More Than a Daycare Franchise | Top Childcare Franchise For Sale

Written by: Patrick Findaro
Last Updated: November 18, 2021
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Daycare Franchise

Patrick: Hey, Patrick Findaro, here, co-founder at Vetted Biz and managing partner at Visa Franchise. At Vetted Biz, we help you find, vet and buy franchise or business for sale. At Visa Franchise over the last five years, we’ve helped 350-plus entrepreneurs from across the globe find and analyze franchises that are eligible for all different types of investor visas, but mostly, the E-2 treaty visa. Today I’m very excited to have on, Marcello Spinelli, from Amazing Explorers Academy. We’ve known each other now for a few years. And we’ve been able to follow his brand starting from one location to five locations open to now 10, 15 locations in development. And they’re definitely pioneers in early childhood education space.

Marcello and I will talk about different business models and opportunities to own the real estate, opportunities to lease the real estate for an early childhood education franchise. Really excited to have Marcello Spinelli. He has an esteemed career on Wall Street where he worked for 20 years or so at some of the largest financial institutions. And he has his undergrad degree from the number one business school in the U.S., Wharton School of the University of Pennsylvania. So we’re gonna talk about all different types of opportunities in the early childhood space, different cities and states that Marcello thinks are well positioned to take advantage of different demographic trends, understanding how the preschool environment has adapted to COVID, and all different types of opportunities in this early childhood education industry, which is booming.

Again, this is Patrick Findaro, those who are just joining now, co-founder of Vetted Biz, managing partner at Visa Franchise. This is part of our franchise Friday’s series, where I’m bringing on the founders of some of the fastest growing franchise systems across the U.S. And this ranges anywhere from education like today, insurance, service brands, food, all different types of industries in the umbrella of franchising. So I’m going to go ahead and add on Marcello to kick off our franchise Friday discussion today. Hey, Marcello. How are you doing?

Marcello: Hey, Patrick. How are you? Good afternoon.

Patrick: Good. Well, thanks, again, for joining. Perhaps you could just tell me a little bit and just for the audience how you got into the preschool space. You spent some time on Wall Street, you’re originally from Brazil. Maybe just tell me a little bit about your background and how you got into this arena?

Marcello’s background and how he got into this arena

amazing Explorers

Marcello: Yeah, thank you for allowing us to participate in your business. This is a pleasure also knowing you and your brother for a long time in developing this business. Congratulations.

Patrick: Thanks.

Marcello: Yeah. So after school, after University of Pennsylvania, I ended up in Wall Street. It was something that I always had a passion for and I lasted about 20 years there. In 2014, I decided to quit and change things around a little bit. I thought that what I was doing was very interesting but, you know, you kind of after 20 years are losing steam or you’re looking for new opportunities and things that are more interesting. And in Wall Street in 2014, I decided to take a break, like, a sabbatical in the beginning. And I ended up going to Asia, studying a little bit of Buddhism, and trying to do something that added value to society and understand how I would do that. So things kind of unfolded in a great manner for me because by around mid-2014, my brother called me and said, “Listen, I have an opportunity I think we should pursue. There’s this person that understands about preschool and wants to build a brand.” And so I, you know, spent almost nine months in Asia, came back. I sat with them here in Florida, had the meeting and I started, you know, researching…

Patrick: And was your brother living in Orlando at the time?

Marcello: Yeah, him and this person were living in Orlando at the time. And I said, “Well, I’m going to meet them. I’m going to come to Orlando.” I was living in New York City. And I said, “Let me understand more about the opportunity.” And I started researching…

It’s a very interesting business. The matter of the fact is if you look at the financial markets, there’s really only one company that you can look at. There’s not a sector, there’s not a lot of companies. And when you look at education, there’s definitely a large difference between the different segments. So I quickly began researching that segment of education preschool and I fell in love with it. Not only because I’m a financial guy and I love the numbers, but also it was more in line with what I was doing. And then I ended up… We kind of founded the company in 2014. We started…

Patrick: Did you rebrand it? Like, what was the initial company in 2014? What did it look like?

Daycare Franchise amazing explorers

Marcello: It was zero. What we did was a ton of research. We gathered and we hired a bunch of PhD psychologists, architects, and a lot of different people to help us brainstorm what we were going to put together. One of the things that we studied was the STEAM education, which was not in preschools at that time. And we didn’t understand why not. And, as you know, during the Obama administration, there was a very large effort in large expenditures in that sector for very good reasons, and which we will get in. But that’s…

Patrick: And had you worked with your brother before?

Marcello: No, we never worked together. No.

Patrick: You were in New York, he was in Brazil, mostly and in Florida?

Marcello: Yes. We invest in different things together. But overall, we never really worked hand in hand together. So it’s a great experience. So then I ended moving to Florida from New York City. And, you know, we started kicking the tires and started creating a brand. With all these people that we hired and money that we spent, we just wanted to understand the basic research is what we are going to create and why. And we thought there was a clear gap in terms of STEAM education at the preschool level, right? And that’s how I got into it. I just fell in love with it and went full force 100% into this business.

Patrick: Look at the numbers.

The education growth market

Patrick: So what we’ve seen at Vetted Biz is the market is growing a lot, and education and early childhood education. And I don’t need to tell you that. But there’s been a lot of investments from institutional investors, private equity, family offices. And also a lot of money going into online education, different platforms. But preschool is traditionally a brick and mortar type business and it is still growing quite a lot. It’d be good just to hear from you a little more overview of the sector and what attracted you to be in it for the next, you know, large part of your career.

Daycare FranchiseMarcello: Yeah. So you’re absolutely right, there’s been a ton of investments in education. And I think it’s one of the sectors that are most important for our future, right? So the industry is pretty large. And there’s a misconception that this is a tiny business, right? You’re talking about a $55 billion business. You know, about two million…

Patrick: That’s just early childhood?

Marcello: Just early childhood. Yep.

Patrick: And how do you define it? Basically before kindergarten, five years and younger?

Marcello: Zero to four years old when they were in preschool and then they went to kindergarten. We don’t have kindergarten in our schools. It’s just zero to five education. So it’s a pretty large market. If you look, about two million people work in this market today. So it’s been growing. And because of the major…

Key to preschool growth

Patrick: What’s driving the growth?

Marcello: Well, there’s a multiple factor like women in the labor force, the participation of women in the labor force has increased dramatically. You have a number of births as well that’s continuously growing. You have government spending, which they recognize the need to fund these programs in certain states. You have funding for the three and four-year-old kids, which the preschools received part of their fundage. It’s like a voucher that’s given by the government to the parents and they can use that as a form of payment. Also, you know, other drivers are disposable income, which has been growing for the last 10 years or more. National unemployment rate as well. Now with COVID, things got a little bit different. But, you know, for the past years, we’ve seen that developing positively. And also the most important one, I think, for this industry is the importance of early childcare development and the impact…

childcare Franchise

Patrick: What’s the benefits? Because you have some people that just one of the spouses will take some time off work, a sabbatical to take care of the kid or hire a nanny. So, yeah, why is it important to focus on the educational aspect from zero to four?

Marcello: So that’s kind of what we worked on to understand the real impact and how we would add value to everyone from children to the country. So there’s a gentleman named James Heckman from the University of Chicago, he’s a Nobel Prize winner and created a lot of research in econometrics, “Understanding the Impacts of Early Childhood Education.” I’ll tell you some of the findings and some of the research are quite interesting and he says that, “First of all, after analyzing these kids for decades, it provides a more stable home for their kids. You have a higher completion of high school. You have lower rates of addiction and arrest and crime. Most of these kids that go to preschool, they’re inclined to have a full time job or be self-employed, be an entrepreneur.” And he calculated the return on investment to be about 13% per year return, you know, if we invest in children. So there’s significant results in better behavior, education, help employment, you know, versus not attending such a program.

Patrick: The kids are two or three years old, I mean, it’s gonna change their life and opportunities that open up or close.

Marcello: Yeah. So you have to think of how we wire their brains. Literally, it’s like riding a bicycle. I’m trying to think of an analogy here. It’s like riding a bicycle, you learn at an early age, and then it’s kind of embedded in you. That’s how you wire someone’s brain. And these kids, when they’re one and a half or two-year-olds, they already…you give them an iPad, they can go through, put the code in, go in. We never thought they would be capable of doing those things. So we definitely have to wire these kids properly from the beginning because it will help them ride their bicycle or with balance, equilibrium, etc., later on. It’s kind of the analogy I think of, right?

So, multiple studies have been out there. And as time goes by, we find more of them, which are interesting. You know, we have the Journal of American Medicine. They say that they followed these kids for 25 years and very tied correlation to success. Cornell University, one of the major universities in the U.S., says that for every dollar spent in the childcare sector, it equates to a broader statewide economic impact of about $2. That’s the double, right? So there’s a number of factors here that are positive. There was also a study from Frank Porter Graham Child Development Center, that long term achievements in education, cognitive skills, language ability, math skills, grade retention, and social engagement, are long term effects actually of being in a childcare program. Like just going back a little bit is when we initially started looking at this, we were very excited about the fact that we could change children’s lives.


The Education and the Politics

Daycare Franchise

Patrick: Yeah, it’s huge. And, you know, recent election, how do you see Joe Biden’s policy and his administration affecting Amazing Explorers Academy and the larger industry?

Marcello: Well, I won’t delve into politics.

Patrick: Sure.

Marcello: But I believe both presidents either Trump or Biden are capable of understanding the importance of education and continue with the program. Trump did some increases in expenditures for these programs. And I believe and I did have a conversation with someone that’s from Biden’s administration, understanding that for them as well it’s something that they’re going to pursue. I don’t know exactly how things are going to change. But I do believe there will be more investments in education and I think that’s just a natural tendency of things. The country is only good as the people that are here and how educated they are, bottom line.

Patrick: For sure. Yeah, it’s largely a service-based economy and it’s not agricultural, like, many years back where education maybe doesn’t matter as much.

Marcello: Yeah. We think of three levels of education, right? Manufacturing to a service to an intellectual. And I think we’re moving to the intellectual and for that we need to be prepared.

What is the competitive environment like?

Patrick: Oh, yeah. And tell me a little bit about the competitive landscape. Like I alluded to it, you have some alternatives, even some churches I believe that offer preschool early childhood education services. What’s the competitive landscape like?

Marcello: So there are daycares which…let’s categorize, what is a daycare? Daycare is basically you leaving your child without education. And then a preschool is naturally where you embed some form of curriculum and you teach kids and you develop kids, right? There’s a development component. In the United States, you’re talking about 670,000 schools, right? And I would say that about 65% of them are large daycares, right? So you’re talking about a $55 billion dollar industry. There is competition, but the market is extremely fragmented. They don’t represent 5%. The top preschools and the larger preschools are just a small factor of the market. So there’s a huge…The market is fragmented and there’s really low market concentration.

Patrick: So, for example, when you open up a preschool, like, are the students…say, it’s a four-year-old that was already at some type of early childhood daycare or preschool. Where are they coming from?

amazing explorers academy

Marcello: Well, there’s a natural strategy to that. If we’re in developed neighborhoods versus breakout neighborhoods. Breakout neighborhoods. Let’s think of having AT&T in your cell phone and Verizon. If you have AT&T and Verizon, and you don’t really understand, you’re gonna say, “Why am I going to change to AT&T?” It’s going to be a large battle. That’s kind of the developing market situation. You have to kind of…

Patrick: So you’re opening up in a nice area like New York City, Manhattan. You’re going to go… That’s more the developed market. And then the other market is nice upper middle income in Orlando or Dallas or some growth market. Is that it?

Marcello: Exactly. So in the market like, you know, let’s talk about New York, we’re looking at Long Island City to open a school there. It’s kind of a tricky situation because when we look at it, we see the outflows of people in New York. Obviously, the school is not open now. The school will be open in 18 months or 14 months. So at that stage, we look at COVID, right? Where are we going to be at COVID? Do we believe that this pandemic will somewhat be curtailed, right? And how would that impact the schools and education on that side and the migration of people back towards Long Island City? So we looked at that, and more importantly, we look at competition?

Patrick: Sure.

The quality of the school that distinguishes it from others

Marcello: So what is the quality of the schools around that area and how do our proposition compare to others? And then that’s where we see where the value is. Obviously, we…owner of the brand, so I’m going to say, you know, I believe that ours is better. But we are focused on STEAM, science, technology, engineering, arts and math. That’s the core concept. And we do have an emotional intelligence program that we partner up with some guys from Yale. And I think that our focus is educating these kids. We’re not in the business just to grow to make money. We really want to make an impact. And I think with that when we look at Long Island City, we definitely see a potential for our brand there. And that’s why we’re looking at despite what’s happening right now, we have to time things, we have to look at competition, we have to the pricing. You know, there’s a number of factors demographically that we have to look at, but we do long story studies to assess that.

Daycare Franchise

Patrick: Before we get more into Amazing Explorers Academy, what are the returns in your industry?

Marcello: Okay. So, yeah, I can tell you in the industry, they are, as I said, you’re looking at, you know, a $55 billion industry with profits of 5.2 billion. They’re running about 9.5%. There definitely was a decrease from the last few years. If you look a couple years ago, the margins, instead of 9.5% what they’re now, were about 14%. Obviously, COVID had a huge impact. And there was a large number of schools, which were not prepared, mostly the mom and pops, that were not structured properly or…

Patrick: I talked to one recently in the Miami area. Their enrollment was down 40% and they’re just getting slammed.

Marcello: Yeah, that was average. Was about 40%. But a lot of them couldn’t withstand, you know, the turmoil. They weren’t prepared financially. You know, a lot of these mom and pops are spending 100% of the money every month. They live paycheck to paycheck and they never really think of, you know, “Let me…”

Patrick: Preparing for a rainy day.

Daycare Franchises

Marcello: Yeah. Let’s put some form of budgeting best practices. We spend a lot of time thinking about it and how to implement that from technology to everything in our business. And that’s what we proposed in all our schools. It’s a pretty much cookie-cutter format so that we’re standardized. There are no idiosyncrasies in one of the schools or any of the units.

The STEAM program and the focus

Patrick: So, besides the STEAM program and the focus on that, what also differentiates you from some of these very large early childhood education brands that might be publicly traded or have, like, 400 locations across the U.S.?

Marcello: Yeah, so I think STEAM is a big differential that we started prior to everyone. Actually, we were one of the pioneers.

Patrick: You taught me what the word meant? I think it was, like, four years ago.

Marcello: Yeah, science, technology…

Patrick: I had heard of STEM but never STEAM.

Daycare team

Marcello: Yeah, they had STEM. Yeah. And the arts component is extremely important. That’s something I’d like to, you know, just tell you about. I think it’s important for everyone to know. The art component came up on our research because the United States was falling behind in terms of math and science. So we did some research and we found that when students reached third grade, about one third of the kids lost interest in science. And then by the time they reached high school, about 40%-some of the kids were not prepared for college level math and about 30%-some percent of them were not prepared for science. And we found out that a lot of it has to do with creativity.

And now we move a little bit backwards. How do you kill creativity? By standardized testing, by memorization, by other methods which are not positive or constructive for your brain. I mean, that’s known today in neuroscience. That’s why we have games and fun ways of learning things rather than drilling something. So I think in our brand, we’re extremely innovative. We’re extremely focused on STEAM and emotional intelligence. That’s our core. And that’s what you’re going to need for the 21st century. We’re continuously evolving. We have greater transparency. Our schools have videos, a lot of glass so you can see visibility through everything. So we also, if you look at the architecture, we’re not a little daycare house, we’re a science center.

We thought about it from the beginning. We had the architects thinking about, you know, psychologists and architects saying, “Okay, you need something that’s inviting for the children.” So in the front of the school, it’s all glass. There’s a multipurpose room with…some have spaceships, some have other attractive features where these kids learn to entice the kids to go in and not a little door with a little window and etc. We thought of everything from beginning to end before we ventured in our expansion phase.

The facility for Amazing Explorers Academy

Patrick: Tell me a little bit about the facility. So I understand most centers have 100 to 200 students.

That’s some of the very large franchise brands. How’s the capacity for Amazing Explorers Academy? Because I understand that it becomes a lot more profitable the closer you get 200.


Marcello: Yeah, you’re absolutely right. Yeah, most of these larger franchise brands, they’re running around the 150, 200 range. And as you go into, from the urban to the suburban, the numbers change. Obviously. Yeah, like, Long Island City, you’re talking about 140 students. Our models in Florida, they all carry 200 capacity. So it’s around that aspect.

Patrick: How much per student when you look at Florida compared to Long Island City?

Marcello: Yeah. So it’s bizarre but it goes along with pricing as well but there’s some advantages. In Florida, the average is about $1,000 a month per child full time. In Long Island City, it’s about $3,000.

Patrick: That’s industry average or Amazing Explorers?

Marcello: Well, the top tiered program is around that much or a little bit more or slightly less. And New York City is $3,000. Yeah.

Patrick: Long Island City, $3,000 a month.

Marcello: Yeah. A couple years ago, you’d look at New York City and you could have some programs at $5,000. So the cost is more because the real estate is more and etc. But there’s some advantages, because, you know, the real estate cost could be twice, but employee cost is a little bit more. But in the end, your tuition could be three times more. So there’s some advantages for margin if we analyze it closely. And we do a lot of that. We do a lot of due diligence to make sure that we’ll hit our desired margins.

Patrick: Make sense. And then how many jobs per location? From Visa Franchise, we have some folks that are applying for different types of visas, but for them, as well as American investors, some of them want to know, like, how many people are going to be managing at the end of the day?

Marcello: Yeah. So I would say that we have capacities, different capacities. If you go from a school of 100 kids to a school of 200 kids. Two hundred kids which is our norm employs about 40 people. So it’s a lot of jobs. And going back to what I was saying is, like, the schools are not larger because it’s a lot to deal with 200 children already. I think it’s the optimal size for chaos.

Types of franchise financing

Patrick: That makes sense. And then, in terms of your brand, I know that you’ve opened up different opportunities, but you have one that a franchisee coming in can develop and own the land and the physical property that the preschool sits in. And then another one would be built to suit the BTS model. Can you talk a little bit about these two models?

Marcello: Yeah. So when we look at a project, those are the two types you can. So if you’re going to Long Island City, you can’t buy the building. Naturally you have to lease or rent the location. A lot of times what we do as the brand is we try to negotiate a pricing for a turnkey solution for the franchisee or for the project. So when the landlord gives you a lease, that lease already incorporates everything you need into the school, except the FF&E. So that takes about a year, 12 months to develop because the building is there, all you need is to really retrofit. So for the grounds up, it’s a little bit different. We have to identify the land, which we do a lot of demographic work, using a lot of tools, mobile data, everything. And we look at these things and have to…literally they take a little bit longer from anywhere minimum 14 months to 18 months to develop a site.

Amazing explorers children

I think that it really depends. The capital requirement to do a BTS obviously is lower than one to own because, yeah, you’re renting something, you don’t have to buy it. So I would say it’s half, you know, 50%. So you’re talking about a project…and this is standardized. If you look at the major brands, you’re talking about someone that wants to own the land and do the whole project, they’re going to spend anywhere from, depending where, you know, 800,000 to 1,000,000, or 2,000,000. And the guys that are doing…

Patrick: In cash.

Marcello: Yes, yes, investment, because these projects, naturally they’re built to suit…sorry, the grounds up could be a $3 million, $4 million dollar project..

Patrick: Generally, they do SBA financing?

Marcello: Yes. We are approved by the SBA, we have our FDD. With the SBA, it’s 100% approved. And so naturally, you know, with the SBA, you might be able to put a lower percentage down, right? As you know…

Patrick: Yes. Generally 30% but I’ve seen some as low as 15%.

Marcello: Yeah, I’ve seen 10%, 15%. So if you’re doing a $4 million project you’re talking about, it could be for $400,000, or $500,000, which could be very viable, if they qualify for that. Obviously, that’s a decision of the SBA and their…

Patrick: And then do you disclose the performance in terms of EBITDA, or basically what the owner is going to make from their investment?

Marcello: So, we cannot by law. We can give them general market figures and they can do their research, or hire someone to do the research for them.

Patrick: Did you guys disclose in your FDD, the financials for one of the corporate locations?

Marcello: We did. We have the…item 19 of the FDD discloses the financial information, and you can run some parallels to that. If you look at the profit margins of the industry, this is how I would look at in a very simple manner. You look at the profit margins of the industry. I said they’re running about…the whole market is running about 10%. If you operate well, I would guess you can make, you know, probably 15%, 20% net profit margin. So if you’re charging a student $1,000 and you have 200 students, that’s $200,000 a month, right? $2.4 million in the end, you might be making 10% to 20%. That’s a real rough and simple way to think about, you know, how well you operate…

Patrick: 10% on the low end, and then you go all the way up to 20% if it’s really well optimized.

Marcello: Yeah. I mean, I’ve seen better than 20% but you have to operate well, and make sure you’re, you know, hands on the school, you know, but…

Patrick: And what would you do, you know, looking between the build to suit versus actually owning the real estate?

Marcello: You mean, my suggestion for someone that would like…

Patrick: A prospective franchisee or if you were in the franchisee shoes.

Marcello: Well, what I would do is I would try to see where the financing is. I would think of both. I would say, “Okay, if I do a BTS, what are my costs? If I go to the SBA, what’s going to be my capital required?” So as we said, If I need, you know, 400 or 500 grand to do a BTS cash to have some cash, or…and if I need 400 to build and have the real estate, I would do the real estate, it’s a no brainer, right?

children playing

So it really depends on a little bit of research. And we can help with that. I mean, we have some SBA people. I think you guys probably have some too.

Patrick: Yeah. We have some great contacts.

Marcello: Yeah. And those are the people you would go to. It’s very simple. You send them documentation. We have the whole entire project and, you know, it’s just a matter of underwriting to make a decision.

Patrick: And then, you know, tell me a little bit about what regions. So we’re both based in Florida. We’re here in Miami, you’re in Orlando. I visited a couple of your sites in Central Florida. But tell me a little bit about what markets you’re currently in and where you want to grow?

Marcello: Yeah, so we’re in Florida right now, as you said. There’s a school opening in Texas very shortly. And…

Patrick: Where in Texas again?

Marcello: I think it’s Austin.

Patrick: Okay.

Marcello: Close to Austin. Yeah. So we really have to understand…you know, it’s important to understand the trends propelled by COVID, right? What’s happening to the States today? People are working remotely, there’s a huge dependence on technology. So what we’ve seen is a very clear migration from, let’s say, roughly speaking, from the north to the south, or from the west to Texas, and to Florida, and North Carolina and to Georgia.

So to understand that, that’s how we…you know, so this serious migration is an important factor of where we’re going to place these schools, right? And it’s evident that Florida, North Carolina, Georgia, and these other states are benefiting from these moves. I mean, you’ve seen Goldman Sachs might be moving their whole entire asset management division to Palm Beach or West Palm Beach, right? I mean, it makes a quarter of the profits of Goldman. So, I mean, that’s very important. You’re talking about a lot of people. Goldman employs about 40,000 people today. It could be a significant move.

I mean, all these locations I mentioned, these states I mentioned are benefiting from this change in trend. So we’re trying to position ourselves properly in places that are going to be easy for us. Naturally, I don’t want to build something in, I don’t know, in Alaska, or, you know, or…I don’t know, Hawaii. I mean, even Long Island City is tough. But it’s kind of a different situation. We’re negotiating a lease that could have a lot of value for a long term. So it really depends. I mean, it’s all a matter of due diligence and assessing everything. But naturally, North Carolina, Georgia, and Florida, are a close reach and it’s easy for us to, you know, an hour away flight to be there and to have our people flying back and forth, if needed, until we establish a team in these locations.

Types of franchisors for Amazing Explorers Academy

Patrick: And what type of franchisee are you looking for? I understand you first started more with growing corporate locations for a few years, and then now you’re bringing on franchisees. What’s the ideal franchisee?

Marcello: So, you know, all of the things that we’re doing right now, most, I mean, I’d say all, are joint ventures corporate locations, right? We are starting to, obviously, speak to franchisees and see opportunities where they would fit. The franchisee, I mean, you know, basically what a franchisee is doing, what we’ve seen is, they’re purchasing a job, right? So in reality, us having schools that we can sell that are operating at low risk, they’re already making money, will be an option, and we could be developing 10 to 20 of these. On the other hand, there will be franchisees that are entrepreneurs, right? Those are the people that I think they’re interesting, you know, people that understand about research…

Daycare Franchise teachers

Patrick: Develop a couple of schools, right?

Marcello: Yeah. I mean, yeah, like area development or something like that. But a franchisee is basically someone that…you know, we would look at someone that has entrepreneurial skills, good in research, good in people, right? You’re managing people, you’re dealing with people. So your emotional skills are important, your management skills are important. You know, you need to be flexible for the training to understand how you need to implement the programs and everything. And so, you know, basically someone that has experience. You know, I wouldn’t say you’re going to get a kid out of college and start a franchise. I think it’s a little bit off, but I’d say people, professionals, you know, there’s a wide range.

Patrick: Sure. And is there a minimum like net worth and then capital requirement that you would look for in a prospective franchisee?

Marcello: That’s a very good question. And it fluctuates, because if I were…

Patrick: It depends on the area too, right?

Marcello: Yeah, so I mean, if I was a franchisee and I went to the SBA, and I applied to buy and build a ground location, and they said, you know, “This guy has a great resume, we’re going to approve him.” I mean, you could have, you know, I don’t know 500 grams of net worth. It depends on the SBA’s underwriting, who’s underwriting, you know, it really depends. Now, when you do a BTS, the person that is buying the land, building the building and spending all that money, he will want some form of, you know, structure, some form of guarantees. Normally, he requires someone with about a million dollars in net worth, right? So we have a bunch of partners that do that, that we qualified. We also negotiate to make sure that the lease rates are proper, because in the end, this is a franchise, we need to maintain the health of our franchisees that they’re making money, that the margins are hitting…


COVID’s impact on this franchise

happy children

Patrick: Have you ever closed a location?

Marcello: No, never.

Patrick: Oh, okay.

Marcello: Far away from. Thank God.

Patrick: Great.

Marcello: Yeah. So, I mean, COVID was a tough time. We got…

Patrick: Tell me a little bit about how Amazing Explorers is adaptive with COVID? And we had talked about a 40% decrease in enrollments with a lot of your competitors. But what have you seen with Amazing Explorers locations?

Marcello: That’s about right. When COVID hit in the end of March, it was a panic attack, right? Nobody wanted to go anywhere, it was like, let’s hide. But throughout the months, we not only recuperated what we had lost, and we exceeded what we had done in the same timeframe. We opened a school three months ago, during COVID, and we were profitable in the first month of operation. That is incredible. That’s really like…I thank my team and the people involved because without them, you know, they really figured out how to live and how to operate during COVID, you know, difficult times. So I think COVID is a terrible experience for all of us. But we try to absorb the best of it, saying like, we’ve been challenged and we were forced to learn how to operate and how to do things in a very difficult environment.

Importance of preschool education and the Amazing Explorers Academy

Patrick: For sure, have you seen any studies in terms of like the emotional and intellectual capability of the kids that are not in, basically are not doing anything and aren’t socializing compared to the ones that continue in preschool and receiving education?

Marcello: Well, Amazing Explorers is a very new program, right? We really started in 2014, but the school started a little bit later. We definitely relied on the studies that I mentioned before, from James Heckman, from Cornell University, Frank Porter, and these things that have shown significant, you know, positives to these kids. They analyze kids, you know, 10, 20 years later. So I mean, it’s incredible how important it is to put your child in an early learning program that’s structured, you know, not just the daycare and keep the kid in there. Obviously, not all programs are the same, right? And if you look at what’s happening in the world, you know, you’re definitely seeing that there is a necessity for STEAM. Look at Elon Musk, today. Anyone that looks at Elon Musk today says he really stands out as a creator, innovator, someone that breaks barriers, right?

Daycare Franchise teacher

Patrick: Sure.

Marcello: He’s probably the…

Patrick: He’s founded many companies, PayPal.

Marcello: Yeah, I mean, he’s probably the number one or top innovator in the world today, right? So now, what you have to think of is, we need to create Elon Musk’s for the future. And not Elon Musk, when I mean that, I mean people that are better than what Elon Musk is today, because the future is going to be dramatically changed. You know, the last 100 years, we looked at linear growth. Today, we’re looking at exponential growth. And this has never happened before. So for that, we need to prepare our kids to face what they’re going to face in the next 10, 20 years. A hundred percent of the jobs are going to be gone. And it’s not going to be gone like the other revolutions, it’s going to be drastically gone. I mean, people have to have the skills to be prepared for the future. And now we go back to, you know, we need to wire these kids properly. And that starts at an early age.

Patrick: You mentioned emotional intelligence, and then on the science and tech side, could you elaborate a little more?

Marcello: Yeah, so our programs are, you know, focused on the standardized curriculum, obviously, or else, you know, I can’t do what Elon Musk did and create his own school and do whatever curriculum he wanted. But they also are enhanced by STEAM, science, technology, engineering, art, and maths. So it’s kind of an enrichment program around the core program, right? So for that, in the beginning of the conversation, I said that we had architects, psychologists, everyone you’re thinking about. We created a room that’s only for that. It’s called the multipurpose room. It’s called the STEAM room. Kids go in and they get full hands-on exposure to STEAM. In every school, it’s very important, like, every school of our schools, Amazing Explorers, has a director that takes care of the school and education director. And it has a STEAM…a person, kind of a director, that really is focused on STEAM, because we need to make sure that we’re providing that education to the kids at its fullest potential.

Patrick: Marcello, so, you know, concluding thoughts. I mean, you said it well, in terms of not linear growth, but it’s going to be exponential for the coming years and our kids need to be prepared for that. Any other closing thoughts you might have?


Marcello: Yeah, I mean, you know, the interesting… I just want to conclude with thinking about, you know, vetted business, us and the kids in the future. The preschool business, when you look at it, it’s kind of a bricks and mortar business. Everyone, as you said, is investing in ed tech and, you know, knowledge oriented education and other, you know, segments like that. I feel that as being part of this business, and being completely entrenched in the business, that it will take a long time for something to drastically happen in this small, little niche business. Why? When we look at this trend about online learning, and, you know, you have kids in elementary school, middle school, high school, this has sometimes worked, sometimes not. It never worked for preschools, never, ever, ever. It’s impossible. You get a two-year-old, or a three-year-old, or a four-year-old, or a four weeks…

Patrick: I heard that you focus for two minutes on a screen.

Marcello: It’s impossible. You won’t be able to work. You will be working with the kids. And you probably don’t have the skills necessary to teach that kid or you won’t know how to follow the curriculum, prepare for the curriculum, etc. So some people…

Patrick: Yeah. You probably have another job too you’re focused on.

Marcello: Yeah, exactly. It’s impossible to do another job. So concluding our discussion here is, it’s still a very viable business, it’s still a very important business for the future of this country and for the kids, the whole spectrum, right? And it’s still a very valuable business and lucrative business because we need it. You know, and the drivers are there. You know, these drivers are there, more women are going to work, more funding is going to go into education, we need more and more education. We have 4 million births a year, we have to, you know, create space for these kids to learn, we have to create schools and etc. So I think it’s just, you know, it’s definitely where…

Patrick: Yeah, I think you’ve struck at a point for us like it’s a necessary good that, you know, you have renewable revenue in terms of getting the payment every month. And we have brought on other franchisors in the insurance space, barbershops, and I definitely think there is a strong parallel with what you’re doing at Amazing Explorers Academy in that renewable and necessary need.

Daycare Franchise

Marcello: Yeah, our revenues are extremely recurring. That’s very important. Yeah, for us…

Patrick: You can forecast. You can plan on opening up another one when you have that constant revenue base.

Marcello: Yeah. It’s definitely expandable.

Patrick: Well, it’s great, Marcello. Thanks so much for joining today. For those that are participating or if you’re listening to a recorded version on our podcasts or on YouTube or another channel, I’m going to leave the contact information so you can enter into contact with Marcello. And then the process, a member from his team will send additional information about franchise opportunities with Amazing Explorers Academy, and see if it’s a good fit for you investing in this early childhood education opportunity.

Again, it was a pleasure to have on, Marcello, the principal co-founder at Amazing Explorers Academy. If you found this informative, share with your friends, like us on social media like YouTube, LinkedIn, and I hope you enjoyed this video and recording. Thanks.

Marcello: Thank you very much, Patrick.

Patrick: Appreciate it.

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