Patrick: Hey, everyone. You have Patrick Findaro, Co-founder at Vetted Biz, as well as managing partner at Visa Franchise. At Vetted Biz, we help find, vet, and finance franchises and businesses for sale across the United States. At Visa A franchise is when a business (franchisor) allows a party (franchisee) to acquire its know-how, procedures, processes, trademarks, intellectual property, use of its business model, brand and rights to sell its products and services. The franchisee signs a contract (franchise agreement) with the franchisor to acquire the franchise and generally has a territory granted to operate. What is a Franchise?… More, we help find and analyze businesses that are eligible for the U.S. E-2 Investor Visa. Today, I’m really excited to have on Tutoring Club, an The year a Business for Sale was established. If the business has been running for a minimum of ten years, Vetted Biz will qualify the business for sale as a “Well-Established Business.”… education and tutoring franchise based in Orange County, California, as well as in Nevada outside Las Vegas.
I have on three of the owners today, including Dan Pinkney, who is currently working as the COO. He actually worked for his uncle who was the founder who founded the company 29 years back. That’s how he got in the Tutoring Club franchise system. And, he’s also an owner of multiple franchise locations. And he met Dave, who is now the current President, 16 years ago.
We’re going to also have on Liam Powers, who was a former student of Tutoring Club before he entered in the management team and also became a co-owner of the business. Tutoring Club didn’t work out for him. He ended up going to USC. Dave was joking earlier on that he didn’t choose the right school. Dave’s Alma Mater is UCLA, but you know, second’s not that bad. But a lot of people aspire to go to USC, UCLA, a lot of these top schools in California as well as across the nation, and they come from an operating background. So there’s few systems where the actual franchisor has experience managing many locations, so they know the ins and outs of the business as opposed to some very large education franchises.
You can have direct contact with the owners, with the president, with the COO, with the head commercial officer. And they’re open to feedback, open to jeer generation, and they’re with you every step of the way. Again, this is Patrick Findaro, co-founder at Vetted Biz, as well as managing partner at Visa Franchise. At Vetted Biz, we currently have a directory of over 1,800 franchises where we have data mined, 50-plus metrics from thousands of franchise disclosure documents to help you compare what the best franchise option is for you.
We’re here to help find, vet in terms of analyzing the business opportunity, as well as finance the business generally through an SBA loan, Small Business Administration loan. I also act as the managing partner together with my brother, Jack Findaro, of Visa Franchise, which is an advisory practice that we established five years ago, and we’ve since helped 360 entrepreneurs successfully move to the U.S. through investing in a franchise for their E-2 Investor Visa.
Today, again, I’m really excited to have on, not just one, not two, but three of the owners of Tutoring Club, an established education franchise. It’s been around for the last 29 years. It’s based out in Nevada and in California, and they’re expanding throughout the United States. And they’ve already had locations throughout the West Coast as well as the East Coast. They’re very excited to expand in states like Minnesota, Texas, Arizona, Florida, the Carolinas, and the investment amount starts at $66,000.
So, I just wanted to show this press release that went out today on our bi-monthly live streams, Franchise Fridays, we’ve coined the term. And we’ve started having more and more franchises on, especially the ones that we’ve had a positive working relationship with at Visa Franchise where multiple clients have invested successfully in the business and obtained an Investor Visa. And we’ve now opened that up with Vetted Biz for Americans that just want to invest in a franchise and want to compare different franchise options or compare different businesses for sale as well.
We have an expanding portfolio of businesses for sale at Vetted Biz and franchise resales, and we have over 1,800 franchises where we go through a lot of the key information in terms of how much it costs to start the franchise, if they disclose their financials through the item 19. How many units have opened and closed over the last three years. When the company was founded, a lot of key information that you need to consider before investing in a franchise.
So I’m going to go ahead and add in Liam, Dave, and Dan. Before I do that, I just want to have their presentation up. All right. So, again, thanks a lot for joining. We have Liam Powers, who’s the CCO and co-owner of Tutoring Club. We also have Dan Pinkney, who is the Chief Operating Officer, and has been with the brand for 16 years now. His uncle founded Tutoring Club. And then we have Dave Hill, who was a multi-unit franchisee of Tutoring Club and is now the President of Tutoring Club. So we’re very excited to have them on.
If you have any questions, you can submit it in the comment box, whether you’re on Facebook, YouTube, or even LinkedIn. We’re now connected through LinkedIn. So just submit your questions, and we have Liam, Dave, and Dan available to answer your questions today about the education business, Tutoring Club, and how they’re affected by COVID. So I want to go ahead and turn it over to Liam, and then Dave and Dan are there as well to answer questions that you might have.
Liam: Thank you for the warm welcome, Patrick. Yeah. This is a really cool platform. Excited to be able to connect with you, whether you’re on LinkedIn, YouTube, you know, Facebook Live, or other platforms right now. And, as Patrick said, I think the biggest thing that, you know, we’re looking for is individuals who are passionate about changing their communities for the better, and all the while being able to make, you know, a steady profit and have a business that’s very successful all along the way.
And we find this a great opportunity to be able to connect with people who are interested in the education space, interested, especially at this point in time, given what you’ve seen in the headlines, the last seven, eight months how the demand for, you know, supplemental education services has really exploded. We feel very strongly about where we were positioned preceding everything going on with COVID.
But now that that has taken hold of virtually all aspects of life, seeing what that’s done to the education industry, how schools have attempted to pivot, and seeing how parents and clients prospectively are reacting to that makes us very excited about the future and the role that we can serve in our communities. So, Patrick, thank you very much for pulling that up. If you don’t mind, could you go back? Actually, there’s a couple slides in front of that one I’d like to tackle.
Perfect. All right, there we go. So the very first thing that we want to speak to everybody about is just kind of the space we’re in. Many of you who are interested in franchising, you may have looked in other industries, or perhaps you’re keenly set in on the education industry, in which case, that’s wonderful. But for those who aren’t necessarily and are exploring multiple options and multiple industries, we just want to talk about the education space.
You know, $5 billion to $7 billion is the supplemental education market annually, and we see nothing but explosive growth moving forward from that. Again, the demand for services like ours, where we help students, whether they’re four-and-a-half, 5 years old, you know, learning how to read and the foundations of becoming a student in the public education or private education space. All the way up to these kids, like Patrick was referencing, that are attempting to go to fantastic universities and making sure we can be a pathway for them to do anything that they’re looking to do academically, and especially during this time when the need for supplemental education, whether students were behind, at level, or a bit ahead, but the parents were very motivated to continue to advance their skills.
It’s just changed more than ever before. We are now regarded as a necessity rather than an option. Most of the areas in which we like to open our centers are community-centric, family-driven, a lot of young families. And we’ve always been perceived by a great deal of the population as almost a necessity to be able to compete at a high level, be able to go to some of these wonderful universities when your students are senior in high school, that’s something that now for the people who are on the fringe and thought, “Well, tutoring perhaps is only for the students who are struggling, or average, or prepping for the SAT or ACT.” That’s no longer the prevailing opinion, and that is something that we really seek to capitalize on. And we’ve always been here, but to be able to engage with a broader segment of the population that we hadn’t previously, it’s very exciting to us.
Patrick, could you go next slide for me, please? There we go. One thing we do want to speak to you about is just kind of how the Tutoring Club model works, why customers, or in this case, parents are going to choose us. And that’s for multiple reasons. Chief among them is the fact that we tutor nearly every subject under the sun. A lot of the other competitors in the education space, they choose to key in on one particular subject, or one small segment of the age population, whether that’s youngsters, whether that’s only those specialized SAT, ACT prep and college applicants. A lot of our competitors segment themselves, we do not.
And it sounds funny to say, but this is our distinct advantage, is that we have the ability to tackle the gamut. We can work with, again, as I mentioned earlier, four-and-a-half, 5-year-olds really just starting their academic career, all the way up to those who are going off to college. And that’s a huge advantage. Because very often, parents, especially if you are parents on this call, most of you probably don’t have twins or triplets and those are your only kids.
Most of them are spread out by maybe three, four, five, upwards of six, and seven years. And there are very few options in the education market where a parent can go and get the best possible help for their student who is a 7-year-old and also that student sibling who is a 15-year-old. It is very rare that that exists. And in our case, we find our advantage to be really twofold. And that’s that we can tackle this gamut of age ranges. And we have programs and curriculum to help them from a very young age, all the way up to helping them with these advanced placement courses in high school and these very challenging subjects. And also, we’re able to help them with, again, all subjects in all ages across the board. That’s going to, you know, generally speaking, from 4 to 18 years old, we can come up with something that is customized, that is individualized for each and every student.
We are realistically positioning the opposite of a one-size-fits-all brush. We are the one-stop-shop where you can bring, no matter your student being behind, at level, or ahead, no matter your student being young, middle, or older in the kind of scheme of public education, we are the one place where you can bring them. And that is our distinct advantage, which allows for us to really key in on, what does this student need? How can we help them, and their family, and their parents achieve those goals? And what is that going to look like for them in the future in terms of how we set them up to be successful?
Patrick, if you could go to the next slide for me, please? The curriculum. The curriculum is key in this case. Obviously, in an education business, the curriculum is literally the root of how we are able to be in existence. It is what many investors like yourselves are going to be looking at when you contemplate investing in an education business. That is our core competency. And we take the constant refinement and improvement of the content and, perhaps more importantly, the systems, our delivery of this content very seriously. We recently completed a comprehensive one-year process overhaul of an update to our math concepts curriculum, which has been enormously helpful during this time where schools have been less effective. And a lot of these families, their students are struggling with mathematics.
We do the same for our reading programs, for our SAT programs, for our foundational writing programs. And that is something that is very near and dear to us to make sure that we are always at the cutting edge of being able to offer the best product to our clients. But at the end of the day, the manner in which our proprietary training systems get our tutors to be the most effective teachers possible and their commitment to excellence in teaching, that’s what takes our curriculum to the next level.
A lot of our competitors also pride themselves on the fact that they have solid curriculum, and I won’t dispute that. But the way and manner in which we can bring really motivated, engaging tutors into the fold to bring this to life and get kids excited about learning again, who maybe realistically weren’t that excited about school, that is something that we feel very strongly and passionate about. And we know that that is why our franchisees and the locations that we as owner-operators continue to operate, that is why we know we are successful and we are fundamentally strong to endure March, April, May back when this first set off. These are a great deal of the reasons that we are still in a strong position, and we feel very bullish about moving forward into 2021.
Patrick, can you go to the next slide for me, please? Thanks, sir. So we talked a little bit about why customers tend to choose Tutoring Club. Of course, this is because of our ability to tackle effectively virtually all aspects of education. But why would a franchisee choose to come on board with Tutoring Club? We feel that the qualities that lead franchisees to choose us are similar to why a lot of customers, parents, kids choose us as well. It’s that we do all subjects, it’s that we cater to all ages.
And as a franchise owner, this ability to handle such a broad segment of the possible student population gives you access to a far more significant market than really any of our competitors economically. You can also recoup your investment in this business and net a greater ROI far more quickly than most other forms of business. And this is because the way in which we enroll our families in our services. When you have a client who calls, or walks in, or sends you a message on Yelp or any of these other platforms asking, “Hey, I have a need. I have a need for help for my 7-year-old in this subject.”
When you get that, the ability for us to assess and precisely diagnose where that student is, paint the picture of what a customized game plan should look like based on the family’s goals and the conversation that we’re able to have with the key members of that family. We don’t just order take. We don’t just have people come in and pay $50 for two sessions or anything like that.
What we instead do is we lay out a blueprint for how a student is going to be successful moving forward. And by doing that, we typically have our parents, who sign on board with Tutoring Club, invest for 8-month period, for a 12-month period, for a 14-month period. And the fantastic thing is, for you as the business owner, instead of always chasing the recoup of your investment cost, you can very quickly The net profit before taxes plus payments to the owner(s), interest, and depreciation of assets…. positive because most of our families are pre-purchasing those 8, or 12, or 14 months, for example, in advance.
So you are going to net the proceeds of these transactions and this commitment of this family for a long period of time on the front end. And, of course, you will have to service and make sure that we carry out the services that we’re committed to. But in the long run, instead of you selling a $7 sandwich, you know, every couple of minutes, and over time, that small margin adding up to recouping your investment costs, we’re able very quickly to cash flow positive because of the pre-purchase nature of what our transactions are.
And don’t worry. For a lot of us, you know, it’s very commonplace for us to think of, “Well, we prefer monthly payments.” And what’s great is we have an in-house financing service that for a lot of parents is very commonplace, you know, 0% A 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 over time to borrow in purchasing a business….. They pay for the tutoring sessions over the course of that year. But you as the business owner, you can still also net the clear majority of those proceeds upfront several thousand dollars.
And that is rest assuring at a time when, you know, there’s uncertainty in the world. And when you’re going to open a new business at a fantastic opportunity point like this, we want you to be confident in the fact that you can have some money in the bank very quickly, if done correctly. And we feel very confident in that. So moving forward, you know, what we want to do is not require that our investors, that our franchisees, who oftentimes are owner-operators, we don’t think that you need a Ph.D. in education. That’s often a barrier for a lot of very bright individuals with whom we speak.
Realistically, to run these centers, our software systems, our team behind you, we take care of all those educational decisions, and we make sure that we put the KPIs, those key performance indicators in front of you on a daily basis so that you and your team can focus on what is the most critical. And I don’t want to mix words here. The most critical thing and the most critical role that you as an owner-operator or your appointed manager will play is as follows, building relationships and enhancing the client experience.
And in our world with Tutoring Club, we think we have two clients. One client is the student at hand, and the other client, of course, is oftentimes the parent. So making sure that you or your designated manager can be the one who builds these relationships and fosters this fantastic experience when the kids are coming in overtime, that’s what we want you to focus on. Let us take care of the nooks and crannies of what we should do with reading comprehension and how many hours and sessions it’s going to take to achieve a certain goal. So you do not need to have a steep or an esteemed background in education to come into this world. You need to be somebody who is passionate about people and putting your team in the best position to succeed, and enhancing your community. That is it.
Patrick, if you can go to the next slide for me, please? One thing that I will just kind of preview here before it goes on to the next slide. I do want to talk about training. So when you sign onboard to become a Tutoring Club franchisee, the key for us is that we make sure that you are indoctrinated in all things TC. And you’ll hear myself, David, and Daniel use that term a lot. TC, it’s our shortened Tutoring Club. We view you as part of the TC family, as part of our community, and making sure that when you first come to training for a two-week period at our headquarters in Henderson, Nevada, that we can give you every bit of information that you’re going to need to be successful. And that’s theory.
Then, we send one of our key training staff members to you, wherever you may be located. Whether that’s Arizona, Minnesota, you know, Texas, you name it, we will send one of our key training individuals to you for one week after your training has concluded with us. And that’s wonderful because then we can see what your local environment is breeding in terms of customers coming in, certain needs, and how we can be extremely successful in your market.
But also, there’s also real-world experience at that point in time. Maybe you’ve opened the doors. Maybe you’ve been there for a week or two operating and you’re getting calls from clients and starting to see kids come in. For our staff members to be able to work with you hands-on at that point, that’s how we ensure that they’re a success. This is not a one time, come out for two weeks, and we’ll talk to you once a year. This is ongoing.
And as a new franchisee, we love to make sure that not only do you have access to our team, which, as Patrick was mentioning, you have access to us. We don’t have so many layers where it’s impossible for you to talk to the president, or the vice president, or other key individuals. We like to keep this a family feel. We feel that, as a collective, we are extraordinarily strong, and the goal moving forward is that we are only going to bring on individuals that we feel will be wildly successful with this.
So, in a way, yes, we’re going to be a bit picky. But once we feel great about a situation, you feel great about our company moving forward, when you sign on, we’re going to pair you with two franchisees who are veterans. The majority of our franchisee network, a lot of them have been doing this for 10, 12, 15 years. David and Daniel actually, operators themselves for more than 16 years. So making sure we can pair you up…
Patrick: Liam, I think that’s a big… I just wanted to quickly pause here because we’ve gotten some questions related to that. You know, how do you vet franchisees? Like, you know, you’ve been around for 29 years, you haven’t grown to 80-plus units just by letting anyone sign up and get a franchise. How do you make sure that only franchisees coming in have a very high chance of success and really meet your core values? Tell me a little bit about that process.
Liam: So our process is not extraordinarily rapid, let’s say. You know, if somebody is keen on doing this business, we want to make sure they have multiple opportunities to have thorough conversations about your goals. What I will talk about momentarily as well, your financial goals, of course, but why are you looking to do something like this? You would not believe the demand that there is for somebody to become a franchisee in the education world with us and, of course, with other competitors in the industry.
But we need to make sure that we’re aligned, in that, we are passionate about building our communities up. We are passionate about empowering our individuals to change these student outcomes. And all along the way, that we’re passionate about business too because we are not a school. We are the two things combined. We are a business and an academic institution. So being sure that we can have multiple conversations.
I think the technology boom, so to speak, since the COVID quarantine of allowing a lot of face-to-face conversation to happen at a distance has been a huge advantage. The familiarization, a lot of individuals have with that now has allowed us to be able to interact on a bi-weekly basis for several weeks in a row. And then, even during this, making sure that we have an opportunity for you to come out to Discovery Day. We love to meet our potential franchisees.
Hey, it’s not the worst thing to come out to the Greater Las Vegas area for a 24 to 48-hour period, meet up in action, and make sure that moving forward, our interests are aligned. Of course, there’s all the typical things too, background checks, making sure it’s financially viable, and so forth. But the most important thing is the human element for this. And I’ll defer… Dave, I don’t know if you have any other points to kind of talk about in terms of the vetting process.
David: Yeah. I mean, I think the big thing… Hello, everybody. I’m David. I haven’t got to talk yet. But I think the big thing that we always want to find out is, are you wanting to be owner front and center? And so there’s two ways to succeed in our business, either you’re a very good manager on the back-end and you make sure you find a very solid director that’s going to oversee your center and be that people person, or more often than not, you’re an individual that really likes to get out in the community, likes to meet with individuals.
We’ve always kind of joked we’re not the behind-the-scenes like sandwich maker kind of franchise. We are definitely more of a, “You’re going to be a known commodity and a known great service to your world and your community that you would open in.” And it’s a great feeling. And so we’re always looking for those individuals that want to make a difference in the community, but also want to run a business. And so it’s that marriage of those two things that really goes a long way.
Liam: Absolutely. And I don’t know if it was choppy on anybody else’s end. But just in case something was missed, there’s two ways to do this, and both are perfectly viable. One is to be that front person, that face, that owner-operator as a good percentage of our franchisees are. But even if you’re looking to be a passive, more investor and owner of a business like this, making sure that your intentions are in the right place as I’m sure they are for you joining this call on a Friday morning or afternoon, depending on where you are.
And further making sure that we put you in a position to be successful if you prefer the passive route by helping you find that dynamic personality who can bring just that next level of customer service and client care to your centers. But at the end of the day, what we want to do is initially have conversations with you, and then from there, you know, see where that takes us. Patrick, could you have something else on that?
Patrick: Quick question, popping back onto your slides. Do you have any franchisees that have multiple locations, kind of like how Dave and Dan had before they took over reins of the franchise system?
Liam: I’m sorry, Patrick. I lost you for a second. What was your question?
Patrick: Do you have any multi-unit operators of Tutoring Club, franchisees that have multiple locations?
Liam: We do. Absolutely. So we have several who have multiple locations, and those individuals are going to be more passive because you can only be in so many places at once. Just the same, you know, we have individuals who love what they do day-to-day. And instead of seeking to grow to three, four, five locations, some of them are perfectly content about continuing to raise the ceiling of being active every day in their business, being the face for that community, and making a very healthy profit along the way. So we have a good amount or a bevy of both situations.
Daniel: We also do have multi-unit owners internationally as well. We are internationally. We do have multi-unit owners in the Philippines and in the Dubai area that have been very successful and have been opened up for… Our Philippine centers have been there for about 11 years now, and the Dubai center’s about 6 years.
Liam: Quite fascinating to see it… Go ahead, Dave.
David: I was going to say, to piggyback on that, though, too, I mean, within the United States, a lot of regions lend themselves really well to have the continuity of multi-owners, or multi-unit owners, I apologize. So that definitely goes a long way. In the Texas community we have, in California, a lot of our locations are the same owner with different directors. And it creates a continuity when there’s even people who move maybe 45 minutes away or 10 minutes away, like they can go to any of the centers. And so that creates a very strong force. And you can even use the same kind of tutors at multiple locations, which helps you as an owner for sure.
Liam: Yeah, once the infrastructure is in place at your single unit and you had a great deal of success moving forward with a second or third or fourth location, that’s very typical in the guidelines of what a lot of our franchisees are looking to do. So, again, two ways to do it, you’re passive or you’re active in your business. But either way, there is a model that we can explore. Speaking of which, Patrick, thanks for pulling back up this slide.
We do want to talk about your work-life balance a bit. For our owner-operators who just love being there and feeling it day-to-day and being the most active presence, you know, we understand that you’re doing this for multiple reasons. And oftentimes, key to that is family and work-life balance. Realistically, the great thing about our business is we parallel the school with your schedule. So when you have those, you know, week breaks for Thanksgiving, you may still have some tutoring going on, that’s a great opportunity for our test prep kids to come in and such, but it’s a lighter week.
It’s almost a vacation for you. You have your two weeks at winter break. You have your local district spring break, and all the random president’s holidays and things that come up in that kind of realm. But operationally, during the course of a week, just to give you an idea how Tutoring Club generally works. Monday through Thursday are your high-traffic days. We are open after school. You know, we’re not here from 8:00 to 5:00. Our centers, generally speaking, operate from about 1:00 to 8:00 or so Monday through Thursday. Fridays, you may have some sessions going on and Saturday mornings.
Those are big. Having the option for some of these kids who are over-scheduled and overburdened to come in on a Saturday when they can fresh focus on school, not have to contend with homework and things they do the next day. The great thing is though, that lends itself very well to you having three day weekends a good deal of the time if you are active in your business. The Saturdays, generally speaking, you would have a tutor run those.
So Monday through Thursday, you check in, and you work overdrive, and you make sure that you are really pushing the needle of improving your center. But after that, you have a lot of flexibility to maintain that work-life balance. And on the passive owner side, actually, the bottom point here in terms of lifestyle and wealth goals, you can have a perfectly happy existence being an active or passive single unit owner-operator.
A great deal of our franchisees, they have the capability of making six figures on one center. But if your goals are more financially aligned with a different number, you know, making sure that there are several six figures or more there, there’s really no cap on what you can do in terms of multi-unit. And as Dave was saying, and what you’ll learn about us, if you come to the Orange County community that we operate in, or the Henderson, Nevada community that we operate in, we have four, five, six units within pretty close succession of one another because you then are able to build off your existing infrastructure, your success, your familiarity with the local school systems, and what that community needs. And that translates very well to a second brick and mortar location, a third, and so on.
So, Patrick, what I was thinking at this stage, if you do have more questions, I mean, we can rifle through a few more slides. You know, for example, this is a good juxtaposition of some of our active owner versus passive owner. You know, Dana, in Jacksonville, we just wanted to share. She’s one of our favorite franchisees. She lights up the room. She is so passionate about her team, and her community, and her students there that despite being incredibly successful at that one, you know, she’s content to continue to just make this a better experience for everybody, make this a better business for herself and her take home. As opposed to, on the bottom there, you’ll see Arya. He owns two locations in the San Francisco Bay Area, and he is more passive. He’s an example of that because, again, you can only be in, you know, two places, or you can only be in one place at once.
So realistically, we see this juxtaposition of Arya more being able to provide for his family in what is a hotbed of education in the Bay Area with tons of competition as opposed to Dana, who just loves the feeling of being at her center and being that bright light that shines in the room. So you can have it either way. Both models are perfectly sustainable and perfectly normal in our world.
Patrick, if you can jump forward to cost breakdown. I think that’s probably something a lot of our viewers here are interested in. Save that for last, right? So when we get to the next slide, what you will see is an investment breakdown of kind of what we’re looking at here. One caveat, there is definitely some fluctuation, depending on the market in which you go into. The leased space availability, which let me tell you, right now is a very good time to be somebody leasing, instead of being the landlord. So your opportunity to maybe have a more marquee position in a shopping center and be able to be that much more visible in your community, it’s going to be there without breaking the bank.
But there’s a reason there’s a range here, and it is those factors that I’ve discussed. Number one, there is a franchise fee. Of course, our franchise fee is $34,500. Beyond that, you will obviously have to furnish the interior of your center. Make sure that you have the tutoring tables, the things, you know, that you may be able to see behind me, the book series on the wall, your interior signage, and all those matters. We supply you with everything that you need for the interior of your center to get open and operated on day one.
So you don’t need to worry about how you’re going to design this place. That’s not why you do a franchise. And we have the blueprint ready to go for you to build out your center to the exact specifications so that if you walk into your Tutoring Club, it looks just like ours here on the West Coast. So that is going to be part of your total investment moving in. And, of course, you’ll have your other basic, you know, functions and cost of setting up a business.
You’ll have to do a build-out. The great thing is our build-out is very easy. We literally require an open format, a room where your tutoring takes place, an office, and a bathroom. Imagine that. There is no reason that you need to build a kitchen. You do not need three break rooms. You don’t need any load-bearing walls installed, none of that happens. So the beautiful thing is when you go in to a lease space, and we’re looking at different properties with you, which, by the way, our team helps you do, and we find what we feel is a good fit, oftentimes the shell of that building, whatever used to occupy that space, we don’t have to do too much to. Sometimes we have to do nothing to it.
So your cost of build-out is theoretically going to be quite low compared to a lot of other businesses which require certain really heavy equipment, kitchens, and so on. So with all that said, the investment range when we look at a breakout is going to be about $66,500, all the way up to $120,000. But the overwhelming majority of our franchisees get their doors open and have cash in their operating account to operate the business on day one for under $80,000. And we intentionally like to keep it where it’s a digestible for a lot of our investors coming in.
As Patrick said, as far as funding is concerned, you know, they can help you with that as well coming into these businesses and make sure that you’re in a good position, especially with that cash flow positivity and your opportunity to make revenue for your center without the cost of servicing out that revenue in the beginning very quickly. We want you to feel good about the investment you’re coming into, and we feel that we have a very strong offering compared to the market landscape out there. So I think, you know… Yeah.
Patrick: Liam, I just wanted to give a little bit of a comparison because we’ve gone through 47 different franchises in the education space, and your brand font is like 1% lower than what the average is. The royalty is 1% above, which, it’s pretty much the same, and you get a lot of back in terms of the branding, and the education support, and the curriculum development, probably a lot more than some other franchisors. But a big thing is the standard franchise investment is $123,000. So that’s the average for these 47 peers in the education program space of which Tutoring Club is a prominent franchise of those 47. And, what would you say? The average is like 80k more, you know, if you could say a rough…
Liam: More of sub $80,000. So $80,000 is going to be on the higher end of our median. I believe $77,500 was the number that most got in for in the last 5 years that we’ve opened just when taken in average of the new franchisees coming in there.
Patrick: That’s great. Yeah, so right around 45%, like you had in your presentation. And that’s verified by the information that we’ve pulled on over 47 franchisors operating across the United States in the education space.
Liam: Looks like you’re sifting through questions. Please, we welcome any and all questions. You know, whatever’s on top of your mind, there’s not a bad question. And, you know, frankly, even if this isn’t something you’ve seriously considered before, we’d love to answer whatever’s on top of mind so you can put this into your consideration.
Patrick: Sure. So some of the questions aren’t coming in through the feed, like I saw on LinkedIn. How often do the franchises meet up? Are the franchises close…the franchisees rather?
Liam: Yeah. So our franchise community, that’s something that, again, if you see kind of our verbiage and our vernacular of TC family, we do mean it. Yeah, it sounds a little bit corny, but it is true. We all know each other extraordinarily well moving into how we meet and how often we communicate. Number one, we do have an annual conference, but that’s pretty standard. No matter what franchise you go into, that’s going to be pretty generic.
What separates us is our ability and how frequent we meet up, at least virtually in this modern climate. So generally speaking, twice a month, we are going to have franchisee system-wide calls. But beyond that, in the intervening weeks that separate those, we very often have kind of regional or smaller gatherings where we’re able to speak with those in the southeast, we’re able to speak with those in the northeast and be able to have a smaller community breakout at least once a month in addition to that where we’re able to have some FaceTime with everybody, and we’re able to hear what’s been going on.
And one big thing that is important to us in terms of that frequency of communication in that community is we want to hear from you. We are not some walled-off entity that doesn’t want to hear any ideas that you have. We are strong, and frankly, I think we are the best option out there because of our franchisees. And we know that because we were franchisees, all of us, the three of us right here who own the company right now.
We were franchisees of Tutoring Club, and we felt that community, and we felt what kind of power that brings. So, communication is constant, is possible for us. At a minimum, twice a month, we’re going to have franchisee one. But beyond that these smaller conversations, that’s where we often have our biggest inroads and discoveries.
Patrick: And I noticed a big reason… I think we’ve had like seven clients together, correct me if I’m wrong, over the last three years.
Liam: That’s right.
Patrick: And a big reason why many of them move forward with you were the optionality in terms of being an active owner-operator, in terms of partnering directly with the corporate, or being a more hands-off semi-absentee operator.
So that optionality and the potential to even change, you know, throughout the coming years and have that flexibility, and then also just the responsiveness and the access where we do work with some very large chains in the education space that have over 1,000 locations. But our clients are constantly complaining, “Hey, they’re not replying to my emails, can you follow up with them?” And we have to follow up and get on the phone. And if the franchisor is that difficult to communicate while you’re evaluating the franchise opportunity, how are they going to be when you join and you’re actually a franchisee?
Liam: Yeah, we’ve seen that firsthand.
David: Yeah. I can segue a little bit on that point, Patrick. I think where this became evidently clear was when COVID hit. Our infrastructure, our team, because we’re so close-knit, and with our franchisees, and internally, on the corporate side, we had to pivot very quickly. And we were able to take a lot of our offerings online into a platform similar to this within about two weeks, which, our other competition, the names that may have more prominence for some of the people on this call, shut down completely.
And we’re not even talking as far as no online offerings, no anything. I do have a couple acquaintances that are part of other franchises in the space, and they were completely dark for multiple months. And many of them didn’t even start up again until the new school year began. So we’re talking five or six months where you’re just completely out of business in a sense. So, that was the thing that…
Patrick: I can totally see that, you know, talking from COVID and from a banking standpoint, when everything’s going on, and I found out about the PPP loan program, I kind of get a hold of my banker at a very, very large bank. Where other entrepreneurs here in South Florida were able to get financing right away from these smaller community banks. So it makes total sense when the times are tough, are they going to be by your side, the franchisor, or do they have barriers and they’ll get to you when they can?
David: Yeah. And, again, that’s what we really saw. And our team here, us three, we’re constantly daily all the time talking to all the franchisees, helping all of our employees, but more importantly, just keep keeping everything adrift or keeping everything on a linear of, like, how are we going to handle this crazy situation?
And, I mean, it’s ultimately enhanced our business too because now we have even more digital options that we didn’t have before, and it cuts costs. So our owners are even happier about that piece. And, yeah, I think that’s the big thing, is the schools and some of these too-large-to-handle kind of organizations have had a lot of problems now with what happened with COVID.
Patrick: Yeah. And we were talking a little earlier, you know, now parents are getting a closer eye of how teachers are presenting the curriculum, and how they’re educating, and some parents haven’t been too happy.
David: No. Dan and I are both parents. Liam has just become a parent. Dan and I have both schooling going children, and we’ve always said it because we have kids at home, and we’ve seen it with…try to explain this to parents, but getting a live view into your child’s daily activities in school via virtual or what have you has made parents realize how much supplementary help is needed even more so than they used to.
Patrick: And tell me a bit more about this online learning? How does it benefit the franchisee? It’s an additional revenue stream, are they actually getting more clients because of it?
Liam: Yeah, so there’s two… Well, there’s multiple ways in which this benefits, but two primary benefits from it. Number one, when we first kind of, you know, had that experience, all of us, wherever you’re from on this call, had that kind of going dark feeling, usually mid to late March, we were able to pivot. And because, what I referenced earlier, we have a lot of clients who have invested in us for a long period of time. We don’t just do this as one-off tutoring sessions. We were able to take their experience and mimic very closely the experience they have when they come to the center, online.
So number one, it helped, at that time, our franchisees be able to cater to their current clients, which also represent recurring revenue streams. Once they get to the end of a certain goal for 8 or 10 or 12 months or what have you, most of them do another 8 or 10 or 12 months with you. So that allowed them to create some revenue during a time where, frankly, for those two or three weeks, there wasn’t a lot of new clients trying to seek out help.
But after that, when the world started doing some form of online school, parents became frustrated with what they were seeing in the schooling process. And for certain states and counties where it wasn’t really possible to go in-person quite yet, I’m talking April or May, we were able to, for new clients, be able to give them a much better online experience and to show apples to apples how much better what we can do and we feel, and this may be controversial, is than the schools. I’m sorry, that’s what we saw.
So in terms of moving forward, you are now, as a franchisee, able to offer this online system. So for those families who maybe, you know, they travel a ton, there may be a bit outside of coming to your center all the time. You’re able to attract new clients who say, “I’m only interested in online learning right now.” So that’s something that didn’t previously exist in 2019 or ’18 for us. But even more so, Dave referenced cost-cutting.
So instead of maybe sometimes a slightly more cumbersome process of analyzing where a student is in our curriculum, moving them along, and so on, the fact that we have online and everything is now digitized in our platform is 100% able to be done remotely, even for our in-person kids who are coming in, we’re able to save costs. We don’t have to print anything anymore. We don’t have to have certain things that maybe we used to.
So for the most part, we’re able to cut costs. You’re able to attract new clients for this online system. And on top of that, just the ability to know that’s in your arsenal to be able to offer this online program, God forbid whatever happens in the next few weeks, we’re now positioned very strongly to have no business interruption moving forward. And to be able to really pounce on that new clientele who is absolutely going to be needing our services in the coming months, especially once grades come out for the fall if they haven’t sort…seeking out tutoring before that.
Patrick: Liam, thanks for that. And we just have time for a couple more questions. Dan, you know, what states are you most interested in expanding to?
Daniel: Great question. So we are seeking out, we’d really like to expand in Arizona, Texas, Georgia, Florida, Washington, Minnesota. Those are some of the states that we’ve targeted that we feel have a very good business climate, and a need for tutoring services to help build our brand in those areas. Arizona is a very good one because we already have a brand built there in the Phoenix area with a location there already.
And in Tucson also. And same as Texas. We already have a brand built in Texas in the Houston and Dallas area. And then in Florida, we have multiple locations in the Jacksonville area and in Val Rico in the southern part of Florida, too. So those are the ideal places that we’ve been targeting for the growth of Tutoring Club.
Liam: Dave, can I ask you just to piggyback on that because that’s kind of your forte. Like, what is it that you feel is most important to look for when we’re looking to expand into a community?
David: I mean, population density goes a long way obviously. It’s helpful in kind of places Dan’s mentioning. They’re kind of the migration spots of the United States. So, a lot of people do travel now to Florida or Arizona. But realistically, it’s a community feel. And this is something that Dan and myself do a lot of investigation on of communities that are very family-centric, where you have that sense of a lot of the kids play club soccer, sports, and where the whole kind of design of the community is around family structure.
Those tend to be the areas where we see the most success, and it’s very plentiful throughout the United States. So another great example, and Dan didn’t mention it, but Tennessee, Nashville area, some of these kind of places where a lot of individuals from other states are now going to, to raise their families. We also want a center…and this is interesting, but we do look at locations that have better school districts too.
Ironically, we do better when the schools are better because of the competition, because of the need for education. And a lot of these larger states like Florida, like Texas, and especially California, the competition to get into some of the top universities now is increasing. And that’s something that we slightly touched on, but that’s a huge competitive space that we do very well in because we are kind of the one-stop-shop for high school students. And that’s something that…they love that, and they become very long term clients of ours. Yes, sir.
Liam: Thank you, Dave. That is one thing that I did not hit on that I’d really would like to hammer home. So yes, we have two things we do. We have our own curriculum, we have our own systems designed to improve, especially for the younger kids, reading, writing, math, and other core skills. But perhaps the biggest advantage you have as a Tutoring Club franchisee is your ability to tackle the gamut of middle and high school.
So I know we kind of mentioned it, but one thing we do, our curriculum. Other thing we do, the school’s curriculum. So if Troy or Johnny is coming in, and they need help in their biology and algebra class, which, let me tell you, when you get to algebra two, and the chemistry, or the biology together, that is when the floodgates open, your ability to help those upper-level subjects, and not just say, “Well, they should do our curriculum.”
That’s a huge advantage because a lot of parents, they call our competitors, you know, I won’t name them, but, “Oh, yeah, you will come in and do our curriculum.” For some kids, that doesn’t make sense. It makes the most sense for us to be able to help them with what their homework’s on out of their digital textbook, and when they have quizzes and tests coming up, making sure they’re prepared.
Patrick: Guys, any comments before we wrap this up?
David: I was going to say, I think what’s interesting, since we kind of live and breathe this every day is if you are looking for a business that gives you a lot of self-satisfaction but also allows you to have a life, that was my search many years ago, 16 years ago, and I was pretty young at the time. It’s a really nice life. Dan, and I have families. Liam does as well. He’s raising a baby. We have kids that are a little bit older.
We’re able to do a lot of the things. I’m able to go to a lot of soccer practices and things like that. And so that balance of having your own business because you hear all the time that if you have your own business, you work 80 hours a week, granted, for us on the corporate side, sometimes we do. But when you’re running a center, which I miss some of the times, to be honest with you, it’s a really nice life, and you get that balance of everything.
And, frankly, you get to be around kids. And if there’s any of you out there who’ve ever wanted to kind of get to be around that energy, it just brings you up. And then lastly, you’re working on selling per se, someone’s most important asset in their life. There’s nothing better or more important to a parent than their children.
And so parents are willing to do whatever it takes most of the time to help their kids. So all those facets just lend, that’s why our industry is so large and still growing. But in truth, a lot of the competition, a lot of people out there have no idea what they’re doing when it comes to this stuff. And Daniel, myself, Liam, we are experts in this, and we are good coaches at helping with this.
Liam: Well said. Yeah. And Dave does miss running centers. You would not believe the amount of golf this guy used to play on the weekends. It was absurd. But that’s been gone since we have become franchisor. But yeah, absolutely. I mean, it’s such a fun combination of if you get excited about the business aspects and the management of a place, that’s great. If you get excited about being able to interact with kids day to day, like, look, you’re not sitting in a cubicle, and, you know, well, you’re probably not doing that anyway right now, but you get to see these kids coming in.
And, man, I’m learning new things every day, what’s cool, what’s popular right now. When my daughter gets older, I’m going to be able to have such a leg up on what I expected of that parental learning curve from this. It’s fascinating. And I mean, it’s easy for me to say I think, but you guys can probably echo this. It kind of keeps you young. It keeps you in tune with what is going on. And that’s probably the favorite part. No two days are the same. You know, running across these kids asking how school was, you’ll get a lot of answers. And it’s a good time.
Patrick: Yeah, I’ve been to a few of your centers, and it’s a cool vibe just seeing the kids and the smiles. And it definitely is a positive work energy compared to a lot of other work environments.
Patrick: Well, Dan, Dave, Liam, it was a real pleasure to have you on. We’re going to be posting this as well as transcribing a lot of the key takeaways from today’s Franchise Friday’s live stream. And if you are interested in scheduling an initial call with Liam and the fellow co-owners, we’ll send out a link to schedule the call. I know there’s about 25 people that already wanted to schedule calls following this. Liam, if you don’t mind, follow up with those folks so you can at least send some information and schedule a call. Wanted to thank everyone for joining today’s Franchise Friday’s live stream, and have a great weekend.
Daniel: Thank you.
Liam: Thank you very much. Thanks for having us. Yeah, absolutely. Have a great weekend.
Patrick: Appreciate it.