This article first appeared in the July, 2016 issue of Franchising World Magazine
Dr. Rozenn Perrigot
Associate Professor and Director of the Center in Franchising, Retail & Service Chains
Graduate School of Management – University of Rennes 1 – France
Muhammad Akib Warraich
PhD Candidate at the Center in Franchising, Retail & Service Chains
Graduate School of Management – University of Rennes 1 – France
Business-format franchising – hereafter known as franchising – is booming in most developed and developing countries worldwide and in most sectors of activity, including retailing, services and more recently in the social sector. Furthermore, there is an increasing interest in the application of principles of franchising in sectors of activity such as healthcare, energy provision, water purification, education in Africa countries, Asian countries and South American countries.
As part of a broader research program dedicated to franchising in the social sector, we investigated how franchising works in a social area such as the education sector. For this empirical research, we focused on the Pakistani market. We gathered secondary data and discovered the importance of franchising in the education sector in Pakistan: 22 franchised chains from elementary to high school, with a total of 3,573 branded schools and an enrollment of 1,233,700 students in the branded schools. A few examples of established franchise chains are The Educators with 700 franchised campuses in 212 cities and villages with 175,000 students; Allied Schools with 730 franchised campuses in 243 cities and villages with 195,000 students; Dar-e-Arqam with 525 franchised campuses in 164 cities and villages with 150,000 students. To go further, we conducted 43 face-to-face interviews with eight franchisors, nine franchisees, nine employees, eight parents and nine students in the Punjab Province. The analysis of the content of these interviews led to some of the following findings.
The emergence of franchising in the education sector
The emergence of franchising in the education sector seems to be a result of the limits of the public school system and its lack of resources. A franchisee explained that “the success of franchise networks is obvious, because [the franchisees] use [their] resources, i.e., faculty and funds, etc., efficiently.” A student told us that “if [he] compare[s] franchised schools with public schools, without any doubt franchised chains are far better than public ones.” A parent added that “[he] prefer[s] franchised chains for [his] children, because they offer excellent teaching services at a low-cost fee which is indeed a very attractive feature for all parents. They use impressive advanced teaching and learning techniques that public schools are not using at all.” This interviewee was “completely satisfied with the performance of franchised schools.”
The social dimension of franchising in the education sector
First, franchising provides benefits for the society as a whole. A student asserted that “franchisors motivate parents to educate their children through TV advertisements. They [i.e., franchisors] are promoting education in our society.” A franchisee pointed out one specific benefit of franchising explaining that “now the poor segment of [his] society, like drivers and vegetable sellers, can also get quality education for their children. The improvement is that now their children are studying together with other children. This will reduce the problems in [the] society.”
Moreover, franchising is also shown to aid in the increase of literacy rates, above all in rural areas. For instance, a franchisee explained that “this is a very important advantage. The same quality of education [is provided] to remote areas and additionally extra expenses [are saved by these people]. [They are] provided with good teachers, good administration, good course notes. It is such a blessing to get all these quality services on the doorstep.” The specific case of quality education for girls was also underlined by a franchisee: “[E]specially for girls, as it is more difficult for them to travel daily or move to some other city. […] That it is a social welfare for people.”
Finally, franchising is a source of job opportunities for both entrepreneurs who can become franchisees, as well as teachers who will be employed by these franchised schools. One of the interviewed franchisees mentioned employing 34 teachers in his school. An employee specified that “franchise networks have swiftly improved and promoted educational facilities for students. They have offered viable business opportunities for local investors to open a franchised campus and they are also offering better employment opportunities for teachers.”
Respecting the basic principles of franchising
Franchising in the education sector has a social dimension but there is also respect for the basic principle of franchising, i.e., brand name, know-how and assistance. Concerning brand name, a parent shared with us the following: “brand name is very important for me. It […] helps me to measure the level of the school services. […] In addition, when my children see TV advertisements about their schools, they get excited. I think the brand name has many positive impacts.” In the case of know-how, a franchisee explained to us that “they [i.e., franchisor staff] offered [him] various sessions of training and workshops to learn know-how of the network. They have a special training. All franchisees have to attend an extensive initial training of about two weeks.” In terms of assistance, a franchisee recognized that “[he] had no experience in the education business. [His] franchisor and his staff shared with [him] all kinds of information about how to start a school. They visited [his] location and suggested [that he] offer[s] small classes at the start. They helped [him] in hiring [his] principal. Until today, [he is] in touch with them regularly. They send [him] monthly lessons and activity plans and [he] just [has] to follow their guidelines.” He concluded that with this assistance it is “easy for [him] to run [his] business.” (A franchisee)
Other key elements of franchising are also present in these educational chains. Interviewees stressed the quality of the provided education. One parent explained that “quality of education firstly depends on quality of teachers and secondly depends on establishing appropriate monitoring of the overall system.” He believed that “chains concentrate on both aspects” and he considered that “teachers are well-trained and children have access to all basic facilities.” Moreover, the price charged by the franchised schools is considered affordable for most people. As a parent said: “Fees in franchised schools are low and quality of education is satisfactory. For the parents who cannot even afford to pay these reasonable fees, franchisees offer them a fee reduction. Personally, I am satisfied with the fee structures of the school and also with its services.” As far as uniformity is concerned, franchisors pay attention to it not only in terms of the buildings and equipment, but also in terms of teaching, using, according to an employee, “the same books and even the same lessons across Pakistan.”
Finally, the business focus of these chains has been pointed out especially by franchisees who mentioned 1) advertising that has attracted them (“I watched a [Brand Name] advertisement on television. I found it very interesting that a new concept had started in Pakistan, so I decided to get initial information about it. When I got information on it, it attracted me and finally I decided to buy a [Brand Name] franchise.”); 2) the fact that franchisees are sometimes investors (“Most of the time, franchisees are not running their schools. They hire principals. I have only seen two [school campuses] where franchisees are operating them themselves.”); and 3) the objective of making a profit (“I think it is more about making a profit. We concentrate on profit. Obviously. It is natural. We have to focus on our margins first.”).
The perspectives and challenges for franchisors and franchisees in the education sector
The perspectives for these franchise chains seem endless as highlighted by our respondents: “Franchising is an interesting concept for everyone. It is successful in Pakistan. I think other countries that are facing problems in terms of education should also adopt franchising. I am sure these franchised schools will grow and never close” (a student); “Franchising will grow because it is a solution to our social pain. Our government must support these educational groups because they have experience and potential for the future. They must be encouraged to serve our society” (a parent); “The franchise sector is progressing in Pakistan. I expect that the development of the education sector in the future [will be] through franchising, because franchised schools offer low fees, scholarships and quality in educational services, which [the] government is unable to offer” (an employee); or “Franchising should grow in the future. It has a great demand because middle and low-income classes have no other solutions. No one is expecting an improvement in public schools. The private sector is out of reach for most of us. Then, who will deliver education to our children? There are only franchise networks that are successful in providing education. This business model is already successful in the market and it is now widely accepted by our public” (a franchisor).
The challenges for these chains are quite similar to those faced by franchisors in more traditional sectors, i.e., adapting the concept to the local market, facing increasing competition and selecting the right franchisees and the right teachers. Another particular challenge is to find the balance between commercial and social goals. The social goals should not overshadow the basic principles of franchising and the business-orientation. Franchisors, as well as franchisees who want to succeed in the social sector, have to strictly apply and respect the principles of franchising if they want to achieve their social goals in a sustainable way and with a long-term perspective.
Short Bio Rozenn Perrigot
Dr. Rozenn Perrigot is an Associate Professor at the Graduate School of Management (IGR-IAE Rennes) – University of Rennes 1 – France where she is also the Director of the Center in Franchising, Retail & Service Chains whose aim is to bring students, researchers and professionals in franchising, retail and service chains together around issues concerning the sector and to generate synergies using a global approach (professions, disciplines and countries). The main activities of the Center – supported by corporate partners – are: education (among which a MSc Degree), research and interactions. Rozenn has published over 30 papers in international peer-reviews using Business approaches (entrepreneurship, management, marketing, organizational behavior, strategy…), Economics approaches (industrial economics, digital economics) and Law approaches (competition law, contract law). She has presented over 60 communications at international conferences on franchising. She is the Secretary of the International Society of Franchising. She has also led several research contracts for the French National Research Agency, the French Franchise Federation, etc. Her recent research deals with the following aspects of franchising: micro and social franchising, franchising in Africa, organizational forms (franchising, company ownership, plural form, multi-unit franchising), chain management (organizational and technical know-how, franchisor/franchisee relationships, franchisee behavior), chain marketing (communication on websites, on social media, on activities linked to corporate social responsibility, customer satisfaction), chain development (franchisor communication to attract new franchisees), chain strategy (E-commerce, internationalization), unit and chain performance (financial and non-financial performance, efficiency, survival/failure), conflicts within chains (European regulation, risk of reclassification of franchise contracts).
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