Happenings

Monday, June 11, 2018

How The Learning Experience Continues To Grow Its Childcare Network



(Forbes) - Franchising is not just about quickly-served food, and other uniformly and swiftly-executed services; it also includes the education and care of our young children.

 

One of the more serious players in the early education and childcare franchise space is The Learning Experience, a Florida-based organization with 254 childcare centers that offer services for children aged six months to six years-old. Another 154 centers are in the pipeline and will come online over the next couple of years. Last year the brand’s corporate office netted nearly $8.5 million in profit on more than $21.9 million in revenue.

In 2017 the company added 27 new locations to its roster, but to sign those new shops The Learning Experience’s leadership had to wade through quite a few inquiries from interested parties. “We get about 500 inbound solicitations for franchisee grants (per month),” says Richard Weissman, the firm’s CEO, who left an investment banking career in 1987 to join his parents’ daycare company, having worked within their organization as teen.

He went on to help the organization grow to its current girth, becoming efficient at identifying quality personnel to run locations. Separating wheat from chaff, he says, is a process. “As we speak to (potential franchisees), just logically they will weed themselves out if something in the conversation doesn’t appeal to them,” explains Weissman. “Or they don’t have enough capital, or it’s not the type of business they’re seeking.”

More Business, Less Education

When it comes to choosing who to sell their childcare and education facilities to, The Learning Experiences favors operating experience over teaching know-how. “The type of person we seek out is not one that has been in the education business,” says Weissman. “As a matter of fact, we shy away from people that have been in the education business.”

Part of the reason for that is that those who have worked with children before may have preconceived notions about how it’s done, or are partial to a different type of childcare or early education curriculum. For The Learning Experience—like many franchisors—adhering to the established system is a must. Deviating from the brand’s existing concept is a non-starter, and franchisee hopefuls need to be on board or they will not be granted a license.

Also, running a childcare center or school is a business, with employees, a payroll, state and federal regulations that must be taken into account, and local marketing that must be seen to, as well as a brand whose standards must be upheld and whose fees must be paid—an experienced business mind is a better bet to juggle those responsibilities. “I’d much more prefer to focus on people who are hard working, have a great college degree in any format and have worked for large corporations; who are used to following operating procedures,” explains Weissman. “That just makes a better quality franchisee for us.”

It’s not as if the franchisee will be overseeing site operations, anyway, as that job falls to the facility’s director, a role the franchisee hires for and whose qualifications are regulated differently from state to state. Sometimes a college degree in early childhood education is necessary; sometimes much simpler certification is required.

Making The Cut: for Franchisees and the Franchisor

After a number of phone chats with staff at The Learning Experience home office, interested potential licensees receive a franchise disclosure document and pore over the minute details of The Learning Experience organization. There they learn that buying a franchise within the network costs between $500,000 and $3.6 million, depending on whether they develop a new center or buy an existing one outright, and that a franchisee should have at least $150,000 in cash (there are exceptions for notably experienced personnel without the necessary liquidity).

Franchisees also learn that the home office takes 7% of gross monthly revenue, and another 1% at least for advertising costs, on top of a number of other fees including marketing, software support, proprietary product licensing, etc. Of the company’s $21.94 million in revenue last year, more than $11.6 million was derived from royalty payments, and an additional $8.9 million from franchising and additional fees.

If the brand’s disclosure documents do not scare away prospective franchisees, they then go through a qualifying questionnaire that delves into their background: where they’re from, whether they have children, their education status, their work history and financial information. Meanwhile, the prospectives will often call up existing franchisees listed in the company’s FDD to ask questions about the organization, trying to unearth red flags.

If the potential franchisee is satisfied, the interviewing process concludes and The Learning Experience hires a third party security firm to run a background check. “That would include everything,” says Weissman,” FBI checks, background checks, worker’s comp checks, traffic checks, credit reports.”

After approval, it can take two years for a new franchisee to take control of and open a new center, because in the vast majority of instances The Learning Experience procures the land for the new facility through a long term lease and sublets or transfers it to a franchisee; the new licensees are not left to fend for themselves.

In The System

But how much money can Learning Experience location make, once up and running? According to the company, in 2017 the average gross sales of centers that had been operational for between two and four years was about $1.3 million—with figures ranging from $464,234 to $2.78 million. Locations that had been operating for longer than four years averaged gross revenue of more than $1.4 million

To compare, company-owned locations that have been in operation four years or longer averaged nearly $1. 5 million in gross sales.

While operating a center, franchisees can expect their organizations to be put through a 900-point evaluation twice a year to assure compliance with brand and regulatory standards. There is also a 200-plus point evaluation conducted quarterly. Area reps of The Learning Experience also reserve the right for unannounced visits to check up on things.

Each location’s computer system is connected to the home office network in real time, Weissman says, meaning that every student or teacher login, every signed document that’s uploaded to the system and every time sheet that’s filed is recorded and viewable by Learning Experience staff at its Florida HQ.

 

 


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