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Here’s What you Need to Know Before Opening a Primrose School Franchise (2022)

Written by: Maria Victoria Silveira e Silva
Last Updated by Rocio Somoza: November 18, 2022
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primrose schools franchise

Buying a franchise in the United States can certainly be a daunting experience. Especially for those who have not had significant exposure to its domestic market and entrepreneurial endeavors in the past. With that said, our team has often found that a strong way to ensure a potential success of one’s business endeavors, entails investing into a franchise that not only is placed into one’s industry of interest, but that also provides a strong match to the investor and their business profile. The article below, details the investment criteria and overall profile required for an investment into Primrose Schools. It provides an in-depth analysis of the franchisor’s financials and franchise structure and hopes to shed some light on whether or not Primrose Schools is the franchise for you.

How is Primrose Schools Franchise Positioned in the Education Industry?

The Education industry in the USA currently has a market size of $2 trillion. There are around 1.4 million open businesses within the industry that support over 13 million jobs. Education is one of the fastest growing sectors of the franchise industry and composes over 7.3% of the U.S. GDP. The annual growth rate in the industry is at 4.2% and its market size is expected to reach around $3.1 trillion by 2030.

Primrose Schools is a national system of accredited private preschools that provide supreme, exemplary education to children in the early stages of their education. At Primrose Schools, the focus is in delivering the best and most trusted early education and care for children who are six weeks to 12 years old and their families.

Founded in 1982, Primrose Schools is considered a national leader in providing premier early education to children across all of the US. As of 2021, Primrose Schools had over 400 franchise units across 34 US states and many more currently under development!

primrose schools franchise

How Much is a Primrose Schools Franchise Fee?

The initial Primrose Schools Franchise Fee is $80,000. Franchisees are required to pay this fee upfront when opening a Primrose Schools franchise. Additionally, there are other pre-opening costs which are detailed in the table below:

Pre-Opening Costs – Franchised Schools

Type of ExpenditureAmountTo Whom Payment is to be Made
Initial Fee$50,000 – $80,000Us
Real Estate Fee$25,000 Us
Security Deposit for Lease and Limited Rent Guarantee Fee$15,000 – $250,000Landlord or PSFC
Utility Security Deposit$10,000 – $30,000Utility companies
School Equipment and Supplies$222,000 – $340,000Approved supplier or lender
Insurance$5,000 – $10,000Insurance company
Initial Training and Opening Support Fee$35,000Us
Marketing, Advertising and Grand Opening$40,000 – $105,000Us or Vendors
Transportation Vehicle$900 – $42,000Approved supplier or lender
Licenses$4,000 – $7,000Governmental authorities
Miscellaneous$10,000 – $45,000Vendors, professionals
Financing Cost$55,000 – $75,000Lender(s)
Additional Funds – 3 months$180,000 – $420,000Employees, suppliers and utilities
TOTAL$651,900 – $1,464,000 

Sub-Total Pre-Opening Costs for Franchised Restaurants: – Low: $651,900/ High” $1,464,000

Primrose Schools Franchise Cost

The estimated total investment necessary to begin the operation of a Primrose Schools Franchise ranges from $651,900 to $8,454,000. This range is significant and is determined highly by the real estate development program the franchisor decides you qualify for. The following costs are part of the upfront costs included in the initial investment for a Primrose Schools franchise. Many of these are one-time fees that are needed to launch the franchise. Review the charts below to see how much it costs to buy a Primrose Schools franchise in 2022.

Type of ExpenditureAmountTo Whom Payment is to be Made
Initial Fee$50,000 – $80,000Us
Real Estate Fee Deposit$25,000Us
Balance of Real Estate Fee$30,000 – $45,000Us or Real Estate Affiliate
Other Real Estate and Development Costs$3,611,500 – $6,960,000Real Estate Affiliate, lender and/or us
Utility Security Deposits$10,000 – $30,000Utility companies
School Equipment and Supplies$222,000 – $340,000Approved supplier or lender
Insurance$5,000 – $10,000Insurance company
Initial Training and Opening Support Fee$35,000Us
Marketing, Advertising and Grand Opening$40,000 – $105,000Us or Vendors
Transportation Vehicle$900 – $42,000Approved supplier or lender
Licenses$4,000 – $7,000Governmental authorities
Miscellaneous$10,000 – $45,000Vendors, professionals
Financing Cost$258,000 – $310,000Lender(s)
Additional Funds – 3 months$180,000 – $420,000Employees, suppliers and utilities
TOTAL$4,481,400 – $8,454,000 
Type of ExpenditureAmountTo Whom Payment is to be Made
Initial Fee$50,000 – $80,000Us
Real Estate Fee$25,000Us
Security Deposit for Lease and Limited Rent Guarantee Fee$15,000 – $250,000Landlord or PSFC
Utility Security Deposit$10,000 – $30,000Utility companies
School Equipment and Supplies$222,000 – $340,000Approved supplier or lender
Insurance$5,000 – $10,000Insurance company
Initial Training and Opening Support Fee$35,000Us
Marketing, Advertising and Grand Opening$40,000 – $105,000Us or Vendors
Transportation Vehicle$900 – $42,000Approved supplier or lender
Licenses$4,000 – $7,000Governmental authorities
Miscellaneous$10,000 – $45,000Vendors, professionals
Financing Cost$55,000 – $75,000Lender(s)
Additional Funds – 3 months$180,000 – $420,000Employees, suppliers and utilities
TOTAL$651,900 – $1,464,000 
Type of ExpenditureAmountTo Whom Payment is to be Made
Initial Fee$50,000 – $80,000Us
Real Estate Fee Deposit$25,000Us
Balance of Real Estate Fee$30,000 – $45,000Us or Property Owner
Security Deposit for Lease and Limited Rent Guarantee Fee$15,000 – $125,000Landlord or PSFC
Other Real Estate and Development Costs$2,288,000 – $4,275,000Contractor, construction manager, architects, consultants, lender and/or us
Utility Security Deposit$10,000 – $30,000Utility companies
School Equipment and Supplies$222,000 – $340,000Approved supplier or lender
Insurance$5,000 – $10,000Insurance company
Initial Training and Opening Support Fee$35,000Us
Marketing, Advertising and Grand Opening$40,000 – $105,000Us or Vendors
Transportation Vehicle$900 – $42,000Approved supplier or lender
Licenses$4,000 – $7,000Governmental authorities
Miscellaneous$10,000 – $45,000Vendors, professionals
Financing Cost$232,000 – $233,000Lender(s)
Additional Funds – 3 months$180,000 – $420,000Employees, suppliers and utilities
TOTAL$3,146,900 – $5,817,000 
Type of Expenditure Amount To Whom Payment is to be Made
Initial Fee $50,000 – $80,000 Us
Real Estate Fee $25,000 Us
Other Real Estate and Development Costs $3,611,500 – $6,960,000 Landowner/Developer
Utility Security Deposits $10,000 – $30,000 Utility companies
School Equipment and Supplies $222,000 – $340,000 Approved supplier or lender
Insurance $5,000 – $10,000 Insurance company
Initial Training and Opening Support Fee $35,000 Us
Marketing, Advertising and Grand Opening $40,000 – $105,000 Us or Vendors
Transportation Vehicle $900 – $42,000 Approved supplier or lender
Licenses $4,000 – $7,000 Governmental authorities
Miscellaneous $10,000 – $45,000 Vendors, professionals
Financing Cost $258,000 – $310,000 Lender(s)
Additional Funds – 3 months $180,000 – $420,000 Employees, suppliers and utilities
TOTAL $4,451,400 – $8,409,000
Type of ExpenditureAmountTo Whom Payment is to be Made
Initial Fee$50,000 – $80,000Us
Real Estate Fee$25,000Us
Security Deposit for Lease and Limited Rent Guarantee Fee$125,000 – $150,000Landlord or PSFC
Other Real Estate and Development Costs$10,000 – $25,000Us 
Utility Security Deposit$10,000 – $30,000Utility companies
School Equipment and Supplies$222,000 – $340,000Approved supplier or lender
Insurance$5,000 – $10,000Insurance company
Initial Training and Opening Support Fee$35,000Us
Marketing, Advertising and Grand Opening$40,000 – $105,000Us or Vendors
Transportation Vehicle$900 – $42,000Approved supplier or lender
Licenses$4,000 – $7,000Governmental authorities
Miscellaneous$10,000 – $45,000Vendors, professionals
Financing Cost$19,000 – $30,000Lender(s)
Additional Funds – 3 months$180,000 – $420,000Employees, suppliers and utilities
TOTAL$735,900 – $1,284,000 

Ongoing Costs and Fees

The royalty fee for Primrose Schools is 7% of gross revenues. There is also a brand fund contribution of 2% under the franchise agreement.

How much do Primrose Schools franchise owners make?

 All Included FacilitiesTop ThirdMiddle ThirdBottom Third
 (141 Facilities)(48 Facilities)(46 Facilities)(47 Facilities)
During 1/1/21 to 12/31/21Average% of Total Gross RevenuesAverage% of Total Gross RevenuesAverage% of Total Gross RevenuesAverage% of Total Gross Revenues
Total Gross Revenues$2,187,800 $2,837,310 $2,142,047 $1,569,250 
Payroll (excluding taxes)$833,316 $1,042,193 $805,939 $646,790 
Payroll Taxes$97,032 $139,921 $86,533 $63,505 
Total Payroll and Taxes$930,34842.5%$1,182,11441.7%$892,47241.7%$710,29545.3%
Brand Fund Fee – 2% of Gross Rev.$42,173 $54,932 $39,996 $31,273 
Royalty Fee – 7% of Gross Rev.$148,303 $191,587 $145,382 $106,956 
Total Brand Fund Fee and Royalty$190,4758.7%$246,5198.7%$185,3778.7%$138,2298.8%
Food$85,290 $105,279 $88,090 $62,137 
Educational Supplies$27,545 $34,304 $27,394 $20,791 
Advertising – Local$17,410 $20,156 $18,651 $13,391 
Bank Charges and Credit Card Fees$8,715 $10,232 $9,649 $6,252 
Bus Operating Expenses$3,897 $3,944 $4,861 $2,906 
Bus Leases$3,864 $5,222 $2,584 $3,731 
Employee Benefits$44,014 $69,302 $39,832 $22,280 
Accounting Costs$6,841 $8,215 $7,048 $5,234 
Field Trips$3,317 $2,943 $3,896 $3,132 
Cleaning Charges$27,674 $32,193 $27,167 $23,553 
Misc. Taxes & Licenses$10,355 $15,451 $7,588 $7,858 
Office Supplies & Postage Expense$11,382 $16,167 $9,266 $8,567 
Printing & Promotional Clothing$1,933 $2,120 $2,335 $1,348 
Staff Training$4,762 $7,292 $3,619 $3,299 
Supplies (General)$7,685 $11,048 $5,516 $6,372 
Telephone Expense$6,450 $6,834 $7,397 $5,132 
Uniforms$3,479 $4,899 $3,276 $2,227 
Miscellaneous Expenses$24,334 $48,436 -$664 $24,184 
Total Other Expenses$298,94713.7%$404,03614.2%$267,50712.5%$222,39414.2%
Insurance – General Liability$22,554 $27,856 $19,374 $20,251 
Maintenance – (Building, Grounds, Equip)$46,052 $52,302 $42,035 $43,600 
Utilities$32,288 $35,679 $32,666 $28,457 
Total Occupancy Expenses$100,8944.6%$115,8374.1%$94,0754.4%$92,3075.9%
Total Expenses$1,520,665 $1,948,507 $1,439,431 $1,163,225 
Adjusted Operating Income/Earnings Before Interest, Taxes, Depreciation, Amortization and Rent (“EBITDAR”)$667,13630.5%$888,80431.3%$702,61632.8%$406,02625.9%
CTA-2
 2021
 All Included FacilitiesTop ThirdMiddle ThirdBottom Third
# of Facilities141484647
Gross Revenues    
Average$2,187,800$2,837,310$2,142,047$1,569,250
# and % Above Avg66/47%18/38%24/52%25/53%
Median$2,151,730$2,698,363$2,149,793$1,580,014
Highest$4,421,348$4,421,348$2,406,126$1,919,283
Lowest$1,102,750$2,420,805$1,924,106$1,102,750
Total Expenses    
Average$1,520,665$1,948,507$1,439,431$1,163,225
# and % Above Avg59/42%19/40%23/50%25/53%
Median$1,465,961$1,901,096$1,439,309$1,191,172
Highest$3,196,633$3,196,633$1,877,969$1,643,621
Lowest$353,977$1,457,553$911,474$353,977
EBITDAR    
Average$667,136$888,804$702,616$406,026
# and % Above Avg75/53%23/48%26/57%23/49%
Median$687,759$838,376$717,402$386,160
Highest$1,435,271$1,435,271$1,186,173$1,166,245
Lowest-$33,255$399,624$136,975-$33,255

2021 Primrose Schools Median Franchise Sales

Average Gross Revenues # at or Above Average Gross Revenues % at or Above Average Gross Revenues Median Gross Revenues Lowest Gross Revenues Highest Gross Revenues
Calendar Year 2021 – 438 Facilities
Q1 $478,607 205 47% $467,126 $104,029 $1,208,846
Q2 $535,099 201 46% $524,430 $105,020 $1,307,378
Q3 $546,908 207 47% $532,466 $124,790 $1,332,371
Q4 $567,495 195 45% $549,724 $175,094 $1,449,738
Full Year $2,128,109 201 46% $2,084,533 $508,934 $5,298,333
Calendar Year 2022 – 438 Facilities
Q1 $616,629 197 45% $598,717 $180,641 $1,567,676
 
 # of FacilitiesAverage Gross Revenues# at or Above Average Gross Revenues% at or Above Average Gross RevenuesMedian Gross RevenuesLowest Gross RevenuesHighest Gross Revenues
Calendar Year 2021 – 438 Facilities
Top 25%110$2,950,0174642%$2,801,824$2,460,655$5,298,333
Second 25%109$2,258,4205147%$2,246,099$2,088,191$2,459,279
Third 25%109$1,907,5745954%$1,917,390$1,718,327$2,080,875
Bottom 25%110$1,395,6056055%$1,435,125$508,934$1,716,796
Total438$2,128,10920146%$2,084,533$508,934$5,298,333

Based on the average sales provided by Primrose Schools franchise locations, at an average of a 32.5% profit margin, it should take around 6 years for a franchisee to recoup their investment. This is slightly more than the return on investment timeframe offered by other franchises, especially considering a franchisee may not reach such a high profit margin which would elongate the timeframe stipulated above.

Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, offering, and competition in the marketplace. The presence of other Education franchises; the extent of market penetration and brand awareness that Primrose Schools locations have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.

Is the Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for Primrose Schools franchise, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.

Under $5 Million Net Sales

  • Estimates Selling Price = Net Sales *0.55

When you go to sell a Primrose Schools franchise based on the median multiple of .55 and median net sales in 2021 of $2,084,533, it would sell for $1,146,493. This is significantly lower than their midpoint investment of $4,552,950.

The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.

primrose schools franchise

How Many Primrose Schools Have Opened and Closed?

Facility TypeYearFacilities at the Start of the YearFacilities at the End of the YearNet Change
Franchised2019391418+27
2020418445+27
2021445465+20
Company-Owned2019000
2020000
2021000
Total Facilities2019391418+27
2020418445+27
2021445465+20

Over the last three years, the company has experienced experienced significant growth. Although the franchisor continues to steer away from owning any schools themselves, franchise units have been opening at a rate of around 22 units per year. This is an indicator that despite the significantly high investment amount, the franchisor is likely providing significant support which is consequently generating a positive performance across all franchise units.

Conclusion

Primrose Schools offers people the opportunity to be a part of a business that has strong returns with a reasonable payback period. The franchise system seems to be as strong as ever and is likely to continue its growth process within the coming years. Additionally, there is no doubt whatsoever that the education industry is one that provides significant room for growth and that is showing inspiring promises of an outstanding performance for within the coming years. If you are passionate about children’s educations and looking to dedicate yourself towards building and running a school – Primrose Schools is certainly the franchise for you. With that said, while this may be the business for you, make sure to also check out other companies offered on Vetted Biz and in the Education Industry.

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