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 2019 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 2019 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 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Sylvan Learning’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average, median, high, and low gross revenue for the top 25%, mid-upper 25%, mid-lower 25%, and bottom 25% of the 359 licensed territories (including a total of 404 Centers) that operated continuously during the 12 calendar months of 2018 under the same or similar form of joint Sylvan and SylvanSync License Agreement which is referenced by and included in the 2019 Disclosure Document
Section I – Background Information
22 Things You Need to Know About the Sylvan Learning Franchise
Celebrates Dramatic Growth in 2018
1. In late January 2019, Sylvan Learning announced that it had met many major milestones in 2018 that helped attract new franchisees to the system and benefited students and their families. From major domestic and international expansion to enhancing its program offerings, the leading supplemental and enrichment education brand accomplished many objectives throughout the year, helping set the brand up for success in 2019.
2. Georgia Chasen, vice president of franchise development for Sylvan Learning, said, “2018 was a banner year for Sylvan Learning. It was very exciting, with investments and developments on all fronts. Landing on this year’s rankings of the best franchise brands to invest in by Entrepreneur Magazine, the Franchise 500, further recognizes our efforts, and we are excited to see what’s in store for our growth this year.”
3. In terms of international franchise development, the brand opened its first center in Saudi Arabia in May 2018 and signed a 200-center deal with a prominent partner in China. Additional centers are also scheduled to open in Vietnam by the end of 2019. Sylvan Learning’s CEO John McAuliffe added, “We’re very, very excited to continue to develop Sylvan Learning’s global footprint. We offer exceptional services that students and families in any market can appreciate and benefit from.”
4. Sylvan Learning sold 24 new North American territories and had 70 resale transactions in 2018, which Chasen said brought dozens of new franchisees into the system. Current franchisees are also expanding and opening new units in the United States and Canada. These new units include satellite locations and traditional brick and mortar centers.
5. Sylvan Learning also began celebrating a milestone that any company would want to achieve: its 40th anniversary. The brand held its annual conference in September 2018, recognizing 40 years of achievements. According to Chasen, “We kicked off our anniversary by celebrating 40 years of delivering exceptional academic results to students. And, we are excited to launch a variety of anniversary celebrations and events across our system that are geared toward both our franchisees and customer families.”
6. At the conference, Sylvan Learning also celebrated the launch of its revamped contact center. The contact center helps franchisees by managing inbound inquiries from parents who want to learn more about Sylvan’s services. Parents can even book tutoring sessions for their children through the contact center. “Our contact center has been very well-received in the franchise community,” McAuliffe said. “It gives our franchisees and center directors more time to focus on students while also allowing our brand to continue delivering premium customer service.”
7. In terms of technology, Sylvan Learning is in the process of rolling out its new operation management system. The company updated the back office infrastructure, which received major kudos from the franchise community. In addition, Sylvan Advisors, the internal community sharing platform, allows franchisees and center and education directors to network and collaborate with their peers at other locations during this implementation.
8. “We also created a consumer referral and rewards platform called Sylvan Nation which allows us to connect with more families with educational tips, resources and rewards.” Chasen said. “We also have SylvanSync, our digital teaching platform, which is what our teachers use for instructing students. This is an excellent example of how the Sylvan executive team has always been entrepreneurial and constantly looks for significant, long-term ways to stay innovative and make an impact for our franchisees.”
9. Sylvan Learning has also made major strides on the marketing front. “Our enterprise marketing management software continues to offer the strongest structure for marketing,” Chasen said. “We provide an outstanding marketing roadmap for our franchisees and are continuously identifying the best-in-class solutions to help our franchisees serve students in their local market.”
10. During Q4 2018, Sylvan Learning also saw unbelievable success across the franchise system as a result of the large number of Black Friday and November sales held. After the corporate team gathered best practices, a benefit of a franchise system, Chief Franchisee Operations Officer Susan Valverde and her team worked to engage more franchisees in the process this year. There were numerous trainings, in which over 100 centers participated, a playbook designed to walk centers through the process, and coordination with the marketing and sales engine teams. The efforts resulted in extraordinary results. For the four-day period from Black Friday through the following Monday, the system was up over 30 percent year-over-year.
11. McAuliffe said, “The executive team is firing on all cylinders in terms of brand strategy, which is helping to attract new franchisees to the Sylvan system. We have the widest breadth of services with 40 years of exceptional results. The average Sylvan student shows more than two times the academic growth of a student attending school alone.”
12. The brand’s solid infrastructure and top-notch support systems are exciting for anyone considering joining the Sylvan brand, Chasen said. She noted that Sylvan has the lowest startup costs in the industry for franchisees and the most advanced technology for students. This has helped make the brand a leader in the education industry.
13. “In 40 years, one of the reasons we’ve been a market leader is because we’re always driving for results and transforming when it comes to the needs of our franchisees,” Chasen said. “We have superior sales, operational and marketing tools in place for our franchisees, and we’re constantly seeking innovative ways to help everyone in our system.”
Celebrates 40th Anniversary
14. In mid-February 2019, Sylvan Learning said that it was gearing up for its milestone 40th anniversary with a series of system-wide community-oriented events throughout 2019, celebrating the families and franchisees that have contributed to the brand’s global impact over the last four decades.
15. John McAuliffe, CEO of Sylvan Learning, said, “The difference we’ve been able to make in our 40 years wouldn’t have been possible without each and every dedicated student that visited one of our centers. Their perseverance and our system of passionate franchisees got us to this milestone achievement and we’re ecstatic to be able to celebrate in all of the communities that have welcomed us.”
16. To acknowledge all of the accomplishments the brand has produced over the years, Sylvan Learning locations across the world held spring kickoff events in April and May followed by in-center customer appreciation 40th birthday bash events in July and August. Sale events were tied into all celebrations as a way for franchisees to give back to their communities for all of their support.
17. On a global scale, Sylvan will be hosting a sweepstakes with several big prizes over the course of the year. These include a free year of Sylvan, a free tutor for a year, and 40 weeks of Sylvan at no cost, among others. The goal of the events and promotions on both the local and worldwide level is to exemplify the brand’s gratitude for each and every family that has come through the doors of one of its centers.
18. Amy Przywara, chief marketing officer of Sylvan Learning, added, “In 40 years, we’ve been able to establish ourselves as market leaders because of the results-driven culture we have created and stayed true to. These system-wide anniversary celebrations geared toward both our franchisees and customer families are representative of the progress we’ve made as well as a continuation of our promise to the communities in which we operate. This is a great way to thank our customers for making us who we are.”
19. Sylvan Learning was founded in 1979 by W. Berry Fowler in Portland, Oregon. Fowler had previously worked with the educational company The Reading Game and wanted to offer tutoring services to students of all ages and skill levels. Fowler’s tutoring business was a success and he began franchising the Sylvan Learning concept a year later in 1980.
20. Within a few years, Sylvan Learning had dozens of franchises open and the company’s headquarters was moved to Bellevue, Washington. Sylvan Learning grew very rapidly and Fowler sold the company in the mid-1980s to KinderCare. Unfortunately, under the KinderCare system, Sylvan languished, as diversifying beyond its means had dragged down KinderCare’s profits until it was forced to file for bankruptcy in 1992.
21. KinderCare then sold Sylvan Learning to the young team of Douglas Becker and Christopher Hoehn-Saric. At the time of the sale, Sylvan Learning had nearly 500 locations open around the United States. Sylvan Learning continued its growth over the next decade and in 2003, Sylvan Learning was purchased by Apollo Management from Sylvan Learning Systems Inc., its parent company. Over the past few years, Sylvan Learning has closed many centers, but there are still numerous locations around the country as well as internationally.
Entrepreneur’s Franchise 500
22. Sylvan Learning ranked No. 411 on Entrepreneur’s 2019 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 2019 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 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- 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: 486
- Outlets at the End of the Year: 484
- Net Change: -2
- 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
- Outlets at the Start of the Year: 13
- Outlets at the End of the Year: 9
- Net Change: -4
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- With respect to the Sylvan System, as of December 31, 2018, Sylvan had 444 licensed territories in the United States, including a total of 484 Centers, which provided revenue reports to Sylvan.
- Of these, 359 licensed territories (including a total of 404 Centers) operated continuously during the 12 calendar months of 2018 under the same or similar form of joint Sylvan and SylvanSync License Agreement which is referenced by and included in the 2019 Disclosure Document.
- For a consistent comparison, this Item 19 reflects only those 359 reporting territories and 404 Centers.
- This Item 19 does not include revenue from any licensed territory which operated during 2018 pursuant to an earlier form of License Agreement which did not include the SylvanSync System offering; all 359 territories that are the subject of this Item 19 used SylvanSync in 2018.
- This Item 19 also does not include revenue from any territories that closed or opened during 2018 and therefore were not open for the full twelve months of 2018.
- 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 2018 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.
2018 Sylvan Territory Gross Revenue by Quartile
- This table reflects the total gross revenues from the Sylvan businesses in the 359 reporting territories for 2018.
- The table divides the group into quartiles, based upon gross revenue by territory.
Top 25% of Territories by Gross Revenue (95 Territories)