Education remains one of the fastest-growing sectors in Malaysia. This is tied to the increasing demand for academic improvement and a growing interest among working adults to acquire new skills.
Gone are the days when you only had one option for starting an education business: starting from scratch. Today, there is education franchising, which gives interested parties the opportunity to tap into an already successful business model.
A lot of debate has been raised on which is better: starting your own education business from scratch or franchising. While both business models are special and unique in their ways, choosing the right one could boost business growth and set you on the path to success.
To help you make an informed decision, we will go through what education franchising is all about and look at its pros and cons. We will also look at what it takes to start from scratch and the stumbling blocks that could limit your growth.
The Concept of an Education Franchise
Understanding the concept of education franchises will give you a clear picture of this business model. Let’s look at what an education franchise is all about.
What is an Education Franchise?
In simple terms, an education franchise is a business model in which an individual or organization is granted to operate their own branch under an established and successful education business. This allows the franchisee to benefit from the brand reputation, curriculum program, support, and system provided by the franchisor.
In Malaysia, you can find a range of education franchises to choose from. The most popular ones include preschools, tuition centers, and international school franchises. While these franchises mainly focus on academics, there are also other types of education franchises such as adult education, language centers, and enrichment centers offering programs in areas like music, coding, art, and more.
Understanding the Key Elements of a Franchise Agreement
A franchise agreement is a contract that legally binds the business relationship between a franchisor and the franchisee.
- A franchisor is the owner of the business, willing to sell a franchise to interested entrepreneurs.
- A franchisee is an individual or organization granted the right to operate a franchise business.
The agreement outlines the terms and conditions under which the franchisee can operate the franchise business. Below are the key elements of a franchise agreement:
- Brand Usage: The agreement specifies the rights granted to the franchisee to use the franchisor’s brand name, trademarks, logos, and other intellectual property.
- Franchise Fees and Royalties: The agreement should outlines the fees and payments that the franchisee is required to pay to the franchisor. These may include an initial franchise fee, ongoing royalty fees, advertising fees, and other charges.
- Business Operations: The agreement sets forth the standards and guidelines that the franchisee must adhere to in operating the business. This includes operational procedures, quality control measures, and compliance with the franchisor’s brand standards.
- Training and Support: It details the training and support programs provided by the franchisor to the franchisee. This may include initial training, ongoing support, marketing assistance, and access to proprietary systems or technologies.
- Term and Renewal: It specifies the duration of the franchise agreement and any renewal options available to the franchisee. The agreement may also include provisions for termination or non-renewal under certain circumstances.
It could be customized to include other information that suits both parties and provides a better working relationship. It is important for both parties to thoroughly review and understand the franchise agreement before signing.
Pros and Cons of Education Franchising
Just like every business model, the franchise business model has its pros and cons. Let’s take a look at the benefits and downsides of education franchising.
Pros
- Brand Awareness: Joining an education franchise allows you to benefit from the reputation and recognition of a well-known brand. This can help you attract customers and gain their trust more easily.
- Training and Support: Franchisors usually provide comprehensive training and ongoing support to franchisees. This may includes assistance with operations, marketing, staff training, curriculum development, and more.
- Network and Collaboration: Joining an education franchise gives you access to a network of fellow franchisees who can share experiences, seek advice, and best practices that can foster growth.
- High Success Rate: Education franchises often come with a proven business model that has been successfully replicated multiple times. This can minimize the risks associated with starting a new business from scratch and increase your chances of success.
Cons
- Fees and royalties: Franchise opportunities usually require an initial investment, including franchise fees, equipment, and other startup costs. It can be expensive especially for those branded franchises. These fees can impact profitability and require careful financial planning.
- Lack of Flexibility: Franchise agreements often come with strict guidelines and operating procedures that franchisees must follow. This limits the freedom to make independent decisions and implement unique approaches.
- Dependence on Franchisor: As a franchisee, your success is closely tied to the performance and reputation of the franchisor. Negative publicity or issues with the franchisor can affect your business’s reputation and success.
Now, let’s look at starting your education business from scratch.
Starting your Education Business from Scratch
Starting your education business independently from scratch is quite different from franchising in that you are responsible for all the policies. You need to develop a clear vision and mission, choose a niche, and identify your target audience.
You also need to draw out a solid business plan to guide you as you progress in your journey. Your business plan should include things like your objectives, strategies, and financial projections.
Nevertheless, one of the good things about starting an independent education business is the freedom that comes with it. You have the freedom to design innovative teaching methods and curricula tailored to the audience’s needs. You also have the flexibility of setting schedules, pricing, and choosing the mode of teaching (whether online or offline).
While starting an education business from scratch can be challenging, dedication and commitment are two keys to creating a meaningful impact in the education industry.
Pros and Cons of Starting Own Education Business
Below are the pros and cons of starting an education business from scratch:
Pros
- Creativity and Freedom: Starting your own education business allows you to have complete control over the vision, mission, and curriculum of your centre. You have the freedom to implement innovative teaching methods and create a unique learning experience tailored to your target audience.
- Flexibility: As the owner, you have the flexibility to adapt and respond quickly to market changes, student needs, and industry trends. This agility can give you a competitive edge and enable you to stay ahead of the curve.
- Personal Branding: Building your education business from scratch allows you to establish your personal brand as an educator or expert in a specific field. This can enhance your credibility and attract students who resonate with your approach to education.
- Potential for Higher Profit Margins: By starting your own business, you have the opportunity to earn higher profit margins compared to being a franchisee as you don’t need to pay franchise fees. You can set your pricing structure and manage expenses to maximize profits.
Cons
- Brand Recognition: Establishing credibility and reputation can be a time-consuming process for startups. It may take time to establish your reputation in the market and attract a steady flow of students.
- Operational Challenges: Managing all aspects of the business, including administrative tasks, student enrollment, curriculum development, and staff training, can be overwhelming for a new education business owner.
- Lack of Support and Guidance: Unlike a franchise, where you receive support and guidance from the franchisor, starting your own business means you have to figure things out on your own. This can be daunting, especially for first-time entrepreneurs.
- Longer Time to Break Even: It typically takes longer for startups to break even and start generating profits compared to established franchises. It requires patience and financial stability to sustain the business during the initial phase.
Starting your own education business from scratch offers the advantage of creative freedom and personalized branding. However, it requires careful planning, dedication, and a clear understanding of the education industry in Malaysia in order to succeed.
Starting from Scratch or Franchising: Making the Decision
When deciding between starting your own education business from scratch or opting for a franchise, there are a couple of things to consider.
- Make a careful evaluation of your specific goals, resources, and circumstances
- Consider your long-term vision for the business and whether it aligns with the limitations and expectations of a franchise model.
- Assess your financial capabilities, as franchises often involve upfront costs and ongoing royalties.
- Evaluate your industry knowledge and experience; starting from scratch allows for creative freedom, while franchising offers an established framework
- Reflect on your personal preferences and whether you prefer autonomy or the support of a franchise network.
- Lastly, before opting for an education franchise, research the franchise’s reputation, success rate, and level of support it provides.
Having said all, deciding on either starting from scratch or franchising boils down to a comprehensive analysis of your goals, expertise, financial situation, and personal aspirations to make an informed decision that sets you up for success in the education business.
Conclusion
Whether you choose to start your education business from scratch or opt for a franchise, operation management is what matters most. Education management can be really challenging, especially if you still rely on manual data tracking and hiring admin to do so!
Thankfully, technology has made it easeir for proper education management. You can employ an education management system that helps relieve the burden of manual data tracking and gain useful business insgiths to make informed decisions.
AOneSchools Management System is a proven and trusted EdTech company that helps more than 2,000 education businesses in Malaysia and other Southeast Asian regions. We are known for streamlining administrative tasks and boosting the overall performance of the education business. Book a Free Demo with us now to learn more!
