In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Sylvan Learning franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Sylvan Learning franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Sylvan Learning franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Sylvan Learning outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Sylvan Learning’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average, median, high, and low gross revenue for the top 25%, mid-upper 25%, mid-lower 25%, and bottom 25% of the 369 licensed territories (including a total of 412 Centers) that operated continuously during the 12 calendar months of 2017 under the same or similar form of joint Sylvan and SylvanSync License Agreement which is referenced by and included in the 2018 Disclosure Document
Section I – Background Information
29 Things You Need to Know About the Sylvan Learning Franchise
Closes Out a Strong 2017 With Plans for Accelerated Franchise Development in 2018
1. At the end of January 2018, Sylvan Learning said that it was proud to have added 49 franchises to its growing system in 2017 as the company looked ahead to 2018 with plans to sign over 100 new agreements.
2. John McAuliffe, CEO of Sylvan Learning, said, “Sylvan has a long history of being a visionary in the education franchise industry, and our continued focus on building our curriculum and constantly looking for ways to stay ahead of the technology curve makes us an appealing brand for franchise candidates. Prospects interested in opening a Sylvan are drawn to the variety of programs that we provide for students of all levels and ages while actually making a difference in the communities in which they work and live. We’re looking forward to welcoming new franchisees into our growing family who understand the benefits of having a diversified revenue stream that helps to increase their bottom line, while also having the lowest all-in royalty fee in the industry.”
3. In 2016, Sylvan launched a new license agreement, and in 2017, the brand implemented changes to its operating requirements at franchise locations by focusing on delivering the best educational programs, building the best business model, leading the market, enhancing the brand, and growing the franchise system across multiple states including Florida, Pennsylvania, Colorado, California, and Virginia.
4. In 2018, Sylvan Learning is building on its momentum to increase its presence across North America with a significant focus on major metropolises. The brand is focusing its national development in major cities including Pittsburgh, Los Angeles, San Francisco, Chicago, Orlando, Tampa, Atlanta, Washington, D.C., and New York City.
5. Sylvan Learning closed out 2017 with the opening of 14 new centers in 11 untapped territories, while the brand transferred ownership of 50 centers. The natural progression of a 37-year-old system has led to the retirement of many original franchisees, selling their existing locations to a second generation of Sylvan franchisees. In total, the company welcomed 49 new franchisees into the system by the end of 2017.
6. Georgia Chasen, Sylvan Learning’s director of franchise development, added, “One of the reasons that someone would want to buy a Sylvan franchise would be to not only have a lasting, positive effect on their community, but to also create a comfortable lifestyle for oneself, and to be able to one day retire and leave a legacy. As the anticipated evolution of the system has led to the retirement of some of our original franchisees, we welcome the ability to introduce new franchisees into communities where Sylvan has had a lasting presence and offers highly regarded programming for all students.”
7. Additionally in 2017, Sylvan successfully positioned itself for further international expansion, inking a deal to open in Saudi Arabia. The company partnered with Haitham Ahmed, an educator who wanted to bring the opportunity for a Sylvan education to young students in Saudi Arabia.
8. He first encountered the brand while studying in Canada and enrolled his son in the local Sylvan center. Ahmed saw noticeable, positive changes in his son, including improved confidence, which left a lasting impact on the family and inspired him to bring the brand to his native country.
9. Like many other Sylvan franchisees, this is a family affair. Haitham’s wife and brother join him on the license, with their first location expected to open in the first quarter of 2018.
10. According to McAuliffe, “With our recent expansion into Saudi Arabia and Vietnam, we will continue to focus on international expansion in countries that place high importance on education, and our 2018 strategic plan includes a major growth initiative across America. We’ve even hired a new franchise development director based in California to help increase our presence coast-to-coast from our Maryland headquarters. With our dedicated staff out in the field meeting with candidates, we know that we have put the right plan in place to increase our national footprint, and our team will be working diligently on the path to signing deals for more than 100 locations this year.”
Hires New Chief Revenue Officer to Support Franchisee Revenue Growth
11. In late March 2018, Sylvan Learning announced that the company had appointed George Shipley as chief revenue officer. Shipley will oversee sales activities tied to the company’s marketing campaigns to best serve franchisees and focus on driving franchisee revenue growth.
12. Shipley has over 12 years of experience in the education industry, with the majority of those years being in the higher education arena with a focus on enrollment growth. He has led several successful sales growth efforts, most recently in his role as vice president of marketing and enrollment at Ponce Health Sciences University.
13. In this new role for Sylvan Learning, Shipley will look to identify fresh opportunities that will support revenue growth. He will also help determine sales strategy and determine what additional resources are needed to best support franchisees. This will include leveraging the business intelligence group, the contact center, and parts of the existing operations support team to create a dynamic and robust sales organization that will be responsible for improving conversion of people contacting Sylvan into Sylvan families. The overarching objective is to spur same center revenue growth.
14. Shipley said, “Our goal is to provide new and existing franchisees with best in breed marketing and student recruitment practices across the system. We see an immediate opportunity to improve lead tracking and sales conversion so that we have more insight allowing us to optimize marketing plans more effectively.”
15. Shipley will also help Sylvan through a technology upgrade to the contact center to improve omni-channel, speed-to-lead, and analytic capabilities by leveraging best-in-class technology in the contact center space. Sylvan went through a six month vetting process to identify the best solutions in the industry to ensure Sylvan is providing the best support possible to franchisees in growing their student base.
16. According to Shipley, “This new role is entirely dedicated to helping Sylvan Learning franchisees grow their businesses, and my metrics of success are focused on franchisee revenue growth and successful business outcome. To me, it’s entirely about the franchisees. They are my internal customers and our department is dedicated to helping them grow their business.”
Continues International Expansion Efforts With Plans to Develop 200 Locations Across China
17. In mid-April 2018, Sylvan Learning announced a partnership with Sylvan China, an organization headed by Bo Jiang, to expand across China with the development of 200 locations over the next 10 years. Jiang is the president and founder of the Shanghai Film Art Academy.
18. With an MBA from Tsinghua University, Professor Jiang has an art management doctorate. He has a significant background in Chinese education, and is a member of the China Expert Committee, as well as being the Deputy Secretary General of the China Art Vocational Education Association. Jiang has also had significant success in the TV and broadcasting world as a journalist, producer, and as a juror of the Emmy Awards.
19. Jiang chose to bring Sylvan to China because of the personalized, adaptive nature of Sylvan’s programs. In addition to being able to provide Chinese students with Sylvan’s premium programs including college prep classes, Jiang believes that Sylvan will teach students additional skills including collaboration, communication, and problem-solving soft skills that are not currently taught through China’s academic curriculum.
20. According to Jiang, “Sylvan Learning will be a meaningful addition to China’s supplemental and enrichment education climate. These programs will not only help students excel academically, but they are the perfect solution to prepare students who plan to study abroad.”
21. China sends the largest number of international students to the U.S. through study abroad programs, with Chinese students accounting for 31.5 percent of all international enrollments in the United States. Additionally, two in five international students enrolled in American high schools came from China, and these numbers are increasing.
22. Students in China will have access to Sylvan’s core programs, including math, reading, study skills, homework help, and test prep, in addition to its superior STEM product line of robotics, coding, engineering, Math Edge, and Algebra Edge.
23. John McAuliffe, CEO of Sylvan Learning, said, “There is a demand for Sylvan Learning to open locations across China and to provide our premium programs and personalized education to children across the country. With our recent openings in Vietnam and the Middle East, China is a terrific next step in our international development initiative.”
24. Sylvan Learning was founded in 1979 by W. Berry Fowler in Portland, Oregon. Fowler was a former school teacher who had also worked with the educational company The Reading Game. Sylvan Learning was established as a tutoring service for children of all ages and all skill levels.
25. Just one year after opening the first Sylvan Learning location, Fowler began franchising the concept. Within a few years, there were dozens of Sylvan franchises across the United States and the company’s headquarters was moved to Bellevue, Washington.
26. In 1986, when there were about 500 Sylvan Learning franchises, Fowler sold the company to KinderCare Learning Centers, an Alabama-based chain of childcare facilities that was expanding the scope of its business. Under KinderCare’s ownership, Sylvan Learning’s growth stagnated and Sylvan Learning was eventually sold to R. Christopher Hoehn-Saric and Douglas L. Becker in 1991.
27. During the 1990s, Sylvan Learning continued to grow across the country and even expanded its services by offering teacher training, computerized testing, and distance learning.
28. In 2003, Sylvan Learning was purchased by Apollo Management from Sylvan Learning Systems, Inc. Since around 2008, Sylvan Learning has been closing underperforming centers across the company’s entire system. However, Sylvan Learning is still opening new locations in the United States and around the world.
Entrepreneur’s Franchise 500
29. Sylvan Learning did not rank on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Sylvan Learning franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Sylvan Learning’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 555
- Outlets at the End of the Year: 527
- Net Change: -28
- Outlets at the Start of the Year: 527
- Outlets at the End of the Year: 508
- Net Change: -19
- Outlets at the Start of the Year: 508
- Outlets at the End of the Year: 486
- Net Change: -22
- Outlets at the Start of the Year: 12
- Outlets at the End of the Year: 11
- Net Change: -1
- Outlets at the Start of the Year: 11
- Outlets at the End of the Year: 11
- Net Change: 0
- Outlets at the Start of the Year: 11
- Outlets at the End of the Year: 13
- Net Change: +2
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- With respect to the Sylvan System, as of December 31, 2017, Sylvan had 436 licensed territories in the United States, including a total of 486 Centers, which provided revenue reports to Sylvan.
- Of these, 369 licensed territories (including a total of 412 Centers) operated continuously during the 12 calendar months of 2017 under the same or similar form of joint Sylvan and SylvanSync License Agreement which is referenced by and included in the 2018 Disclosure Document.
- For a consistent comparison, this Item 19 reflects only those 369 reporting territories and 412 Centers.
- This Item 19 does not include revenue from any licensed territory which operated during 2017 pursuant to an earlier form of License Agreement which did not include the SylvanSync System offering; all 369 territories that are the subject of this Item 19 used SylvanSync in 2017.
- This Item 19 also does not include revenue from any territories that closed or opened during 2017 and therefore were not open for the full twelve months of 2017.
- The following chart sets forth certain historic performance information by category for United States licensed territories that operated continuously throughout the 12 calendar months of 2017 pursuant to a joint Sylvan and SylvanSync License Agreement. All such licensed territories are included in the following calculations.
- The financial performance of company-owned territories is not included.
- The figures included in this Item 19 have not been audited.
2017 Sylvan Territory Gross Revenue by Quartile
- This table reflects the total gross revenues from the Sylvan businesses in the 369 reporting territories for 2017.
- The table divides the group into quartiles, based upon gross revenue by territory.
Top 25% of Territories by Gross Revenue (100 Territories)