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Education Franchise & Business Opportunities
General Education Industry
General Education Industry
The Education Services industry provides educational services of various subjects at different learning levels. The industry offers elementary and secondary schools, colleges, universities, technical schools, language schools, testing and educational support operators, and more.
The Educational Services sector has around 1.4 million open businesses that support over 13 million jobs. It has a market size of $2 trillion and it contributes directly and indirectly to U.S gross domestic product. The economy becomes more productive as it has more educated workers.
Education Industry Trends
The marketplace is getting more competitive by the day. Companies increased the demand for skilled professionals and quality learning, which explains the rising number of student enrollment in the U.S. Online learning has been a major factor contributing to the growth of the industry. In addition, it has been a sector that continues to grow as people are now required to stay in their homes due to the Covid-19 pandemic. With people staying at home, they have more time to pay attention to their own and their family’s needs, understanding, more than ever, the importance of education. Schools, colleges, universities, and tutoring centers are all adopting online courses over the traditional method. In a post Covid-19 scenario, scholars are expecting a new hybrid model of education that integrates information technology in the education dynamic.
Key Education Industry Numbers
The Paid-in-Full RateReferring to the SBA 7(a) Loan Program, how many businesses in a particular industry paid their SBA loans in full including interest relative to all the businesses in that industry. Note that many businesses are exempt from sharing their loan statuses as part of the… is when the SBA loan is fully paid off by the small business owner including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, indicating financial strength.
The Charged Off RateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be… is the SBA loan default rate where loans have no confidence in being paid off by the small business owner.
For every 10 SBA loans fully paid including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, 1 SBA loan was unable to be paid back, or defaulted.
*SBA Loan Data from 2010-2019
*Non-Franchise Businesses taken into account: 4,794
So you want to invest in an education franchise?
Education is one of the most valuable assets in society, as it can open doors to new opportunities for people in all walks of life. As the saying goes, an investment in knowledge pays the best interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…. Do you enjoy making a difference? Do you enjoy working with children? Are you passionate about helping individuals to excel? If your answer is “Yes,” then operating an education franchise can help you realize your dream of becoming your own boss while having a positive impact on society!
Education Franchises: Tutoring and More
Educational franchises include a variety of sub-industries including tutoring, STEM enrichment, daycare, sports, art, and music programs that combine entertainment and learning for children. Other education-based opportunities include college preparation, career training, business training, and assisting those with special learning needs.
Education: One of the Top Franchise Industries
Education is one of the fastest growing sectors of the franchise industry. With the huge success of franchises like Kumon, which currently has more than 25,000 franchise units, the industry has seen a burst of new business opportunities in recent years. Tutoring in the U.S. is a $7 billion industry and education as a whole is over 7.3% of the U.S. GDP. Education is the premise of progress in every society, every family.
Parents are paying more attention to their children’s education. Often times, they are willing to make significant investments on their children’s behalf even at the pre-school level. New studies published on Child Development found that high-quality early education（longer than one year) would significantly improve infants’ English speaking skills, decrease parent-reported behavioral issues, and has more positive child-parent interactions.
Later on in a child’s education, there is a need for college preparation programs to identify their interest and secure a coveted spot into the best universities possible. Parents who hope to help their children succeed in school and college seek outside services to fill the educational gaps in response to a more competitive college admissions environment. College planning franchises help high school students get into better colleges and might qualify them for larger scholarships and financial aid packages.
Parents know that their children’s acceptance into a recognized university enables them to have a wide range of opportunities once they graduate and join the workforce.
Vetted Biz has reviewed over 2,900 businesses and franchises with 1,700 in our portfolio as viable investment opportunities. Of the businesses reviewed in the education industry, we have seen the a wide range of investment amounts, from a small leadership learning concept starting at $16,800 to a full-sized pre-school at over $6,375,500.
On average, the royalty fee is around 8.7% and the marketing fee is approximately 1.9%.
Average Education Franchise Industry Percentage Fees
Standard Education Franchise Industry Investment
The Paid-in-Full RateReferring to the SBA 7(a) Loan Program, how many businesses in a particular industry paid their SBA loans in full including interest relative to all the businesses in that industry. Note that many businesses are exempt from sharing their loan statuses as part of the… is when the SBA loan is fully paid off by the franchisee including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, indicating financial strength.
The Charged Off RateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be… is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
For every 5 SBA franchise loans fully paid including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, 1 SBA loan was unable to be paid back, or defaulted.
*SBA Franchise Loan Data from 2010-2019
*Franchise Businesses taken into account: 955
Sample Education Franchise Income Statement
| Year 1 | ||||
|---|---|---|---|---|
| Base | % of Revenue | High | % of Revenue | |
| SalesThe total amount in dollars made in the business before expenses are deducted. See also Gross Revenue. | $ 120,000 | 100% | $ 172,000 | 100% |
| Cost of Goods SoldAlso known as Cost of Sales, Cost of Goods Sold includes the direct costs associated with generating revenue. Depending on the business, it can be physical products, supplies, and/or payroll. More | $ 24,000 | 20% | $ 30,000 | 20% |
| Gross ProfitThe profit a business makes after deducting the costs involved in making, providing, and selling the goods and services. In an income statement, it is the sales minus the cost of goods sold.Gross profit = Revenue – Cost of Goods Sold | $ 96,000 | 80% | $ 142,000 | 83% |
| Expenses | ||||
| Rent | $ 36,000 | 30% | $ 48,000 | 28% |
| Utilities | $ 2,400 | 1% | $ 2,400 | 1% |
| Marketing / Advertising | $ 24,000 | 20% | $ 30,000 | 20% |
| Insurance | $ 8,500 | 7% | $ 8,500 | 5% |
| RoyaltiesFees paid by a franchisee to their franchisor in order to operate a franchise location. They are usually on a weekly or monthly basis. More | $ 12,000 | 10% | $ 17,200 | 10% |
| Salaries / Wages | $ 0 | 0% | $ 0 | 0% |
| Repairs and Maintenance | $ 500 | 0% | $ 500 | 0% |
| All other expenses | $ 1,500 | 1% | $ 1,500 | 1% |
| Total Expenses | $ 84,900 | 71% | $ 108,100 | 63% |
| Owner BenefitThe amount of money a business owner receives before taxes from a business’s operations over the course of a year. More | $ 11,100 | 9% | $ 33,900 | 20% |
| Net Profit MarginThe net profit margin shows how much a business is generating profit for every dollar of cost, expenses, interest, and taxes involved. It is displayed as the percentage of how much of each dollar collected by a company as revenue translates to net profit. The… | 9% | 20% | ||
| Year 3 | ||||
| Base | % of Revenue | High | % of Revenue | |
| Sales | $ 180,000 | 100% | $ 302,000 | 100% |
| Cost of Goods Sold | $ 30,600 | 17% | $ 45,300 | 15% |
| Gross Profit | $ 149,400 | 83% | $ 256,700 | 85% |
| Expenses | ||||
| Rent | $ 48,000 | 27% | $ 48,000 | 16% |
| Utilities | $ 2,400 | 1% | $ 2,400 | 1% |
| Marketing / Advertising | $ 36,000 | 1% | $ 48,000 | 1% |
| Insurance | $ 8,500 | 5% | $ 8,500 | 3% |
| Royalties | $ 18,000 | 10% | $ 30,000 | 10% |
| Salaries / Wages | $ 0 | 0% | $ 0 | 0% |
| Repairs and Maintenance | $ 500 | 0% | $ 500 | 0% |
| All other expenses | $ 1,500 | 1% | $ 1,500 | 1% |
| Total Expenses | $ 114,900 | 64% | $ 138,900 | 46% |
| Owner Benefit | $ 34,500 | 19% | $ 117,800 | 39% |
| Net ProfitAlso known as net income or net margin, the net profit is the net income on an income statement. It is the revenue minus the cost of goods sold, expenses, interest, and taxes.Net Profit = Revenue – Cost of Goods Sold – Expenses – Interest – Taxes Margin | 19% | 39% |
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