Top Franchise Development Executives of 2024: Matt Kelton, Vice-President of Franchise Development, Children’s Lighthouse

Matt Kelton, vice president of franchise development at Children’s Lighthouse, brings over two decades of experience in franchising to the role. His background as a third-generation franchisor and former multi-unit operator has equipped him with the knowledge and insights necessary to lead franchise development for the growing early education brand.

1851 Franchise spoke with Kelton to learn more about his story, as well as to learn about some common mistakes he sees franchisors making in today’s industry.

1851 Franchise: Tell us about your brand.

Matt Kelton: Children's Lighthouse is an early education school that started in 1997 in the Dallas-Fort Worth area. Two entrepreneurial brothers were looking for something that didn’t exist at the time. Child care at that point was mainly playtime and babysitting, but they wanted something with a strong curriculum — essentially a full preschool experience on a different level. The business took off, growing to nine locations before transitioning to a franchise model.

Today, Children's Lighthouse has 100 locations either open or in development, serving around 12,000 students nationwide. Texas has the largest number of schools, especially in the Dallas-Fort Worth and Houston areas, but the brand is also in 12 other states. We focus on being a premium option, typically located in upscale suburbs and major metropolitan areas, though we are present in some smaller markets as well. Our target families are often dual-income, white-collar executives looking for child care that offers a high-quality curriculum.

We serve children from six weeks old up to five years, guiding them from infancy through walking toddlers to reading preschoolers, preparing them for kindergarten. We also offer an after-school program for children ages five to twelve, with buses that pick kids up from school and bring them back to the center until parents can collect them in the evening.

One of our key differentiators is our curriculum. We offer three proprietary programs that set us apart from the competition. Children's Lighthouse remains a family-owned business, now in its second generation. Michael Brown, who grew up in the business and attended the University of Texas Business School, is now our president. Unlike our competitors, who are often private equity-backed, we maintain a family-focused culture and are driven by doing the right thing for kids and helping our franchise owners succeed. We've never had an SBA loan failure, and demand for our services far exceeds supply, so we continue to grow rapidly.

1851: How did you get into franchising? 

Kelton: I'm a third-generation franchisor. My grandfather was an early franchisor and my dad was involved as well, so I grew up in the industry. When I graduated college, my parents offered to either pay for law school or buy me a franchise. I decided I didn't want to go to school anymore, so I chose the franchise route. I kind of got my MBA on the job with a company called ColorTyme, which is now part of Rent-A-Center. I became a multi-unit operator for them, but eventually sold those locations and spent some time in corporate America before returning to franchising.

For the past 20 years, I've served as president and chief operating officer for a couple of different brands. I've been here for six months as the vice president of franchise development.

1851: Are there any keys to consistent franchise growth? 

Kelton: The key to successful franchise growth is that your franchisees have to be making money. You’re not going to grow if they’re not doing well, not validating or not adding additional locations. You need solid unit economics. Franchisees must have a profitable business.

You need to offer world-class support. Communication is essential. Franchising is about relationships and you must build those relationships by listening and having good communication.

Solid training is another key. This includes lead generation, having a solid marketing plan and helping franchisees understand how to drive profits. They need to know how to read profit and loss (P&L) statements and understand key profit indicators. There’s basic blocking and tackling that has to happen.

You also need a solid business model with demand. The fact that we’ve never closed a location or had an SBA failure indicates we have a model with big demand that works and we provide high-level, world-class support for franchisees.

1851: What are the biggest hurdles to successful franchise growth right now? 

Kelton: This is a larger scale investment. You're going to need to find franchise owners or partnerships with financial resources or access to funding. That’s a significant factor for us.

We’ve also introduced a new lease program, which lowers the barrier to entry. Instead of a million-dollar-plus cash investment upfront, it’s now significantly lower, and that’s a big piece of our growth potential. It’s a newer program.

We’re also working with you to update our marketing — our website, videos and content. It’s important to be able to tell the story, share franchisee experiences and communicate what we’re about and what our vision is. Having great content is essential because people are doing a lot of their research online, and if you don’t have a great website, it’s a problem. You need to tell stories and communicate your value proposition clearly.

That’s a big part of the equation, but we also need to invest in marketing to target the right customers. We need to walk potential franchisees through the discovery process to make sure it’s a good fit all around. We’re going to be selective about who joins us. They need to fit our culture and share the same vision and values, especially our core value of integrity.

Since we’re dealing with the most precious asset people have — their kids — we need someone we can trust. They not only need to be great at running a business but also need to be part of the community, ensuring these kids are in good hands.

1851: Are there any common mistakes you see franchisors making when trying to grow? 

Kelton: It's tempting to take a check from a new prospect when there are red flags, but if someone isn’t following your discovery process or they’re underqualified, that’s a huge issue. You need to ask, do they have the money to do this and cover their bills during the ramp-up? That’s critical. Do they fit your model and are they going to follow your systems? Are they coachable? These are all things you have to look for.

If you bring in one or two bad franchisees, it can hurt your system, damage your culture and negatively impact validations, so it's important to be extremely picky about who you bring into the system. It’s tempting to add someone just because they’re willing to pay, but fortunately, we have strong financial resources so we’re not in a position where we have to take every sale.

There’s an old saying: "We listen to our gut, but we don’t always obey it." If something feels off, you need to say no. For example, we recently had someone at Discovery Day, and we decided not to move forward because we knew they wouldn’t be a good fit. Our goal is to ensure that every franchisee is successful and sometimes that means acknowledging when this isn’t the right place for someone.

I think the people we’ve rejected are great, but they need to find the right organization. It’s about finding the right seat on the right bus, and you need to figure that out during the discovery process.

1851: What is your number one goal at the moment?

Kelton: I'm in sales, so my number one goal is to hit our target of 25-30 new franchise awards each year. Right now, we have 100 locations open or in development, but we want to grow that to 300. We’d like to reach 300 locations, achieve $300 million in revenue and become one of the top two or three players in this space.

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