How Sylvan Learning’s Business Model Creates a One of a Kind Franchise Opportunity with the Lowest Fees in the Industry

As demand in the supplemental education segment of the franchising industry continues to grow, brands are competing for new and innovative ways to stand out from the competition. For Sylvan Learning*, that competitive edge begins with its top tier programs—the brand’s 40+ years of experience combined with a focus on staying ahead of the latest trends both in and outside of the classroom continue to resonate with families across the country. But it isn’t just the brand’s relationship with consumers that enables it to outpace other concepts. Sylvan Learning also boasts a unique business model that’s attractive to both existing and aspiring franchisees.

Part of what makes Sylvan’s business model so unique is that it’s all encompassing. The brand’s corporate team and franchisees have worked together to identify what local owners need in order to be successful, and set up the systems and processes that ensure those tools and resources are made available. That then means that on top of an affordable initial investment rate, Sylvan Learning franchisees are better prepared to see a profit than others who are working with the competition.

Unlike their competitors who charge a royalty rate and then also charge a fee for national marketing and numerous other fees, Sylvan Learning offers an all-in flat royalty rate of 16 percent that’s designed to save local owners money in the end while positioning them to bring in higher revenues than the competition. That rate includes payments to the brand’s national ad fund, mandatory student assessments and all online training resources, including e-learning courses and web conferences, as well as a full-time corporate team that helps source and secure contracts on behalf of franchisees. It also covers fees that were previously associated with Sylvan’s digital platform SylvanSync—instead of being charged up to $2.50 per session, the fees are now part of the all-in royalty rate. Sylvan University Now, an interactive online platform that includes programs created by training specialists for franchisees, center directors, directors of education and teacher certifications, is also included with the brand’s royalty rate along with the brand’s initial training program Sylvan 101, meaning that franchisees don’t have to pay additional fees for their in-person training.

“When looking at ways to enhance our business model, we discovered that brands in the education segment of the franchising industry—ourselves included—were nickel-and-diming franchisees. That really adds up for local entrepreneurs, so, we found a way to simplify the structure and ultimately lower the cost for the franchisees in our system,” said Jacob Jones, SVP of Finance for Sylvan Learning. “Now, we offer franchisees an all-in royalty rate that covers all payments to the corporate team. This system allows us to help our franchisees and candidates understand our financial model in advance so they can anticipate the funds that will be due on a monthly basis, better positioning them for long-term success.”

Sylvan Learning’s one of a kind business model also includes upgrades to its curriculum, providing franchisees with the best possible programs to offer both new and existing customers. That’s an especially strong competitive advantage for local owners now with the addition of the SylvanSync program, which allows the brand to make enhancements to its programs in real time as trends shift and new rules are introduced to classroom curriculums. Those changes can be pushed out overnight to Sylvan’s entire franchise system at no additional cost to franchisees, ensuring that the brand’s franchisees are always steps ahead of the latest industry trends.

In addition to that cutting edge technology, Sylvan Learning franchisees also gain access to strong marketing support. The brand’s national advertising and marketing fund creates a road map on a national level that supports franchisees’ local store marketing efforts. That framework becomes a guide for franchisees who then take its strategies and apply them to their own online presence. The ad fund also includes significant online presence, social media platforms, public relations, online directory management, creative development, the national Sylvan Learning website and local central websites that are templated and easy to personalize.

The benefits that come with Sylvan’s business model aren’t easily ignored by existing or aspiring candidates. According to Randy Way, president of Sylvan Learning’s Franchise Owners Association, the brand’s unique approach to building a strong franchise system makes a significant difference.

“Our business model is really all encompassing. That’s what makes the difference between Sylvan and the competition,” he said. “Everything is built into Sylvan’s system right off the bat. There are never going to be additional costs that come as a surprise—all of our training and support is available for franchisees to use as they need it.”

That robust support system includes both initial and ongoing training, as well as access to all that the brand’s operations, information and technology and operations help desks have to offer. Sylvan franchisees also gain a competitive edge through the company’s commitment to developing additional products and resources for franchisees, which then in turn become additional revenue opportunities for the brand’s growing network of owners.

“As a franchisor, we’re paving the road for our franchisees to be successful. Our goal is to deliver the best educational programs, build the best business model, be leaders in the market, enhance the Sylvan brand and grow the overall system, which is something that we’ve been able to accomplish over the course of 2017,” said John McAuliffe, CEO of Sylvan Learning. “Our business model allows us to provide a higher level of support for our franchisees at a lower rate than any other brand in the industry. That innovative approach to franchising is what has enabled Sylvan to distance itself from the competition over the past three decades, and it’s what will continue to propel our business forward in the future.”

Key Takeaways from an Executive Q&A with John McAuliffe, CEO of Sylvan Learning

How has Sylvan Learning gotten to its current level of success?

When Sylvan first started out over 40 years ago, I’d put us what I call the remedial tutoring business. But over the past five or six years, we’ve worked incredibly hard to expand our product base and increase the use of technology in our learning programs. Take our variety of classes—we cover the basics like math, reading, study skills and test prep in addition to diving into the STEM arena. That’s something that none of our competitors offer, and it’s a huge differentiator. Sylvan is also the only brand that uses technology to deliver the vast majority of our core programs. We’re constantly continuing to expand more and more into online content, ultimately making our program more convenient for students, teachers and families.

From a business perspective, Sylvan has also recently introduced a new business model that allows our franchisees to become more profitable. Our new licensing agreement gives our local owners a smaller footprint. That means that our franchisees are no longer limited to delivering services within our centers. They can also extend our programs into schools, libraries and community centers, making the Sylvan brand easily accessible for families across the country. We’ve found that makes all the difference—it’s hard to see success when students and parents have a hard time physically making their way to a center.

What about Sylvan makes it unique within the supplemental education industry?

The one thing that technology allows us to do now—even more so than in the past—is to individualize our program for a child. Within our typical core program, students are first assessed to determine where they need the most help. Our teachers then deliver a unique plan that tailors lessons to a child’s specific problem areas. There isn’t anything about our model that’s generic—everything we do is designed to help each individual student reach their goals, whether that’s keeping up with a certain grade level or getting ahead.

The role that technology plays in the education landscape is changing rapidly, but we have the tools at Sylvan to stay on top of the trends and integrate new practices into our system. We go above and beyond to ensure that we’re offering students the best possible resources to help them succeed in the classroom.

What plans does Sylvan have in the coming years?

We’re taking the initiative to expand our services and really go above and beyond when it comes to the Sylvan programs that students have access to. Right now, our paper-based Math Edge program is available to students in first through sixth grade. But we’re currently working out how to move that program online, in addition to rolling out a new digital Algebra Edge program for older students. That’s a general theme for us moving forward into the new year—we’re continuing to capitalize on online content. That includes making the most of our app, SylvanPlay, which we think will be big for us going forward.

That doesn’t mean we’re moving our programs out of our centers—it’s essential for children to learn in a classroom setting together. That sense of community and face to face interaction with their teachers ultimately builds confidence, which is a key component in getting students to reach their academic goals. By placing more attention on our digital offerings, we’re simply making it easier for families to access everything that Sylvan has to offer.

The importance of STEM is also something that can’t be overstated—it’s coming at us like a freight train, and we’re perfectly positioned to be at the forefront of that increasingly popular segment of the education industry. We’re expanding our robotics, coding and engineering programs, and we’re looking forward to bringing those programs to new markets both domestically and internationally.

What has been the brand’s biggest milestone over the last few years?

I think our biggest accomplishment—at least in recent history—has been changing the way consumers view us. In the past, most people lumped us in the remedial tutoring provider category. But through our digital marketing efforts and the expansion of our products, Sylvan is now positioned as an education solution for all students. We’re able to create a custom program for every child that walks through our doors, and our methods are been proven to work time and time again.

Why is Sylvan a good investment?

First, Sylvan is a mission driven business. I don’t know a better business to work in—you feel good about owning a Sylvan franchise and helping students succeed. Second, our new licensing agreement and operating requirements are second to none. We’ve done an enormous amount of competitor research, and our model is more profitable than any other brand operating within our arena. Sylvan also offers a flexible business model with startup fees that are significantly reduced. We work with our franchisees in terms of their operating hours and royalty rates. Instead of throwing multiple fees at our owners, we have a flat rate. That attractive and affordable model—in addition to Sylvan’s wide breadth of programs and services—makes our business opportunity the best in the industry.

What does Sylvan’s ideal franchisee look like?

The ideal Sylvan franchisee is passionate and mission driven. Passion is the most important thing—all of our local owners need to be 100 percent committed to helping kids. It also helps if they have some experience in the education industry. They don’t necessarily have to have teaching experience, but it’s beneficial if they have a general awareness of what’s going on in the industry. We also look to partner with franchisees who have a strong entrepreneurial spirit. A big part of our business involves getting the word out about the Sylvan brand and making the most of local marketing opportunities, so we’re looking for franchisees who thrive in that type of environment.