It is a nostalgically heard name in the coaching and test preparation arena in India- Aakash Institute. The most popular feature is the name associated with quality education and promising results. Every student preparing for competitive tests, especially for NEET and JEE, will recognize this prestigious name. The model franchising had a great role in the growth and profitability of Aakash Institute.
Aakash Institute also used franchising for expansion and reduced the burdens of operations and increased profitability while maintaining high standards in education.
It helps to reach various markets effectively without changing the delivery model for their high-quality education.
The Educational Hub of India
It is one of the largest education countries in the world with a market size expected to touch $225 billion by 2025. The coaching sector is in the fastest growing sector because most of the students go to competitive examinations, increases in per-capita income in Tier 2 and Tier 3 cities, and a strong cultural importance placed on education and career as a means of life.
But, of course, this rapid growth also brings competition, increased costs of operation, and entry into new markets in a sustainable way, thus prompting Aakash Institute to adopt the franchise model.
Why did Aakash Institute Adopt the Franchising Concept?
1. Equip New Centers Rapidly in Lower Investment Costs
● Franchising is one solution to the problem of setting up new centers requiring huge investments in terms of infrastructure, hiring, and marketing.
● Franchising allowed Aakash to leverage the capital and local expertise of franchise partners, as a result, the brand could grow rapidly without the upfront cost of developing such centers.
2. Reach to Smaller Towns
Franchisees have contributed in local market knowledge that is helping Aakash to adapt to regional requirements and attract students from tier II and tier III towns such as Aligarh, where quality coaching is now in demand.
3. Much Greater Efficiency
Day-to-day operations managed by the franchisees lead to freeing the burden on central management, thus allowing Aakash to focus on improving core offerings – curriculum, faculty training and technology.
4. Reliable Sources of Revenue
Well ensuring a regular flow of cash without direct operation involvement, Aakash earned sustainable revenue through royalty fees, licensing agreements, and shared profit.
5. Brand Building Through Local Efforts
As invested stakeholders, franchisees worked with utmost dedication to build and maintain the brand’s reputation to ensure quality service delivery.
Crucial Elements of the Franchise Model of Aakash Institute
1. Unified Curriculum
Aakash gives a centrally designed, very effective curriculum to its franchisees, which they are expected to follow, ensuring homogeneity in the teaching standards at all centers.
2. Extensive Faculty Training
Intensive training programs are also available for the faculty recruited by the franchisees so that they are aligned with the methods and standards defined by teaching by Aakash.
3. Technology Front
All franchisees receive digital tools for hybridization in learning, and thus, it will use them for serving both offline and online students. AI-powered performance tracking and learning analytics are part of these digital tools that are given to franchisees.
4. Monitoring of Performance
Aakash regularly schedules auditing and evaluation of franchise centers to ensure quality and compliance with its operational standards.
5. Marketing Support
Aakash provides national advertising campaigns that would benefit the franchisees and assists them in developing local marketing plans.
Insights Data on Franchise Model of Aakash
Expansion-
● Aakash has a cumulative total of over 200 centers with a huge chunk of franchises.
● The franchise model has made it possible for Aakash to expand at a rate of 20% higher than that of direct ownership.
Profitability-
The centers run by franchisees contribute around 60% to all revenues generated by Aakash, with slightly hiked operating margins (about 18-20%) when compared to company-run centers.
The coaching institute is poised to follow an operating revenue that would amount to INR 2,325.1 Cr in FY 2022-23, based on Aakash’s valuation report submitted to the Ministry of Corporate Affairs. It would represent a nearly 63% growth in operating income over INR 1,421.2 Cr, which Aakash reported for FY22.
Market Penetration-
Aakash increased its penetration in Tier 2 and Tier 3 cities by about 25% over the last three years, primarily through franchising.
Cost Efficiency:
Franchise operation brought down costs in the establishment by roughly 20% to 25% in emerging markets.
Advantages of the Franchise Model for Aakash Institute Above
1. Superior Growth
Aakash’s increased presence moved with its focus on core competency areas such as R&D and technology by transferring financial and operational responsibilities to franchisees.
2. Greater Brand Penetration
Local franchisee ambassadors ensured and earned the brand credibility in new places while preserving reputation for quality.
3. Varied Revenue Streams
Royalties and licensing streams from franchisees ensure a constant inflow of cash, weighing significantly on the bottom line for the company.
4. Risk Sharing
Financial risk taken of entering into action new cities shared allowed Aakash to experiment in new areas while not stretching itself too far in resource capabilities.
Challenges of the Franchise Model
Everything has its own merits and pitfalls. Aakash Institute is face to face with the challenge of the franchise model, which it addresses strategically:
● Maintenance of Uniform Quality: Rigorous training and frequent audits helped to maintain consistent teaching standards across hundreds of centres.
● Brand Reputation Risk: Incapability of any franchisee center could spell doom for the overall brand in public perception. To mitigate this, Aakash has laid down very stringent operating guidelines.
● Shared Profits: While the same takes a part of the income to themselves, reducing direct earnings for the company somewhat, it is balanced against the cost savings brought through franchising.
Lessons-
The impressive growth rate achieved by Aakash Institute is indicative of the ability of franchising to:
● Expand rapidly without huge investments.
● Access markets that are not served, such as those in smaller towns.
● Attain profitability while preserving quality.
Conclusion
In Aakash Institute’s case, the franchise model successfully transformed it into an efficient structure with continued profitability while reaching a wider student base. Locally relevant but centrally controlled, Aakash’s model has set the pace for others in the education sector to meet. With rising competition in the coaching scenario, perhaps this model of franchising and innovation will determine future sustainable growth in education.
