A major franchise brand in the United States that has seen enormous growth in the last five years is Kiddie Academy. Due to its great growth, it has become a popular choice among entrepreneurs who want to own franchisees or who want to diversify their portfolio.
However, its investment numbers are extremely high, which could go as high as $6.7 million. You might wonder if it makes sense to own one if the costs are too high. We will be looking at Kiddie Academy and its franchise system in this article to show you if it’s worth the money and the time.
About Kiddie Academy and Kiddie Academy History
Kiddie Academy is a childhood center franchise center that offers education-based academic and social studies for children in the United States. The company was founded in 1981, and they have been franchising since 1992.
The company focuses on providing an environment where children can have fun and learn in the meantime. They currently have over 300 outlets nationwide and a leading franchise opportunity among childcare franchise providers.
Franchise Model Table
| Cost or Fee | Amount or Percentage |
|---|---|
| Initial Investment | $370,000-$6.7 million |
| Franchise | YES |
| Franchising Since | 1992 |
| Franchise-Fee | $65,000-$145,000 |
| Royalty-Fee | 7% |
| Liquidity | $250,000-$750,000 |
| Estimated Outlets | 312 |
How Much Does it Cost to Open a Kiddie Academy Franchise?
If you lease the real estate, which is the facility of the outlet, the estimated costs are between $370,000 and $825,000.
However, if you are going to own the property, then the costs are between $3.3 million and $6.7 million. The acquisition costs, real estate prices, and other real estate-related prices shoot up the expected overall investment.
The expected initial investment numbers include all the startup costs like the franchise fee, equipment, employees, and real estate costs. They might vary based on your outlet.
Franchise Requirements
You don’t need professional experience background in the industry or as a manager to quality for a Kiddie Academy franchise. They let their proven business model take care of teaching you how to operate their business.
However, they do look for certain liquidity and net worth as financial requirements. You need a liquidity of $250,000 if you are leasing or $600,000 to $750,000 if purchasing the building.
Additionally, you need a net worth of at least $750,000 if leasing or $1 million if buying. You also need to have a credit score of at least 650.
Profit & Revenue
As per sources, the Kiddie Academy franchise owner makes $1,632,000 in annual sales on average.
So, if we assume a profit margin of 24% as per the industry standards, then we can calculate that a Kiddie Academy franchise owner makes $391,680 in annual net profits on average.
| Financial Overview | Percentage of Revenue | Amount ($) |
|---|---|---|
| Individual Franchise Annual Revenue | 100% | 1632000.00 |
| Rent | 9.50% | (155040.00) |
| Insurance | 4.75% | (77520.00) |
| Salaries | 19.00% | (310080.00) |
| Franchise Royalty Fees | 4.75% | (77520.00) |
| Utilities | 1.90% | (31008.00) |
| Cost of Goods Sold (COGS) | 23.75% | (387600.00) |
| Labor (Variable) | 12.35% | (201552.00) |
| Total (Expenses) | 76.00% | (1240320.00) |
| Net Profit | 24.00% | 391680.00 |
Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.
Overall Sales Of Kiddie Academy
The average annual sales revenue per Kiddie Academy’s franchised store is $1.9 million. This number is based on the Kiddie Academy franchise stores that have been open for at least 24 months as of 2022.
How Much Does A Kiddie Academy Franchise Owner Earn?
Kiddie Academy shows the average annual gross profits per franchised store as $485,035 for 2022. Once you remove the taxes, which could vary, the net profit per store is around $391,680 annually.
Payback Period Of Kiddie Academy
The total investment of Kiddie Academy is $6,700,000, and the yearly profit is $391,680. So, to find out how long it will take to earn back the initial investment:
Payback Period = total Investment / Yearly Profit = $6,700,000 / $391,680Â = 17.1 years
Based on these figures, it will take approximately 17 years to pay back the initial investment for Kiddie Academy. This time period could be longer or shorter depending on your sales, revenue, and profit figures.
Failure Rate Of Kiddie Academy
Franchised Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2019 | 213 | 246 | +33 |
| 2020 | 246 | 270 | +24 |
| 2021 | 270 | 286 | +16 |
For the Franchised outlets:
- In 2019, the growth rate was (33)/213×100≈15.49%
- In 2020, the growth rate was (24)/246×100≈9.75%
- In 2021, the growth rate was (16)/270×100≈5.92%
According to the above-mentioned data, there is no failure rate for franchised outlets as the outlets at the end of the year increased during the span of 3 years.
We can see that the franchised outlets for Urban Air grew from 2019 to 2021, showing a growth rate between 15.49% and 5.92%.
Training and Support Of Kiddie Academy
They have an initial training program called Learn On that teaches you hands-on stuff about the operations of the store. Then, you have classroom and on-the-job training at their headquarters in Maryland. This training is for a total of 105 hours combined.
Kiddie Academy also offers a pervasive support program after opening. They provide you with customized marketing strategies and tactics to drive growth in your first year of operation. You will also have an ongoing dedicated business consultant.
You can ask any questions you have, and this consultant will provide you with additional training when necessary.
Terms of Agreement and Renewal
The length of the agreement will be aligned with the franchisee’s lease term, but it cannot be shorter than 15 years. If the franchisee owns the property, then the agreement will be for 25 years.
A renewal will be available if the franchisee meets the criteria and the franchisor is satisfied with them. The renewal will be for an additional term of 10 years.
Obligations and Restrictions
According to the franchise agreement, there has to be someone, either the franchisee or a designated person, who is trained and certified to oversee the operations of the store directly and on-premises. This person also has to spend enough time and energy on the overall management of the store.
The franchisee must offer all services that the franchisor requires them to, and the franchisee can’t offer any services that the franchisor didn’t approve.
Financial Assistance
Generally, the franchisor does not provide direct or indirect financial assistance to their franchisees.
However, the franchisor has long-standing relationships with regional and local financial lenders. They can offer favorable terms and other options to finance your business.
The franchisor doesn’t guarantee that the franchisee will get the loan. They will only help the franchisee in the process, prepare the loan application, evaluate what package fits the best, and introduce the franchisee to their network of lenders.
Entrepreneurs considering a venture into the education franchise sector might explore options such as Legal Academy Franchise, Code Ninjas Franchise, Kumon Franchise, Kidzee Franchise, and Mathnasium franchises.
Kiddie Academy Comparison
| Name | Franchise Fee | Royalty Fee | Initial Investment |
|---|---|---|---|
| Primrose Schools | $50,000-$80,000 | 7% | $651,900-$8.4 million |
| The Goddard School | $135,000 | 7% | $879,950-$1.2 million |
| Kiddie Academy | $65,000-$145,000 | 7% | $370,000-$6.7 million |
Conclusion
Kiddie Academy is one of the leading childcare provider franchises, and they provide good opportunities for entrepreneurs to own a franchise.
The expected initial investment costs are relatively high, including the franchise fee, but the expected profit is around $391,680 annually, which is a significant number.
Considering all of these, if you can cover the high costs to start the franchise, Kiddie Academy is a good franchise opportunity to own.
FAQs
What is the franchise fee for a Kiddie Academy?
The franchise fee for a Kiddie Academy could be between $65,000 and $145,000, depending on specific conditions.
Is there a difference between leasing or buying the property for a Kiddie Academy franchise?
The only difference between leasing or buying the property is the cost. Leasing is much cheaper when opening the store than buying the property.
Is Kiddie Academy a franchise?
Yes, Kiddie Academy has been an active franchise since 1992.
Who Owns Kiddie Academy?
Kiddie Academy is a franchise meaning all the locations are independently owned and operated by professionals in the industry.
Where Is Kiddie Academy Headquartered?
Kiddie Academy is headquartered in Abingdon, Maryland.
How Many Locations Does Kiddie Academy Has?
There are currently more than 300 open academies in the Kiddie Academy system, which are located in 33 states and the District of Columbia.
Who founded Kiddie Academy?
Kiddie Academy was founded by Pauline and George Miller in 1981. They brought their vision of combining fun and learning in a nurturing environment.
Sources
https://kiddieacademy.com/franchising/qualification-requirements/