FDD Talk 2021: 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 2021 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 2021 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 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

Section V – Presentation and analysis of The Goddard School’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

2016, 2017, 2018, 2019, and 2020 average gross sales, payroll, occupancy costs, miscellaneous expenses, total expenses, and EBITDA for the Goddard Schools that had been open and operating for over 18 months as of December 31, 2016, December 31, 2017, December 31, 2018, December 31, 2019, and December 31, 2020, respectively

Section I – Background Information

20 Things You Need to Know About The Goddard School Franchise

CEO Named to Savoy Magazine’s List of 2020 Most Influential Black Executives in Corporate America

1. In early April 2020, The Goddard School announced that Dennis Maple, chief executive officer of Goddard Systems, Inc. (GSI), had been named to Savoy magazine’s 2020 Most Influential Black Executives in Corporate America list. Published quarterly, Savoy is a cultural catalyst for the African American community that showcases and drives positive dialogue on and about Black culture. This elite list of African American executives, influencers, and achievers impacting corporate America was featured in the Spring 2020 edition of Savoy.

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2. Maple’s expansive leadership and business experience over the past 38 years positioned him well for this honor. He has spent significant portions of his career devoted to the K-12 education community and working in consumer packaged goods (CPG) industries. This compelling blend of experiences coupled with a track record in leading business transformations positions Maple well to drive long-term growth and success for GSI and its franchisees.

3. Prior to becoming CEO of GSI in 2019, Maple spent nearly six years as president of First Student, Inc., North America’s largest K-12 school bus transportation services company, and he spent 10 years before that as president of Aramark Education, which focuses on delivering food, nutrition, and facilities services to K-12 school markets. In both roles, Maple gained valuable insights into the issues facing educators and administrators, particularly issues about ensuring healthy and safe environments for students.

4. Robert Strouse, president of Wind River Holdings, parent company of The Goddard School, said, “When you are in Dennis’ presence, it doesn’t take long for you to feel his genuine passion for education and his dedication to the success of children. He’s a tremendous leader who connects genuinely and readily with people, engaging them deeply in the broader mission of the organizations he leads. Dennis is incredibly deserving of this honor, and we are proud to see his name among this list of inspiring business leaders.”

5. Maple said, “I am truly pleased with and honored by this tremendous recognition. I am also privileged to lead the trusted and talented Goddard team. I stand together with our more than 500 Goddard Schools nationwide in helping working families to develop healthy, happy and successful children.”

6. According to the magazine, the selection process began by examining the landscape of spheres of influence impacting Savoy’s readership including corporate sector influence, scholastic achievement, career growth, community outreach, and recognition. The field of candidates was narrowed to the 2020 Most Influential Black Executives in Corporate America list based upon their exemplary record of accomplishments and influence while working to better their communities and inspire others.

Launches New Video Series Providing Valuable Resources to Parents

7. Near the end of November 2020, The Goddard School created the Parenting Under Five video series to help parents with children currently enrolled in preschool, as well as parents contemplating an eventual return to preschool. The 15-part series offers expert advice, findings from the Yale School of Medicine, and practical tips for parents to keep their children safe while continuing vital early childhood education.

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8. Dennis R. Maple, CEO of Goddard Systems, Inc., the franchise owner of The Goddard School, said, “Throughout the pandemic, childcare has remained an essential function of the American economy; it’s the workforce behind the workforce. While the pandemic has presented unfamiliar challenges, it has also provided a wonderful opportunity for our teachers and staff to connect even more deeply with parents. Now more than ever, we want parents to know that we’re here for them. We launched Parenting Under Five to provide resources designed to help parents make informed decisions for their families.”

9. To create Parenting Under Five, The Goddard School sought the expertise of health and well-being medical experts and education professionals with deep knowledge in early childhood development. Parents, owners, and teachers of The Goddard School also provided insight from their first-hand experiences of managing through the pandemic. All 15 videos are available on both The Goddard School’s website and YouTube channel.

10. The Parenting Under Five objective is to extend Goddard’s access to medical experts in an effort to help answer parents’ pressing questions on essential care for their young children. Topics include:

What is the correlation between children going to preschool and incidence of transmission? – Includes findings from a recent Yale School of Medicine study about COVID-19 transmission rates in childcare programs.

How did parents make the decision to send their children back to preschool? – Includes perspectives from Goddard parents and school owners, and insights from Dr. Jack Maypole, pediatrician and director of the Comprehensive Care Program at the Boston Medical Center.

What long-term impact could missing preschool have on a child? – Includes perspectives from Dr. Kyle Pruett, clinical professor of child psychiatry at the Yale School of Medicine.

11. Maple added, “We hope all parents can use these videos to feel confident about making the best decisions for their families, whether that means returning to the classroom or continuing with virtual learning.”

CEO Appointed Chairman of the Board

12. In early April 2021, Goddard Systems, Inc. (GSI), the franchisor of The Goddard School, announced that Chief Executive Officer Dennis R. Maple has been appointed to the additional position of chairman of the board. Maple has been a member of the GSI board and chief executive officer since September 3, 2019. Goddard Systems, Inc. also announced that Joe Schumacher, who since his retirement as CEO in September 2019 has served as non-executive chairman, has been named to the position of chairman emeritus.

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13. According to Robert Strouse, president of Goddard’s parent, Wind River Holdings, “During a time of unprecedented change in the early childhood education industry, Dennis has demonstrated a steadfast ability to lead the Goddard System forward. Combining the roles of Chairman and CEO will further enable Dennis to drive the efficient execution of our long-term strategic imperatives. Dennis’ leadership style, his vision and passion for early childhood education, and his focus on culture and process excellence uniquely positions him to serve as GSI’s new Chairman.”

14. Continued Strouse, “Wind River remains extremely grateful for Joe’s leadership and dedication to the beloved Goddard System. Joe joined GSI in 2007 as Chief Operating Officer, was named Chief Executive Officer in 2009 and then Chairman in 2019. A firm believer in the importance of a strong succession strategy, Joe personally recruited and has actively supported Dennis in his leadership role at GSI. We sincerely thank Joe for his contributions to Goddard’s record of success and for his continuing role as a GSI Board member.”

15. Maple said, “It is an honor to be appointed to the Chairman position and I thank Wind River for the confidence they have in me. I cannot thank Joe enough for his support and guidance as I transitioned into the CEO position and now as I take on the role of Chairman.”

Company History

16. The Goddard School was founded in 1983 by Lois Goddard Haines in Malvern, Pennsylvania. Haines saw the need to enrich the lives of children and their families who required childcare in the area. She developed a program that 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.

17. The original Goddard School augmented the daily curriculum with art, theater, music, garden to table, and made use of traveling programs of The Philadelphia Museum of Art, The Please Touch Museum, and The Franklin Institute.

18. After a few years of successfully running the Goddard School, Haines sold the company to Anthony A. Martino, founder of the AAMCO Transmissions and MAACO Auto Painting and Bodyworks franchises, in 1988. Martino established a franchising system under the name Carousel Systems, Inc. This name, as well as Goddard School’s logo, is based on the carousel horse that Haines had installed at the entrance of the original school. The Goddard School continued to expand around the United States and by 1999, there were 100 locations in operation.

19. In 2002, the Goddard School was acquired by Wind River Holdings, LP, which still owns the company today. Since then, the Goddard School has expanded to more states and by 2019, the company celebrated a major milestone with the opening of its 500th school.

Entrepreneur’s Franchise 500

20. The Goddard School ranked No. 76 on Entrepreneur’s 2021 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 2021 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 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

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

2020

Outlets at the Start of the Year: 519
Outlets at the End of the Year: 553
Net Change: +34

Company-Owned

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

2020

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, 2021 FDD) and Analysis

The following is a report of mature The Goddard Schools (open over 18 months as of December 31, 2020) (“Mature Schools”), identifying the actual gross revenue, payroll, occupancy (representing rent plus property tax expense), and miscellaneous operating expenses prepared on a cash basis for the year ended December 31, 2020 for all The Goddard School businesses operating as of December 31, 2020.

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, marketing, royalties, repairs and maintenance, school supplies, snacks, technology, and professional fees. The expenses reported may also include miscellaneous items that are subject to the discretionary spending of the individual franchisee.

“Gross Revenue” is determined on an accrual basis and represents the amount billed by a School for all services or products of any nature rendered or sold at or from or as a result of the School, and without deduction of any kind. (School services are not currently subject to sales taxes or similar taxes.)

As of December 31, 2020, there were 555 The Goddard School businesses in operation, all of which 555 Schools were owned by franchisees. Of these 555 Schools, 504 Schools had been open and operating for over 18 months as of December 31, 2020.

One Mature School closed during 2020; it had not been open for less than 12 months. Information from this one closed Mature School is not included in the report.

The figures in the report have been compiled from operating reports supplied to The Goddard School by franchisees. All of the Schools report financial information to The Goddard School based upon a uniform reporting system. The Goddard School has not audited these figures.

The Goddard School offered substantially the same services to all of the Schools described in the report. The Schools offer substantially the same services to the public.

Some Schools have sold and/or earned this amount. Your individual results may differ. There is no assurance that you’ll sell and/or earn as much.

Average Gross Revenue, Payroll, Occupancy, Miscellaneous Operating Expenses, Total Expenses, and EBITDA for Mature Goddard School Businesses

2020 Average – 504 Mature Franchise Schools

Gross Revenue: $1,336,520 (100.0%)
Payroll: $579,551 (43.4%)
Occupancy: $236,803 (17.7%)
Miscellaneous Items: $389,825 (29.2%)
Total Expenses: $1,206,179 (90.2%)
EBITDA: $130,341 (9.8%)

2020 Median Gross Revenue: $1,291,314
2020 Highest Gross Revenue: $5,052,878
2020 Lowest Gross Revenue: $207,178

2019 Average – 478 Mature Franchise Schools

Gross Revenue: $1,812,739 (100.0%)
Payroll: $671,104 (37.0%)
Occupancy: $255,686 (14.1%)
Miscellaneous Items: $472,324 (26.1%)
Total Expenses: $1,399,114 (77.2%)
EBITDA: $413,625 (22.8%)

2019 Median Gross Revenue: $1,700,221
2019 Highest Gross Revenue: $6,028,893
2019 Lowest Gross Revenue: $226,260

2018 Average – 458 Mature Franchise Schools

Gross Revenue: $1,725,514 (100.0%)
Payroll: $645,696 (37.4%)
Occupancy: $248,470 (14.4%)
Miscellaneous Items: $458,027 (26.5%)
Total Expenses: $1,352,193 (78.4%)
EBITDA: $373,321 (21.6%)

2018 Median Gross Revenue: $1,631,631
2018 Highest Gross Revenue: $5,229,396
2018 Lowest Gross Revenue: $449,582

2017 Average – 443 Mature Franchise Schools

Gross Revenue: $1,632,855 (100.0%)
Payroll: $613,225 (37.6%)
Occupancy: $240,655 (14.7%)
Miscellaneous Items: $437,013 (26.8%)
Total Expenses: $1,290,893 (79.1%)
EBITDA: $341,962 (20.9%)

2017 Median Gross Revenue: $1,563,551
2017 Highest Gross Revenue: $5,042,110
2017 Lowest Gross Revenue: $513,461

2016 Average – 423 Mature Franchise Schools

Gross Revenue: $1,568,657 (100.0%)
Payroll: $591,736 (37.7%)
Occupancy: $233,051 (14.9%)
Miscellaneous Items: $421,051 (26.8%)
Total Expenses: $1,245,838 (79.4%)
EBITDA: $322,819 (20.6%)

2016 Median Gross Revenue: $1,488,532
2016 Highest Gross Revenue: $4,795,011
2016 Lowest Gross Revenue: $551,210

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