Want to buy a franchise? Be your own boss? Have more business than you can handle while catering to young couples that see Harvard in the future for their tots and toddlers?
If so, you could buy a Primrose Schools franchise for $70,000, which is a lot less than, say, a McDonald’s restaurant.
In reality, that’s just enough to get your foot in the door. But Jo Kirchner, president and CEO of the Acworth-based national preschool company, and her executives are selling nationally accredited quality care and education. Which means you’d have to follow the Primrose model, abide by its policies and share revenues.
The chain has 245 schools in 17 states, including 39 in metro Atlanta. Even though tuition runs $10,000 or more, some have waiting lists to get in.
Q: It’s got to be more than $70,000 for a franchise. What’s the catch?
A: The franchise fee itself is $70,000, or $65,000 for existing owners. The total investment is about $3.4 million. We build our schools from the ground up, so you would have to have about $350,000 cash, and the rest is an SBA [Small Business Administration] guaranteed loan. And the franchise owner has to be autonomous, not controlled by investors.
Q: On average, how much does each school make?
A: Gross annual revenues at the average mature school are about $1.55 million, based on 2011 numbers.
Q: Tuition is $10,000 to $12,000. That’s a lot of money, isn’t it?
A: We live in a society where both parents most often have to work and are looking at quality care for their children. We cost about 10 percent more than competitors.
Q: What does the headquarters staff do?
A: We have 50 at headquarters and other business functions. We have one Ph.D. in early childhood, five with master’s degrees in education, three with bachelor’s degrees. We also have 20 in the field who visit the schools at least three times a year, looking at the schools from every aspect to assure quality and adherence to the highest standards.
Q: Is the idea like McDonald’s — which wants a hamburger in Acworth to taste the same as one in San Francisco?
A: We have a proprietary curriculum, a blueprint that provides all that is necessary to ensure high-quality care and education. Every individual school has the same foundational elements that make Primrose a good investment for families and owners. Each school has 30 to 35 staff members and the capacity for 180 children.
Q: But in a franchise model, isn’t it hard to maintain quality?
A: All standards for our schools are developed and monitored by the Primrose Schools Support Center. We undergo quarterly quality assurance reviews conducted by our field consultants to make sure we are doing everything necessary to create a safe, nurturing and stimulating environment in which children can learn successfully.
Q: What’s the total number of kids enrolled in all Primrose schools?
A: 37,000 in 2011, 34,300 in 2010 and 32,000 in 2009.
Q: You’re a private company, but what can you say about revenues?
A. We project system revenue this year for all schools of $384.6 million. We had $342 million in 2011.
Q: Has the Primrose company been affected by the poor economy of the past few years?
A: Yes. We have had double-digit growth every year except in ’09 and 2010. Revenue dropped in 2008, 2009 and 2010. Since mid-year last year it has been increasing. I think we lost families who lost jobs, and some who thought they were going to lose a job. While the number of students didn’t necessarily drop, it also didn’t increase as much as we planned. Plus, during the recession lenders weren’t lending like they did before, so we weren’t opening schools frequently. When you don’t open as many schools, you lose potential franchise fees, training fees and so forth, all things that affect the bottom line.
Q: What is your target market?
A: We look for [areas where] family incomes can support tuition, and where there is density of population and growth. It takes about 150 families to fill a Primrose school, and the average family lives 3.2 miles away. Our pattern is suburbs, but we are seeing some young families moving back to cities, so more of our schools will be urban.
Q: What is the difference between Primrose and a day care center?
A: We are in the early childhood education business. Our focus is providing children an opportunity for developmentally appropriate learning environments. Kindergarten teachers need to have a four-year degree and be certified in their state. Pre-k teachers need to have a four-year degree in early childhood education or a closely related field.
Q: I noticed that you said you don’t sell franchises, but you award them. What’s that mean?
A: Applicants must go through an interview process and fill out pretty extensive applications, with résumés, and outline why they want to be franchise owners. We want to know their motive, what kind of character they have shown in their careers, and if they have capital. Franchise owners receive six months of training prior to opening a school, as well as ongoing support.
Q: Given recent coverage about problems at some Georgia child care facilities, how does Primrose address safety and other concerns?
A: Primrose Schools exceeds the state licensing requirements in Georgia and maintains low student-to-teacher ratios. If there is ever an issue identified by our internal quality assurance team or state regulators, it is addressed immediately. Our staff members are carefully screened, certified in first aid, fire safety and CPR, and complete extensive annual training requirements.
MEET JO KIRCHNER
Job: President and CEO of Primrose Schools
Family: Married with two children and two grandchildren
Age: 61
Education: Associate degree, Ohio Career College
Previous jobs: Creative Logisitics Inc., president and CEO; Five Star Publishing Inc., vice president of sales; Proctor Silex Corp., manufacturer representative
Favorite book: “Good to Great: Why Some Companies Make the Leap and Others Don’t,” by Jim Collins
Favorite hobbies: Gardening and hummingbirds
Please send suggestions for candidates to interview to writer@billhendrick.com.
