Do you want to open a preschool business by buying Goddard franchise? If YES, here is how much it cost to open a Goddard school franchise successfully. If you are looking towards opening a Goddard School Franchise, it will be nice for you to have a of what the company represents before going ahead to open their franchise in your location.
Goddard School started operations in 1986 and they began selling franchise in 1988. They have their corporate headquarters at King of Prussia, Pennsylvania and presently they have an estimated 520 franchise units in operation.
Goddard Systems, Inc. (GSI) is the franchisor of the school. The school will offer primarily preschool programs and care for children between 6 weeks and 10 years of age. The programs offered to a child will vary depending upon the age, skills and development of the child. The school will ordinarily be open from 7 a.m. to 6 p.m. five days a week.
Initial Financial Investment Required to Open a Goddard School Franchise
- Initial Franchise Fee – $135,000 – $135,000
- Initial Training and Opening Assistance Fee – $35,000 – $35,000
- Initial Advertising Contribution – $50,000 – $55,000
- Site Development Assistance Fee – $35,000 – $35,000
- Background Check (up to four individuals) – $3,000 – $5,500
- Convention Deposit – $1,000 – $1,000
- Land Acquisition Cost – Optional – Varies
- Building Construction and Site Work – Optional – Varies
- Furniture, Fixtures and Equipment – $191,000 – $231,000
- Marketing Materials, Stationery, Forms, and Curricular Resources – $17,800 – $24,500
- Signs – $10,500 – $10,500
- Computer Hardware, Telephone, Interactive White Board and Digital Signage Package – $21,000
- Security System – $11,000 – $11,000
- Miscellaneous Opening Costs – $73,000 – $113,000
- Three Months’ Rent – $55,000 – $85,000
- Advertising Contribution – 3 months – $10,500 – $10,500
- Additional Funds (3 months) – $48,300 – $90,600
ESTIMATED TOTAL (doesn’t include land or building costs) = $697,100 – $863,600
Here are Other Applicable Fees
- Royalty – 7% of gross receipts of the school; The royalty fee is reduced during the first year to 2% of gross receipts for months 1-3, 4% for months 4-6, and 6% for months 7-12, if the franchisee is an existing franchisee purchasing an additional (new) franchise for a reduced initial license fee.
- Advertising Contribution – $3,500 (subject to inflation adjustments), or 4% of gross receipts, including the gross receipts derived from any Satellite Location or Annex, whichever is greater, per month.
- Telephone Charges – Cost of telephone services.
- Local Advertising, Marketing and Promotion – The franchisee’s cost.
- Financial Statement Audit – The franchisee’s accountant’s fees for audited financial statements.
- Audit Expenses – Cost of audit including the charges of any independent accountant and the travel expenses, including food, transportation and lodging, and compensation of the franchisor’s employees.
- Late Reporting Fee – $250 for each and every failure and/or refusal to comply plus $100 per day beginning on the third day.
- Transfer Initial Training and Assistance Fee (on-site field and technical) – $10,000, subject to annual increase of 10%.
- Transfer Initial Advertising Contribution – The initial advertising contribution then required of buyers of existing Goddard Schools, currently $15,000, or a different amount if so stated in the transferring franchisee’s agreement or the franchisor’s assessment of the school’s needs.
- Transfer Fee and Sales Commission – $5,000 transfer assignment fee; 7% sales commission.
- Transfer Security Deposit – $5,000
- Background Check Fee – The franchisor’s cost, which it currently estimates is $3,000 to $5,500 for up to four people, plus $1,500 for each additional person’s background check run at the same time; the cost may be less for existing franchisees or more due to international background investigations or other reasons.
- Director’s Training Fee – $1,000 – $5,000
- Construction Management Fee – The construction manager’s fees, which we currently estimate is $50,000 for a school, and $0 to $50,000 for a Satellite Location.
- Conventions – Reasonable registration fee.
- Interest on Late Payments – 1.5% per month or the maximum rate permitted by law.
- Insufficient Funds Fees and Other Financial Institution Charges – The greater of $30 or the amount imposed by the financial institution.
- Insurance; Insurance Reimbursement – Policy cost plus reasonable fee for the franchisor’s expenses if the franchisor obtains insurance.
- Rent for Premises of School – Will vary under circumstances.
- Maintenance/ Refurbishing/ Replacement – As specified.
Site Development Assistance Fee – Annex, Satellite Location, Relocation, Expansion – Up to the franchisor’s then current site development assistance fee offered for new franchises for any relocation, expansion, Annex and material alterations of the school, and up to 25% of the then current site development assistance fee for its services in connection with any Satellite Location, including the development, any relocation, expansion and material alterations of a Satellite Location; the current fee for new franchises is $35,000 (resulting currently in a maximum fee of $8,750 for a Satellite Location).
- Computer and Telephone System Modifications and Enhancements System-Wide Fee and Individual Information Technology Maintenance and Support Services Fee – As specified.
- Appraisal Fees – The cost of the franchisee’s appraiser and one half of the cost of any third appraiser’s fees.
- De-Identify Premises – Costs plus reasonable administrative fee.
- Litigation Expenses – The franchisor’s attorneys’ fees, court costs, expert fees and litigation expenses.
- Taxes – Amount of taxes.
- Late Crisis Notification Fee – $2,500 for each and every failure to notify plus $500 per day beginning on the second day.
- Indemnification – Amount of loss or damages plus costs.
Please note that the above information has been compiled from the FDD of The Goddard School. Year of FDD: 2022.
Other Important Information You Must Know About Goddard
Some of the benefits that are covered by the Franchise Fee include;
a. Training
Goddard Systems, Inc. (GSI) is obligated to provide franchisees with approximately 10-14 days of intensive live training plus online prerequisite training in the marketing, operation, management and education product of a school. Currently, the first phase of training is a combination of online courses and a live session.
This training will occur after franchisees have received their building permit, have received both a definite and final address and telephone number for their school, and they have returned all documents and deposits the franchisor requires. The second phase of training, which is currently a two-week live session, will be held approximately two months before the school receives its Certificate of Occupancy (CO).
All training will be conducted at the franchisor’s headquarters, another training site chosen by the franchisor, or via its online learning management system, Intranet, webinar or other form of electronic communication, and will be conducted on an as-needed basis.
Franchisees must attend, at the franchisor’s request, supplemental and refresher training programs, sales meetings, operations meetings, advertising meetings and conventions which may be offered periodically at various locations or via Intranet, webinar or other form of electronic communication, determined by the franchisor during the term of the franchise.
b. Territory Settled and Approved
Goddard Systems, Inc. (GSI) can assist in settling and securing approval when it comes to locations but franchisees may operate the school only at the location the franchisor has approved. The franchisor does not restrict the area into which franchisees may go to solicit business or the customers whom they may solicit.
Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that owned by the franchisor, or from other channels of distribution or competitive brands that the franchisor controls.
However, the number of schools operated or licensed by the franchisor will not exceed a maximum of one school for each 10,000 households in the county in which the school is located if franchisees are in compliance with their obligations under the Franchise Agreement.
c. Obligations and Restrictions
The franchisee designated, who the franchisor has approved, to conduct the day-to-day management and operation of the school must devote full time, energy and efforts to the management and supervision of the school to satisfy and honor the obligations under the Franchise Agreement.
The designated on-site-operator must also have at least a 10% equity interest in the franchise business. If the franchisee is a married individual, the franchisor will require both the franchisee and spouse to sign the Preliminary Agreement, Franchise Agreement and related agreements as individuals.
Franchisees may not offer or sell any products or services that do not meet the franchisor’s standards and specifications or that are not approved by the franchisor. Franchisees may not use the premises for any purpose other than the operation of a school.
d. Financial Assistance
Please note that you can have access to financial assistance from Goddard Systems, Inc. (GSI). Franchisees are responsible to set up their own financing arrangements; however the franchisor has a Finance Department that can assist them in the preparation of financial applications to lending institutions. The franchisor will not derive revenue from any third party for this assistance.
The franchisor and its affiliates do not offer or arrange direct or indirect financing, except that if franchisees purchase certain initial furniture, equipment and materials through us (other than for a Satellite Location or an Annex) described in one of its Purchase Orders, which the franchisor estimates in the aggregate total $222,300 – $269,000, the franchisor will pay the vendors on the franchisee’s behalf after the vendors issue their invoice and the franchisee will pay the franchisor when the Opening Invoice is received.
The franchisor and its affiliates do not guarantee any of the franchisee’s financing, lease or any other obligations. The franchisor and its affiliates do not receive direct or indirect payments for placing financing with any other lender.
Please note that there are Term of Agreement and Renewal Associated with Owning a Goddard School Franchise. The length of the initial franchise term is 15 years. A five-year renewal term is available, if the franchisee meets certain requirements.