is increasing by the moment. Again the concept of working parents translates into greater need for preschools/playschools.

Forays have been made into the non-urban centres and an example of it is the SHEMROCK Group of Schools. They have introduced playschool-based centers in many small towns and sub-urban areas. Such play-schools aren’t a mirror image of their metropolitan counterparts but they strive hard to fulfill the purpose of structured preschooling . There have been some attitudinal changes that have led to a growing demand for play schools. The debate regarding a play school’s purpose is increasingly fading away.