Why Pre School Franchisees Fail?
With the education sector in India showing double digit growth, opening a preschool franchise might seem a very lucrative business opportunity. While there are enough and more success stories of highly profitable preschool franchisees, there are plenty of stories of failures as well. It is important that you consider the reasons why some franchisees fail while others are able to run profitable centers. Being prepared can help you overcome these pitfalls better and increase your chances of becoming a successful franchise owner.
Location is the single biggest reason for the failure or success of a preschool franchise. In case you are thinking of picking a location solely because it comes with low monthly rental, think again. A location with a low rental might help you to keep costs down but it might also keep parents away from enrolling their child. It is always better to go with a location that is centrally located and in a well reputed residential neighborhood. Even though you many need to pay higher rentals, your cost will be more than offset by the increase in footfalls. A professionally run franchisor will be able to offer you a lot of insights in choosing the right location.
Robust Business Plan
For any business to succeed, the importance of a robust business plan cannot be over emphasized. However, many a times franchisors are known to try and reduce the investment required by franchisees on paper, in order for them to see the business proposition as being lucrative. This often becomes the reason for a pre school franchisee’s failure. With sizeable costs such as first year’s operating losses or rentals not factored into the business plan, you are setting yourself up for failure. Do remember to go through the plan with a fine tooth comb & provision for real costs.
Sales & Marketing
Sales & Marketing is one of the biggest determinants of success for a pre school franchisee. It is not possible for a stand alone pre school to compete with large advertising spends of bigger chains. However, as a franchisee it is important to determine the exact sales support being offered. Also be certain to look for franchisors with high brand equity in your region. Not only will it lead to higher admissions, it will also help you in charging a premium on the fee.
The reputation of any educational institution depends on the quality of its teaching staff. Hiring and training high quality teaching staff constitutes one of the biggest challenges of running a preschool franchisee since training in new technologies and teaching methodologies requires significant investment of time and money. A big challenge also lies in retaining teaching staff. Since salaries tend to be low in this business, attrition rates are high which can end up hurting the reputation of the preschool. Young children tend to form emotional attachments to their teachers and changing teachers frequently is likely to upset them which in turn gets communicated to parents and does not bode well for the business.
It is imperative, therefore that you work with franchisors that extend support in hiring and training teaching staff in the teaching methodologies and technology being adopted. Working with a well reputed franchisor will also allow you to charge a premium and pass on the benefit to the teachers in terms of higher salaries leading to a higher rate of satisfaction overall and increasing the chances of success.
There is a lot of focus nowadays on the role of early education in the overall development of a child. That being said you need to ensure that your curriculum and teaching methodology is well researched and based on scientific principles that facilitate early stage learning as opposed to offering only a rudimentary curriculum. Parents nowadays are keenly involved in every aspect of their child’s education and the key differentiator for deciding a preschool for them is the quality of the curriculum and its integration with new advanced learning principles and methodologies. Unless you have had the prudence to team up with a franchisor that offers a highly value driven curriculum, you are increasing your chance of failure.
Deciding the fee structure is always a tricky proposition and getting the balance wrong is one of the quickest ways of setting yourself up for failure. A low fee structure might help drive more footfalls but sustainability becomes an issue. On the other hand keeping the fee structure high might lead to low enrollments and mounting losses.
Franchisors who are willing to work with you and offer the benefit of their experience in preparing a realistic fee structure that balances both the profit needs of the business and what the customer is willing to pay, will help you avoid the pitfalls associated with failure. Teaming up with a franchisor with equity will also help you charge a premium in the fee rather than just play the pricing game.
As long as you have done your due diligence before partnering with a franchisor and have provided enough financial buffers to overcome first year operations, you should be able to count yourself among the successes.