Pakistan-focused study reveals broad respect for franchising business model.

By Dr. Rozenn Perrigot and Muhammad Akib Warraich

Business-format franchising is booming in most developed and developing countries worldwide and in most sectors of activity, including retailing and services and, more recently, in the social sector. This corresponds to the application of the main principles of franchising in various social sectors, such as education, healthcare, energy provision and water purification in African, Asian, and South American countries. 

One of the sectors gaining prominence is the education sector. This has become particularly important in countries where public education is hampered by lack of funds and inefficiency in administration. As part of a broader research program dedicated to franchising in the social sector, we investigated how franchising works in the education sector with a particular focus on the Pakistani market. 

There are 22 education franchises active in Pakistan. Some examples of established franchise chains are The Educators with 700 franchised campuses in 212 cities and villages with 175,000 students, Allied Schools with 730 franchised campuses in 243 cities and villages with 195,000 students, and Dar-e-Arqam with 525 franchised campuses in 164 cities and villages with 150,000 students. 

Through a series of 43 interviews with franchisors, franchisees, employees/teachers, parents, and students, we set out to gather information on the background of franchising in education in Pakistan, what attracted franchisors and franchisees to these businesses, and what parents and students thought about the education these franchised schools were providing in terms of quality, price, and other key aspects. 

The emergence of franchising in the education sector in Pakistan results from the perceived limitations of the public school system to accommodate a broad section of the population and from its lack of resources, which affects the quality of education offered by the government. 

A franchisee explained that, contrary to public schools, the success of the franchised schools is based on their efficient use of resources. One parent expressed his satisfaction with the franchised schools, saying that he preferred them “because they offer excellent teaching services at a low-cost fee, which is indeed a very attractive feature for all parents. They use impressive advanced teaching and learning techniques that public schools are not using at all.” A student maintained that when comparing franchised schools to public schools “without any doubt franchised (ones are) far better than public ones.”

Social dimensions

There are several social dimensions associated with franchising in the education sector. First, franchising provides benefits for the society as a whole. As a student asserted, franchisors, through the use of media, motivate parents to educate their children and promote education. One franchisee pointed out that a specific benefit of franchising was that “now the poor segment of society, like drivers and vegetable sellers, (could) also get quality education for their children. The improvement is that now their children are studying together with other children. This will reduce the problems in society.” 

Franchising is also shown to aid in the increase of literacy rates, above all in rural areas. As a franchisee explained, with franchised schools, students in remote areas have the opportunity to receive quality education at affordable prices. The specific case of quality education for girls was also stressed by a franchisee who emphasized the advantage of franchised education for girls, as the franchised schools are often in local areas, which make them more accessible to girls “as it is more difficult for them to travel daily or move to some other city.” 

Finally, franchising provides a source of job opportunities for both entrepreneurs who can become franchisees, as well as teachers and staff who are employed by these franchised schools. As an employee explained, franchise chains offer “viable business opportunities for local investors to open a franchised campus and they are also offering better employment opportunities for teachers.”

Respect for franchising’s principles

While franchising in the education sector has a social dimension, there is also a respect for the basic principles of franchising, i.e., brand name, know-how, and assistance. A parent we spoke to confirmed the importance of brand name as a measure of the quality of services. In reference to know-how, a franchisee explained that the franchisor’s staff offered him “training (sessions) and workshops to learn the know-how of the chain. … All franchisees have to attend an extensive initial training of about two weeks.”  Another franchisee said that though he had no experience in the education business, his franchisor gave him assistance in obtaining information in all areas from hiring faculty to composing lesson plans and activities for students.  

Among the general factors that are important to parents, according to our interviews, are both the “quality of teachers and … (the) appropriate monitoring of the overall system.” Moreover, the fees charged by the franchised schools are considered affordable for most people and, in cases where parents cannot afford the set fees, some franchisees may offer them a fee reduction. Another important aspect is that of uniformity. This pertains not only to buildings and equipment but also in terms of teaching and supplies using, according to an employee, “the same books and even the same lessons across Pakistan.” 

We asked some of the franchisees how they came to hear about franchising in the education sector. They replied that initially it was the advertising that attracted them, the information that was given to them by the franchise chains, and the objective of making a profit. It was also pointed out that many franchisees do not operate the schools themselves, they leave the running of the school to the principles they hire, since it is the principles who are more familiar with the administration of the day-to-day workings of a school. 

The future prospects for these franchise chains seem endless, as highlighted by our respondents. During our interviews, it was iterated by the interviewees that in Pakistan the government is unable to provide the “low fees, scholarships and quality of educational services” that are offered by the franchised schools. One of the parents was of the opinion that, in fact, the government should “support these educational groups because they have experience and potential for the future. They must be encouraged to serve our society.” From a franchisee’s perspective, “(t)here are only franchise chains that are successful in providing education. This business model is already successful in the market and it is now widely accepted by our public.”

Education franchisor challenges similar to other sectors    

Ultimately, the challenges for these chains are quite similar to those faced by franchisors in more traditional sectors, i.e., adapting the concept to the local market, facing increasing competition, and selecting the right franchisees and the right teachers. 

Another particular challenge is to find the balance between commercial and social goals. The social goals should not overshadow the basic principles of franchising and the business-orientation. To this end, franchisors, as well as franchisees who want to succeed in the social sector, have to strictly apply and respect the key elements of franchising if they want to achieve their social goals in a sustainable way and with a long-term perspective. 

Dr. Rozenn Perrigot is an associate professor at the Graduate School of Management, University of Rennes 1, France where she is also the director of the Center in Franchising, Retail & Service Chains. Muhammad Akib Warraich is a Ph.D. candidate at the Center in Franchising, Retail & Service Chains.