Emergence of school franchises? bodes well for the several thousand students all over the country who scramble to study in well-known schools. Regardless of the drawbacks, the advantage of being able to provide quality education to a large number of students outweighs franchisor-franchisee issues (discussed in this article) and as a result, the concept of franchising in relation to schools appears to be flourishing, and rightly so.

Let?s consider one of the most widely recognised franchising models. The first thing that comes to mind when one crosses a McDonald?s is the particular taste of the burger and the specific size of the medium fries. This and other aspects like the uniform of the staff, the general d?cor and even the quality of service, is more or less uniform in most McDonalds and have all contributed to the development of the McDonald?s ?chain?.

Franchising is simply an arrangement whereby a trademark owner firstly allows the use of his trademark along with a standardised manner of presenting the goods & services under the mark, in exchange for the franchisee providing capital and also paying certain royalty for the use of the mark. This business model is now adopted not only for sale of goods but also for providing services to consumers. The continuing control by the franchisor over the way a franchisee operates is the distinguishing feature of a franchising agreement that differentiates it from a licensing agreement.

Case for school franchising

Well-known schools face a continuous surge of students who vie for the few enrollments that occur every year. At the same time, students in remote towns either travel long distances everyday or move away from home to be enrolled at reputed schools. Maybe the solution to all such problems is franchising. The concept of franchising in education, though not new, has seen phenomenal growth in recent years. Franchise-run vocational courses, ?tuition? centres and coaching institutes like NIIT, Career Launcher etc have been around for decades, but the introduction of franchise-run school ?chains? has seen wide-scale adoption in recent years.

Franchising in the case of schools involves the franchisor allowing the use of a trademark to a franchisee, along with the educational philosophy behind that trademark in exchange for the periodic payment of royalties, and in some cases a share in the profits or revenues of the school. However, school franchising involves parties that commit to each other for a long term and involve huge investments. Therefore, school franchising agreements also clearly define the scope of activities of each party and their roles in relation to one another.

Such an agreement may define exactly how the franchisor expects the school to be run, in terms of its curriculum, school design, set up & functioning of the school administration, lesson plans, day-to-day operations of the school, the manner of conducting research & development policies, so as to keep up their reputation for which they are well-known. In effect, the franchisor maintains absolute and strict control over the quality of the education that the school provides. Despite the restrictions on the operations of the franchisee, the business, or in this case, the school, remains the property of the franchisee.

Such an exchange arrangement between the two parties appears to be advantageous to both. A large pool of capital becomes available to the franchisor who can then develop his business model and have it executed by the franchisees. Also, most reputed schools face a scramble of students who want to enroll and obviously, not all can be accommodated. The solution in such cases is to have ?branch? schools and franchising appears to be the cheapest and easiest manner of doing so, while also ensuring that the branch continues to provide the same quality of education as is associated with the name of the school.

For a person, starting a franchisee is always easier than starting a new business since it amounts to duplication of a business model that has already proven to be successful. This is an extremely important aspect to consider when it comes to schools, since the reputations of a school develop over several years of existence. A new school has a long gestation period, so to speak, before it can gain the kind of reputation that is necessary to attract the kind of faculty and students necessary to make it viable.

Reliance on a well-known and well-established name allows the franchisee to gain advantage of the reputation associated with that name. In such cases, prospective students and parents already expect a certain standard and quality of education as is associated with the name. The reputation and laurels of other schools of the same name can prove to be advantageous to the new entrepreneur/educator. In addition, the franchisee can take the benefit of any publicity or advertising undertaken to promote the services provided by the franchisor as its own.

However, most franchise agreements are in standard form and the negotiating power of the franchisor is generally more than that of the franchisee and it can often be difficult to balance the interests of both. As a result, often such arrangements are to the advantage of the franchisor. Also, since most such organisations are run as businesses, with large sums payable to the franchisor as royalties, it makes acquiring education a costly affair. Further, due to the development and reliance on standardised practices, it is relatively difficult to introduce new models of teaching. It remains debatable as to how this method would impact the development of entire education process.

?The author is founding partner, Lall, Lahiri & Salhotra