Interview With MindChamps Franchisor

Creating The Best Mind Software For The World.

MindChamps, the world’s leading specialist in Mind Development Programmes, is the only institute that collaborates with Professor Allan Snyder, world-renowned neuroscientist and Fellow of the Royal Society, the prestigious academy of science that counts Sir Isaac Newton and Albert Einstein as distinguished fellows.

Incorporating the groundbreaking findings of Professor Snyder and the Centre for the Mind, MindChamps’ programmes empower preschool to tertiary level students with the latest and most practical strategies to achieve their full potential, both academically and throughout their lives.

MindChamps was declared the ‘Promising Franchisor of the Year 2009’ at the FLA Award 2009 organised by the Franchising & Licensing Association of Singapore as a testament for their innovative spirit. To find out how the franchising world has helped MindChamps in realising its vision of ‘creating the best mind software for the world’, Franchise Asia spoke to David Chiem, Founder, Chairman & Group CEO, of MindChamps Holdings Pte Limited.

Can you tell us about MindChamps?
MindChamps is an international institute dedicated to training students from preschool to tertiary level in the ‘Art of Learning How to Learn’ and developing their Champion Mindset. Launched as a research centre in Australia in 1998, MindChamps established its world head institute in Singapore in 2002. In May 2008, MindChamps preschool was launched, achieving the distinction of being the first preschool to be fully booked within three months and with 150 students on the waiting list.

MindChamps preschool also broke convention by selling 22 franchise licenses prior to the operation of its first (company owned) centre in Toa Payoh HDB Hub. Currently, there are 5 other preschools, all franchised – Tampines Point, 143 East Coast Road, Changi Business Park, Fusionopolis and Tanglin.

By the end of 2009, there will be two more preschools; Paragon, the first preschool in Singapore’s premier shopping belt of Orchard Road and City Square Mall, arguably the largest preschool in a shopping mall in Asia. Occupying a grand space of 10,000 sq. ft., it will provide a conducive learning environment and 5,000 sq. ft. space, exclusive for interactive outdoor learning. More preschools are set to be launched in 2010 and beyond, including Mapletree Business City.

What are some of the challenges faced by companies in becoming a franchisor?
Finding the right time to start a franchise system – Many variables come into play; your business, industry, level of development within the business, the timing in your career and business cycle, the cash flow and profitability, and the resources available.

Cash flow and profitability – To initiate a franchise system based on nothing more than a well developed idea is not a sensible decision. A proven cash flow and profitable model will ensure that the business is healthy and that it has sustainability and relevance.

Capital – Strong decisions need to be made from the very beginning as to how much capital is to be raised from the franchisees, how much is the franchise license fee, what is the royalty to be paid and how much is to be pumped in to support the franchisees.

Getting the right advice – The quality of the development of the franchise system, business, and legal documentation is dependent on the quality of the advice you receive. The research and due diligence a franchisor completes at the outset is extremely important. Do not scrimp on lawyers’ fees.

Based on your experience, can you describe the methods you have adopted to overcome these challenges?
Location: Where will your education franchise be located? If you plan on starting it in your own locality or any other community, make sure you know the demographics of the area. It is best to research and find out if you will have enough potential clients.

Competition: Study the competitors; their products, pricing, marketing strategies and operations. Find out which category you are from, for example in education, are you in childcare, preschool or kindergarten?

Qualified staff: The success of an education franchise largely depends on its manpower resources. Although the course curriculum is important, there must be a strong training programme for the teachers before they can be deployed to the franchisees.

Marketing: With the large number of childcare, preschools and kindergartens in the market, it is not possible to attract clients without employing marketing and publicity initiatives that shout out your USP (Unique Selling Proposition). Make people aware of the exclusive benefits offered by your institute by utilitising the most effective media for your message, be it the mass media, direct mail or via referrals.

Standards: Another challenge faced by the preschools is of maintaining the standard between the parent company and the franchisees. Developing strict compliance procedures and a strong quality assurance system with frequent checks, training and retraining will definitely preserve the same product value and service experience for all customers.

Share with us some learning points or tips on the following:

Why did you choose your model of the franchise outlet?
Our preschool franchise is modelled on the blueprint of our first preschool in HDB Hub, which in turn is based on 11 years of research and development behind our successful enrichment programme model.

As mentioned previously, we started franchising our preschool without even our own HQ preschool in place last year and managed to sell 22 licenses. Within a year, we are opening eight outlets in prime locations. Now we are moving on to multi-unit franchise overseas.

Why did you choose franchising as an expansion plan?
Franchising is a rapid way of expanding the business once a successful model has been established. Efficient replication is possible once Standard Operating Procedures are in place for all aspects of the business; operations, legal, financial back-end, product/service training, marketing, client relations, etc.

Franchisees are attracted to a system that has been tested and proven. They take on a lot of risk when trying to launch a new business. Starting a business from scratch is hard work, so a franchisor who has demonstrated the success of the system is an attractive proposition that can be bought for the price of the franchise fee.

How did you establish your first franchise outlet?
Our franchising exercise began in February 2008, three months before we had our first fully-owned centre up and running. The blueprint was there so it was a matter of marketing the franchise and inviting potential franchisees to complimentary preview talks. We won our franchisees over with a solid presentation on the full scope of the franchise business opportunity. We also believe that our track record of our enrichment programme had a great bearing on their decision to buy the license.

Once selected, we helped them in all aspects of the business and one year later, the first two franchised centres were launched (143 East Coast Road and Tampines Mall).

What are your greatest challenges faced in the following areas?
In remodeling your business to become a franchise business
MindChamps has been in the enrichment programme business and developing curriculum for the past 11 years. It was only last year that we felt that our R&D in the preschool business was ready to go to the world. We came up with the blueprint for our first fully-owned preschool and basically ran with that for the franchised preschools; we didn’t have to remodel it much.

In developing the business to become a franchise business
The challenge is to safeguard our Intellectual Property from being copied when we expand overseas. Thus we have developed a programme that would take years for a competitor to copy or catch up and we are still updating and improving our delivery as we go along.

In selecting suitable franchisees
The challenge of selecting a suitable franchisee is that we will not know their working style until we start to work together. In our industry, we also cannot be looking for an educator who has the passion but does not have the capital outlay. So we have attracted mostly business people who want to come into the education sector and contribute back to the society. Thus we have developed a one-stop solution for business owners who have the business acumen but do not have the experience in early childhood education to work with their preschool principal to operate their franchise preschool in a dynamic way.

In managing the franchise business
Some of the challenges in managing the franchise business are:

• Finding the right franchisee
• Finding the right franchise location
• Providing strong marketing support
• Finding quality teachers
• Expansion opportunities in franchising

Roughly 40% of retail trade in the USA for example, is conducted through franchising. What do you see for the future of franchising in Singapore/Malaysia?
The education industry is perceived as an evergreen industry as people require education at all stages of their lives. There has been a mushrooming of franchised kindergartens, preschools, childcare centres as well as enrichment centres over the last couple of years in Singapore and Malaysia. I see the trend continuing to grow.

What are your “Do’s and Don’ts” of franchising?
Before you franchise:

• Do interview your potential franchisees thoroughly
• Do get a good and competent lawyer and accountant
• Don’t assume, check the accurate financial position of the franchisee
• Don’t look for investors, look for entrepreneurs

After you franchise:

• Do conduct periodic training
• Do conduct regular meetings
• Do extend support to your franchisees as often as you can
• Do maintain good relations with your franchisee

What are your tips to become successful in franchising?
Choosing the right people as franchisees and not rushing into the market are crucial to a successful franchise business. Evaluate all candidates thoroughly; from their finances, business track record, personality and most of all, their ability to get along with you as an individual.

It is also important that potential franchisees take training seriously. Training is not just about operations, but should also include key business principles. Franchisors should ensure through training that franchisees understand and intepret basic balance sheets and develop business acumen.

It is also critical for franchisees to maintain and not compromise the standard of product/service delivery. At MindChamps preschool, we not only have the latest scientific validated curriculum, quality teacher’s training programme and training resources, we also have a Quality Assurance team to make sure all franchisees uphold the standards that we set.

What is the one golden tip you like to share with first-time franchisor and first-time franchisee?
Tip for first time franchisor:
Managing the Franchise Business Life Cycle
The most crucial stages in a business life cycle are the start-up and growth stages. These are where any new enterprise, franchised or otherwise, are most vulnerable.

The support provided by the franchisor to the franchisee makes a big and a significant difference to the franchisee’s business life cycle. High levels of support early in the franchise relationship will accelerate a franchisee’s growth and facilitate their early maturation between the franchisor and franchisee.

Franchisors usually find the nature of support provided to a franchisee during the course of the franchise business life cycle changes from highly technical and operationally focused at the start, to management, financial and marketing expertise as the franchisee matures.

Tip for first time franchisee:
In franchising, someone has already done the ground work of establishing a business model; the franchisor is now prepared to share that expertise with franchisees for a financial consideration.

However, one should not enter into a partnership just because the proposition is attractive. The franchisee should diligently check up on not only the background of the franchisor but also find out from other franchisees of that brand or franchisees in the related business, what it means to be a franchisee for them.

In the recent FLA Award 2009 organised by the Franchising & Licensing Association Singapore (FLA Singapore), MindChamps preschool garnered the Promising Franchisor of the Year 2009 Award, which recognises new budding franchisors who have made an indelible mark on the franchising scene.

What

winning this award means to you personally and as a franchisor?

The support we have received from both students and parents has been immense. As we embark on our expansion plans into the region and the rest of the world, this recognition will further enhance MindChamps position as a leader in preschool education.

How will a homegrown Asian brand like MindChamps preschool plan to compete with global brands from USA, UK and others?
From the outset, we have always envisioned our preschool to be an international brand. We have a team of experts from the four domains of early childhood – education, child psychology, neuroscience and theatre and they hail from four different continents; North America, Europe, Australia and Asia.

To compete with global brands, we have to have access to the latest cutting-edge research findings from all over the world. It helps tremendously when our experts are from the countries that are leaders in the field of preschool education.

Asia is our stepping stone to the rest of the world and currently our brand is very well received in Indonesia, Malaysia, Thailand, Vietnam, China and India.

In what ways have FLA Singapore helped you to become a successful Franchisor?
FLA has assisted us in various ways. For a start, they guided us to achieve the standard to receive the award as well as provided a platform to market our brand in their marketing portal and magazine. Another enormous contribution was their business match making service which allowed us to meet potential franchisees and investors without us going through all the hassle. FLA was also instrumental in linking us with International Enterprise (IE) Singapore while we were studying the possibilities of venturing overseas. IE

Singapore has been a great help by providing us with the first hand information to the culture and statistics of the various countries before we enter, e.g., Hong Kong, Malaysia, Vietnam, Indonesia and China. We are very impressed with the support from the representatives of the IE personnel in the various countries.