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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, the sector continued to grow as people were 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
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Paid-in-Full Rate
The Paid-in-Full Rate is when the SBA loan is fully paid off by the small business owner including interest, indicating financial strength.
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Charged Off Rate
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the small business owner.
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SBA Loan Success Ratio
For every 10 SBA loans fully paid including interest, 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 interest. 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. Oftentimes, 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 lead to 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
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Standard Education Franchise Industry Investment
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K
This metric is the standard industry investment amount for a single unit franchise investment in this industry. Our research and analytics team analyzed over 47 franchise concept investment breakdowns in order to calculate this figure.
0
%
Paid-in-Full Rate
The Paid-in-Full Rate is when the SBA loan is fully paid off by the franchisee including interest, indicating financial strength.
0
%
Charged Off Rate
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
0
:1
SBA Loan Success Ratio
For every 5 SBA franchise loans fully paid including interest, 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 | |
| Sales | $ 120,000 | 100% | $ 172,000 | 100% |
| Cost of Goods Sold | $ 24,000 | 20% | $ 30,000 | 20% |
| Gross Profit | $ 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% |
| Royalties | $ 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 Benefit | $ 11,100 | 9% | $ 33,900 | 20% |
| Net Profit Margin | 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 Profit Margin | 19% | 39% |
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