FDD Talk 2020: The Goddard School Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

Section I – Background information on The Goddard School franchise opportunity, including relevant news updates

Section II – Estimated initial investment for The Goddard School franchise, based on Item 7 of the company’s 2020 FDD

Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for The Goddard School franchise, based on Items 5 and 6 of the company’s 2020 FDD

Section IV – Number of franchised and company-owned The Goddard School outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

Section V – Presentation and analysis of The Goddard School’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

2019 average gross sales, payroll, occupancy costs, miscellaneous expenses, total expenses, and EBITDA for the 478 Goddard Schools that had been open and operating for over 18 months as of December 31, 2019

2019 average gross sales, payroll, occupancy costs, miscellaneous expenses, total expenses, and EBITDA for the 478 Goddard Schools that had been open and operating for over 18 months as of December 31, 2019, grouped by occupancy level (less than 70%, 70% to 80%, 80% to 90%, 90% to 100%, and greater than 100%)

average monthly EBITDA and average EBITDA for the first full year of operations for all 18 Goddard Schools that had their first full month of operation in 2018

Section I – Background Information

16 Things You Need to Know About The Goddard School Franchise

Appoints New Chief Executive Officer

1. In early September 2019, The Goddard School announced that Dennis R. Maple had been appointed chief executive officer. Maple succeeds Joe Schumacher, who had been GSI’s CEO for ten years. Schumacher remains in an advisory role as the chairman of GSI’s board of directors.

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2. “It’s been an honor to lead GSI for the past ten years, and I’m confident that Dennis is the right person to lead GSI into the future,” said Schumacher. “He brings a compelling blend of experiences around K-12 issues and in consumer packaged goods (CPG) industries and has a track record of success in driving business growth. Dennis will position GSI and our franchisees for continued long-term growth and success.”

3. Maple’s 37-year professional career includes five years as president of First Student, Inc., North America’s largest K-12 school bus transportation services company, and ten years at Aramark Corporation where he served as president of Aramark Education, focused on delivering food, nutrition, and facilities services to K-12 school markets. In both of these roles, Maple gained valuable insight into issues facing today’s educators and administrators, particularly around ensuring healthy and safe environments for students.

4. He brings another 20-plus years of general management experience with CPG leaders such as The Quaker Oats Company, PepsiCo, Inc., Kraft General Foods, Inc., and Coors Brewing Company. His experience with these companies taught Maple to use data-driven insights to spark innovation in business models and product offerings and to help shape business strategies.

5. Maple added, “I am absolutely delighted to join the Goddard team. For more than 30 years, The Goddard School has represented the industry’s gold standard for early childhood education, offering today’s children preparation that’s uniquely designed to enhance both their academic and social success in life. I am passionate about educating our nation’s young people. I come from a family of educators and have spent a significant portion of my career supporting the K-12 community. My first priority will be listening to franchisees, employees and other key stakeholders to determine how we can continue to drive franchisees’ success, education innovation and excellence and responsible growth for Goddard.”

6. At First Student, Inc., Maple leveraged his transformational leadership style to restore the struggling home-to-school transport services business to profitable growth. His emphasis on process discipline and cultivating an engaged stakeholder culture of performance has helped to create a strong, trusted partner in school transportation services.

7. Maple is a member of the Descartes Systems Group board of directors, where he serves as a member of the compensation committee and nominating committee. He is a former board member of various organizations in his hometown of Philadelphia, including the Urban League of Philadelphia, Episcopal Academy School, Philadelphia Outward Bound School, The Philadelphia Academies, and the Paoli Hospital Foundation, and has been an active participant in organizations supporting primary and secondary schools and communities across North America.

8. Robert Strouse, president of Goddard’s parent, Wind River Holdings, added, “We are delighted that Dennis Maple is joining the Goddard team as its Chief Executive Officer. With his proven leadership and business experience, Goddard is well positioned to continue as the leading franchisor in the preschool education sector. On behalf of Wind River, I would also like to thank Joe Schumacher for his years of dedicated service to Goddard. He has been instrumental to Goddard’s record of success, including the recent opening of its 500th school. We look forward to working with Joe in his new role as Chairman of Goddard’s Board of Directors.”

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Names Melissa & Doug Take-Along Town the Winning Educational Toy of 2019

9. In mid-November 2019, The Goddard School announced that the public had selected Melissa & Doug Take-Along Town as the winning toy in the twelfth annual Goddard School Preschooler-Approved Toy Test. To promote the concept of play-based learning for all children, The Goddard School purchased and donated 100 units of Melissa & Doug Take-Along Town to Toys for Tots, a program run by the United States Marine Corps Reserve dedicated to bringing joy to children in need by providing holiday gifts every year.

10. Established in 2008, the Goddard School Preschooler-Approved Toy Test provides an opportunity for preschoolers, teachers, and early childhood education experts across the United States to test the most innovative educational toys on the market. Each year, The Goddard School Toy Test Committee evaluates dozens of submissions from the leading toy manufacturers across the globe.

11. The top 25 educational toys that support child-initiated play and collaboration, among other criteria, proceed to the next round where preschoolers from 50 Goddard School locations nationwide are given the opportunity to play with and critique the toys. The children and their teachers work together to provide insights on their favorites, which are compiled into a list of the top 10 educational toys. The top 10 are then put to a public vote to determine the winning toy of the year.

12. Dr. Craig Bach, vice president of education for GSI, said, “We are proud to celebrate the twelfth year of our Preschooler-Approved Toy Test. Play-based learning has always been an important part of our curriculum as it allows children the freedom to have fun while discovering and exploring the world and their interests. It has also been proven to be an effective way for children to develop communication, creativity, collaboration, and critical thinking skills necessary for social and academic success early on and later in life.”

Company History

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13. The Goddard School was founded in 1983 by Lois Goddard Haines in Malvern, Pennsylvania. Haines started the Goddard School to help enrich the lives of children and their families who required childcare. The curriculum that Haines developed incorporated a variety of teaching methods and progressive ideologies from all areas of child psychology and neurology to create a warm yet individualized experience to meet each child’s needs.

14. After a few years, Haines sold the Goddard School to Anthony A. Martino, founder of the AAMCO Transmissions and MAACO Auto Painting and Bodyworks franchises, in 1988. Martino started franchising the Goddard School concept under Carousel Systems, Inc. Martino chose the name “carousel” as well as a carousel logo (that is now just a horse) because of the carousel that Haines installed outside of the original Goddard School.

15. Under Martino’s ownership, the Goddard School continued to grow around the United States. By the end of the 1990s, the chain had grown to 100 locations. In 2002, the Goddard School was acquired by Wind River Holdings, LP, which has continued to franchise The Goddard School under Goddard Systems, Inc.

Entrepreneur’s Franchise 500

16. The Goddard School ranked No. 88 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

Please click here for detailed estimates of The Goddard School franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

Please click here for detailed information on The Goddard School’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

Outlets at the Start of the Year: 461
Outlets at the End of the Year: 473
Net Change: +12

2018

Outlets at the Start of the Year: 473
Outlets at the End of the Year: 489
Net Change: +16

2019

Outlets at the Start of the Year: 489
Outlets at the End of the Year: 519
Net Change: +30

Company-Owned

2017

Outlets at the Start of the Year: 0
Outlets at the End of the Year: 0
Net Change: 0

2018

Outlets at the Start of the Year: 0
Outlets at the End of the Year: 0
Net Change: 0

2019

Outlets at the Start of the Year: 0
Outlets at the End of the Year: 0
Net Change: 0

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

The following are Statements of Average Gross Revenue and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for The Goddard Schools.

The first report is a Statement of Average Gross Revenue and EBITDA for Mature Schools (open over 18 months) for the year ended December 31, 2019.

The second report is a Statement of Average Gross Revenue and EBITDA for Mature Schools by Occupancy Group for the year ended December 31, 2019.

The third report is a Statement of Average EBITDA for the first 12 months of operation for Schools opened in 2018 and following them for their first 12 full months of operations in 2018 and/or 2019, depending on what month the School opened.

Part 1 – 2019 Average Gross Revenue, Payroll, Occupancy, Miscellaneous Operating Expenses, Total Expenses, and EBITDA for Mature Goddard School Businesses Operating as of December 31, 2019

The following is a report identifying the actual average gross revenue, payroll, occupancy (representing rent plus property tax expense), and miscellaneous operating expenses prepared on a cash basis for all The Goddard School businesses operating as of December 31, 2019.

The net result of these items is “EBITDA” which is defined as gross revenue less all expenses directly related to operating the School excluding interest, taxes, depreciation, and amortization. EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization.

The items included in the expense category identified as miscellaneous items include bank charges, office supplies, utilities, telephone, transportation, payroll taxes, employee costs, advertising, royalties, repairs and maintenance, school supplies, snacks, technology, marketing, and professional fees.

The expenses reported may also include miscellaneous items that are subject to the discretionary spending of the individual franchisee.

The report has not been audited.

As of December 31, 2019, there were 519 The Goddard School businesses in operation, all of which 519 schools were owned by franchisees. Of these 519 Schools, 478 Schools had been open and operating for over 18 months as of December 31, 2019. All of these 478 Mature Schools reported occupancy information for the full year.

Two mature Schools closed during 2019, neither of which had been open for less than 12 months. Information from these two closed mature Schools is not included in the report.

2019 Average – 478 Mature Franchise Schools

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