Goddard School Franchise Cost Worth Profit Potential? (2023)
Written by: Tyler Morris
Last Updated by
Marina Longo: January 20, 2023
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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.
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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.
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 expediture | Amount (8,600 square feet to 12,000 square feet) | To Whom Payment Is To Be Made | |
|---|---|---|---|
| School | Satellite Location | ||
| Initial License Fee | $135,000 | Not applicable | Us |
| Satellite Location Fee | Not applicable | $30,000 | Us |
| Initial Training and Assistance Fee; Satellite Location Assistance Fee | $35,000 | $7,500 | Us |
| Initial Marketing Fee | $50,000-$71,500 | $15,000 | Us |
| Site Development Assistance Fee | $35,000 | $8,750 | Us |
| Background Check (estimate is for up to four individuals) | $3,000-$5,500 | $0-$5,500 | Us |
| Convention Deposit | $1,000 | $0-$1,000 | Us |
| Lease Deposit | $19,000-$100,000 | Landlord | |
| Three Months Rent | $55,000-$85,000 | Landlord | |
| Furniture, Fixtures and Equipment | $282,000-$340,000 | $53,100-$136,100 | Us or the Outside Suppliers |
| Marketing, Materials, Stationery, Forms, and Curricular Resources | $19,000-$31,500 | Us or the Outside Suppliers | |
| Signs | $12,000 | Us 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-$35,000 | Us or the Outside Suppliers | |
| Security System | $12,000 | Us or the Outside Suppliers | |
| Miscellaneous Opening Costs | $85,000-$100,000 | Third Parties | |
| Accreditation | $1,000 | $0-$1,000 | Third Parties |
| Additional Funds—3 months | $48,300-$90,600 | Third 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 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.
| Mark | Registration Number | Registration Date | Register |
|---|---|---|---|
| THE GODDARD SCHOOL (Service Mark) | 1,788,532 | August 17, 1993 | Principal |
| 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.
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, | ||
| 2021 | 2020 | |
|---|---|---|
| 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 |
Statements of Shareholder’s Equity
| Common Stock | Additional Paid-in Capital | Retained Earnings | Total Shareholder’s Equity | ||
|---|---|---|---|---|---|
| Shares | Amount | ||||
| 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 |
Statements of Income
| Years ended in December 31, | |||
| 2021 | 2020 | 2019 | |
|---|---|---|---|
| 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 type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 489 | 519 | +30 |
| 2020 | 519 | 553 | +34 | |
| 2021 | 553 | 579 | +26 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets | 2019 | 489 | 519 | +30 |
| 2020 | 519 | 553 | +34 | |
| 2021 | 553 | 575 | +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.
