Goddard School Franchise Cost Worth Profit Potential? (2022)

Written by: Tyler Morris
Last Updated by Marina Longo: August 3, 2022
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This article is based on its 2022 FDD

The Goddard School is a franchised preschool learning center. Services are offered for children between 6 weeks and 10 years old. The Goddard School has existed for over 30 years. Goddard aims to provide a positive and inclusive learning environment as some of the most valuable lessons can be in everyday moments. 

The Goddard School is run by Dennis Maple who currently serves as both the Chief Executive Officer and Chairman of the board. Maple took over the Goddard School operations in 2019 and had previously served as the President of First Student. 

At the end of 2021 the Goddard School had a total 575 locations nationwide. All 575 locations are franchises and the company itself does not own a single location. 

Contents

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How is the Goddard School Franchise Positioned in the Education Industry?

The standard Education franchise in the U.S. costs $123,000 for a single franchise. The Education industry is one of the fastest growing sectors in the U.S. The industry itself is valued at over $2 trillion with over 1.4 million businesses. A standard education franchise should expect between $120,000 and $180,000  in sales the first year alone. By year three sales should be between $180,000 and $302,000. Be sure to check out all of these metrics on the Vetted Biz Education Profile

The Goddard School charges both premium royalty and marketing fees. The royalty fee is 7% of gross sales and the marketing fee is 4%. A Standard royalty fee is 5% and marketing is 3%. While the Goddard School has above average fees the brand and success the company has makes it a desirable franchise. 

A similar education brand is Childrens Lighthouse Schools. Childrens Lighthouse is a competitor of the Goddard School with 49 franchised and 0 corporate owned locations. The royalty fee is on par with the Goddard School at 7% of gross sales and has a slightly less expensive marketing fee of 2%. However, the initial fee for a Childrens Lighthouse is quite expensive coming in at $70,000.

goddard school

How Much is a Goddard School Franchise?

The initial Goddard School Franchise fee is $30,000. The total expected initial investment for a standard Goddard School ranges between $818,300 – $1,090,100. The initial license fee which is a lump sum totaling $135,000. If you are opening a Satellite location $30,000 will be the lump sum amount owed.

Franchise Cost

Estimated Initial Investment

Type of expeditureAmount (8,600 square feet to 12,000 square feet)To Whom Payment Is To Be Made
SchoolSatellite Location
Initial License Fee$135,000Not applicableUs
Satellite Location FeeNot applicable$30,000Us
Initial Training and Assistance Fee; Satellite Location Assistance Fee$35,000$7,500Us
Initial Marketing Fee$50,000-$71,500$15,000Us
Site Development Assistance Fee$35,000$8,750Us
Background Check (estimate is for up to four individuals)$3,000-$5,500$0-$5,500Us
Convention Deposit$1,000$0-$1,000Us
Lease Deposit$19,000-$100,000Landlord
Three Months Rent$55,000-$85,000Landlord
Furniture, Fixtures and Equipment$282,000-$340,000$53,100-$136,100Us or the Outside Suppliers
Marketing, Materials, Stationery, Forms, and Curricular Resources$19,000-$31,500Us or the Outside Suppliers
Signs$12,000Us or the Outside Suppliers
Computer System, IT Security, network equipment/wireless access point devices, Telephone System, Interactive Flar Panel and Figital Signage Package$26,000-$35,000Us or the Outside Suppliers
Security System$12,000Us or the Outside Suppliers
Miscellaneous Opening Costs$85,000-$100,000Third Parties
Accreditation$1,000$0-$1,000Third Parties
Additional Funds—3 months$48,300-$90,600Third Parties
Total Estimated Initial Investment$818,300-$1,090,100$390,650-$670,950(If You Lease the School and Landlord Constructs the Improvements)
goddard school

Goddard School Franchise Requirements

While there is not a specific minimum net worth required the Goddard School and its affiliates reserve the right to mandate one. If you are looking to purchase an existing Goddard School, you are required to pay a $60,000 initial fee. It is important to follow the Goddard School’s opening and operating requirements. The company has the right to terminate an opening agreement and not refund the initial deposit. Additionally, you are required to compensate the Goddard School for background checks. Finally, you must use the approved Goddard School logos for your location.

MarkRegistration NumberRegistration DateRegister
THE GODDARD SCHOOL (Service Mark)1,788,532August 17, 1993Principal
GODDARD (Service Mark)2,539,754 (Classes 41 and 42)February 19, 2002
THE GODDARD SCHOOL FOR EARLY CHILDHOOD DEVELOPMENT (and design) (Service Mark)4,457,865 (Classes 35, 41 and 43)December 31, 2013
LEARNING FOR FUN. LEARNING FOR LIFE (Service Mark)4,426,366 (Classes 41 and 43)October 29, 2013
READY, SET, GODDARD (Service Mark)5,516,960 (Class 41)July 17, 2018
READY, SET, GODDARD (Service Mark)4,813,738 (Class 35)September 15, 2015

 

Ongoing Fees

The Goddard School charges 7% of gross sales for its royalty fee. In addition, 4% of gross sales are the company’s marketing fee. Local advertising is endured by the franchisee and depends on how much they are willing to invest.

goddard school

How Much do Goddard School Franchisees Make?

The median Goddard School that was open for over 18 months by the end of 2021 earned $1,699,054  in gross revenue. The highest was $6,257,269 in revenue and the lowest was $213,171.The median EBITDA was $321,938, which was 19.3% of revenue. This median was calculated with 532 open schools at the end of 2021.

Median 2021 2020 2019
Gross Revenue $1,669,054 $1,291,314 $1,700,221
Ebitda $321,938 $97,736 $356,538

Note the outbreak of the Covid-19 pandemic in 2020, had a major impact on Goddard School locations nationwide. Schools were forced to close for an extended period of time.

Is the Company Franchise Profit Worth the Franchise Cost?

If you invest a standard $954,200 to open a Goddard School it will take approximately 4.5 – 5 years to recoup your investment. This includes 1.5 – 2 years of development and construction of your Goddard School. This is a standard timeframe it takes for any franchise to get off the ground. Five years with a highly profitable business makes the Goddard School a great investment opportunity

Selling Price:

Under $1 Million Net Sales

  • MVIC/Net Sales: 0.56

$1 Million – $5 Million Net Sales

  • MVIC/Net Sales: 0.87

Over $5 Million Net Sales

  • MVIC/Net Sales: 0.54

Goddard School is expected to sell for $1.56 million in year 5. 

After recouping all your initial capital investment of $954k,  you can make another ~$600k when it comes time to sell.

Income Statements

Balance Sheets

 Years ended in December 30,
20212020
Assets
Current assets:
Cash$26,330,736$36,815,388
Accounts receivable, net$7,040,285$5,963,035
Deferred opening expenses$309,906$225,608
Prepaid expenses and other$3,371,070$2,128,426
Total current assets$37,051,997$45,132,457
Property and equipment, net$3,986,141$1,677,665
Other Assets:
Deferred opening expenses$1,369,598$1,558,651
Deposits and other$123,024$1,558,651
Total other assets$1,492,622$3,531,124
Total assets$42,530,760$50,341,246
Liabilities and Shareholder’s Equity
Current liabilities:
Accounts payable and accrued expenses$6,148,312$6,394,172
Due to affiliate$249,466$404,066
Deposits on franchise contracts$375,000$800,000
Deferred revenue$2,718,417$2,856,166
Other current liabilities$1,270,674$1,477,212
Total Current Liabilities$10,761,869$11,931,616
Long-term Liabilities:
Deposits on franchise contracts$2,796,250$2,550,000
Deferred revenue$15,450,974$14,662,363
Other liabilities$1,127,689$339,158
Total Long-Term Liabilities$19,374,913$17,611,521
Commitments and contingencies
Shareholder’s equity:
Common stock, $.01 par, 9,000 shares authorized, issued and outstanding$90$90
Additional paid-in capital$3,223,905$3,223,905
Retained earnings$9,169,983$17,574,114
Total shareholder’s equity$12,393,978$20,798,109
Total liabilities and shareholder’s equity$42,530,760$50,341,246

 

goddard school

Statements of Shareholder’s Equity

 Common StockAdditional Paid-in CapitalRetained EarningsTotal Shareholder’s Equity
SharesAmount
Balances at January 1, 2019$9,000$90$3,223,905$19,365,708$22,589,703
Adoption of Topic ASC 606$(12,854,776)$(12,854,776)
Net Income$24,516,775$24,516,775
Distributions$(19,000,000)($19,000,000)
Balances at December 31, 2019$9,000$90$3,223,905$12,027,707$15,251,702
Net Income$15,546,407$15,546,407
Distributions$(10,000,000)$(10,000,000)
Balances at December 31, 2020$9,000$90$3,223,905$17,574,114$20,798,109
Net Income$29,595,869$29,595,869
Distributions$(38,000,000)$(38,000,000)
Balances December 31, 2021$9,000$90$3,223,905$9,169,983$12,393,978

 

franchise specialist

Statements of Income

 Years ended in December 31,
202120202019
Revenues:
Royalties$69,444,943$48,606,300$62,595,206
Fees on initial franchise contracts$3,451,638$3,951,556$2,514,589
Commisions and other income$366,219$521,091$942,772
Total revenues$73,262,800$53,078,947$67,052,837
Operating expenses:
Personnel$23,971,294$20,126,757$26,569,876
Travel expense$651,416$750,128$2,567,195
Convention$176,442$1,366,148
Selling, general and administrative$15,360,002$13,076,362$9,506,138
Amortization of intangible assets$4,310
Management fees$3,000,000
Other operating expense, net$563,999$1,152,639$445,027
Total operating expenses$43,733,153$38,105,886$43,458,694
Income from operations$29,529,647$14,973,061$23,594,143
Operating (expenses) income:
Charitable contributions$(6,4419)$(8,550)$(11,619)
Interest income$72,641$581,896$936,366
Other$(2,115)
Net income$29,595,869$15,546,407$24,516,775

 

The Goddard School as an organization had a net income of $29,595,869 in 2021. The royalties were $69,444,943 making it a highly profitable and stable enterprise. 

How many units have opened and closed?

Systemwide Outlet Summary

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised2019489519+30
2020519553+34
2021553579+26
Company-Owned2019000
2020000
2021000
Total Outlets2019489519+30
2020519553+34
2021553575+25

There are no company owned outlets meaning that all 575 locations at the end of 2021 were all franchised locations.

Conclusion

Education is one of the most important focuses across the world. Parents invest heavily in child education. The Goddard School has had major success attracting families of young children to utilize their services. The business while expensive up-front on average returns the investment in 4.5-5 years. Additionally, the median franchise sells for $1,564,930.77, making it a highly attractive business for potential franchisees. 

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