Private School Ownership and Management Models

Private school ownership and management may look the same from the outside however there are a number of different structures that exist for the ownership and operation of a school.

Most private branded schools are operated under either a lease, management contract or franchise, or a combination of these options. For each of these models there is most often a separation between the investment in the real estate element (PropCo) and the operation (OpCo) and/or branding of the business element. Schools and operators prefer to have models that are ‘capital light’ and partnership with real estate investors makes sense. Private school ownership models are different in some locations but there are a variety of ways to structure the business model in order to achieve long term success.

Private School Ownership and the School Name

The school name is unique and created independently or shared through a partnership agreement with an existing school. What can often be misleading is the inference that ‘Brand Name School A’ in the UK, USA, Australia and Canada is actually the same school in a new country. Brand licensing agreements are popular but what value is that ‘sign on the wall’ if there is no quality assurance or processes in place to deliver the same brand standards. It is actually rare that the school is directly involved in the management, supervision and operation of the overseas school. In many cases an agreement has been made for use of the name and then a system of expectations or KPIs are applied then checked from time to time. (To be fair some are changing their models to correct these challenges)

Beware: Sometimes an owner pays for the rights to use a school name but in practice there is little connection to the host school or experienced international education leaders. Similarly, the school brand may not have any experience operating schools outside their host country. This partnership must focus on more than just branding identity.

While there may be a common debate between the benefits of ‘for-profit’ and ‘non-profit’ schools but the truth is that “without mission there is no money and without money there is no mission”. Even non-profit school trusts create positive cash flow and additional resources. Some are very financially liquid with large deposits of money and assets on hand.

Private School Ownership Often Reflects Hotel Management Models

With a hotel management contract such as Sheraton, Hilton, Four Seasons and others, the owner of the hotel real estate (PropCo) and business (OpCo) appoints a management company to operate the hotel business on behalf of the owner. In some cases the management companies are also brand owners but it will not be clear to patrons what is actually the case. The owner remains the owner of the business and retains the majority of the risk and reward from operation, but pays a fee to the management company, which is responsible for the day-to-day management of the hotel.

This private school ownership model is being applied more and more to international schools as a way to ensure high standards are met and vision and mission integrity is retained. The famous school brand wants to expand overseas however they want to retain brand integrity, protect their legacy and for the school to be successful. Operating a school in another country is very different, sometimes risky and most schools don’t have the capacity to set up and operate without trusted partners.

Similarly, overseas investors do not have the expertise to operate school brands, or they may have some experience in the education industry but it is limited to a different model. They might be concerned about a non-profit school not having the business acumen to lead a for-profit school. Conversely the school may be concerned about profit gouging and an overly aggressive commercial model. A balance needs to be struck for private school ownership to work for all parties.

The Argument for Specialist International School Management

GSE is unique in that we have set up and operated schools in all major regions of the world. From Asia to the Middle East, Australia, USA, Africa and elsewhere. Founded by experienced international heads of school and supported by a team of specialists, our niche in the market is understanding both education and business but also through the frames of unique cultural contexts.

GSE creates new and unique brands. We also represent famous overseas brands .

GSE is globally recognised and whatever the school name, the tag “school operated by Global Services in Education” provides brand credibility and a comprehensive set of skills and intellectual property (IP)..

To find out more about GSE contact us for a company profile and full scope .

Private School Management Fees

School management companies typically charge a base fee and then a percentage of gross revenue. This incentivises all parties to succeed and also the fee correlates to the increasing complexity of growing schools. The fee starts small and grows with the school. GSE tailors the fee model to each unique project, location and context. Our fee structures vary with each business model but ultimately it is designed in ways that ensure long term success. Our mission is to have universal and ever reaching impact and our school owners budgets can range from moderate to $300 Million or more, so it is important that we tailor programs to suit.

Private School Facility Rent or Leasing Fees

The PropCo will charge a fee on the school facility, calculated based on Ground Floor Area (GFA) and the standard of the facility. The PropCo will be seeking a good yield that can range from as low as 5% to as high as 15% depending on location. Most often the OpCo will negotiate for lower payments in the first 1-5 years until the school reaches a stronger position in the market. This is a very attractive and secure investment because schools that are in full operation are considered very sound. It is also a very attractive addition to long term investment portfolios like pensions and superannuation funds.

Private School Ownership: 3 vital signs that determine school health

The vital signs of school health indicate the status of a school’s performance. Our experience tells us that private schools fail if they don’t get the balance right.

1. Education Leadership
2. Business Acumen
3. Marketing and Admissions

To generalise, rarely does one party have strengths in all of these 3 key areas. If we also consider the complexity of a different culture or location, then the team is frequently stretched and cant be expected to achieve best practice, balanced across all areas. Education management teams must have strong skills across all of these areas.

For more details on each of these areas explore one of our most frequently read articles on the topic. Learn more

If you want to learn more about the steps required to set up a school or an international school franchise check out some of our other articles:

– Open a School – 10 Things to Consider

– Steps to Setting Up a New School

– 10 Steps and Articles on How to Set Up a New School

– GSE International School Franchise Models

For some great regular updates on the international education industry we also monitor PIE

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GSE set up schools in all areas of the world

CEO and Education Expert Greg Parry

Internationally renowned for his expertise in education leadership, Greg Parry’s vast experience includes leadership of projects for edu-cation institutions throughout Australia, the Middle East, the United States, India, Indonesia, Malaysia and China. Recognised for his numerous contributions in the education arena, Greg has received the Ministers Award for Excellence in School Leadership based on improvements in school performance and a range of successful principal training and leadership development programs, as well as the School of Excellence Award for Industry/School Partnerships and the School of Excellence Award for Technology Innovation. His company GSE (Global Services in Education) has been recognised as having the Best Global Brand in International Education in 2015 and 2016.

Considered one of the premier experts in his profession, Greg has trained teachers and principals throughout the world in areas such as critical thinking, language development and leadership. His expertise in school start up projects, leadership and curriculum development, has made him a sought after authority in these discipline.

www.gsineducation.com

Global Services in Education set up and operate schools in all parts of the world. Governed by a philosophy of global citizenship, every member of the GSE team shares a passion to help shape international education and student achievement through inspiration and collaboration.
Our goal is to meet the highest objectives of every school, teacher, student and parent, with an unwavering dedication to quality education, shared ideals and intercultural perspectives.