W. Berry Fowler didnt leave the franchising world for long.
Two years ago, the Spokane entrepreneur, who earlier had founded such franchising giants as Sylvan Learning Centers and Little Gym International Inc., set out to build a corporate chain of neighborhood tutoring centers that would be operated by nonprofit groups, rather than franchisees.
He enlisted Spokane venture-capital firm Allison Johnson Venture Partners Inc. to raise $5 million to launch the chain, called A Thousand Points of Knowledge Inc., and envisioned having 250 such centers open by now.
What he found back in those days of soaring tech stocks, however, were investors hungry for anything that involved the Internet, but not necessarily something so low tech as face-to-face tutoring. Capital was available, but only if Fowler would adapt his business plan to provide tutoring online, he says.
Everybody wanted us to become a dot-com, recalls Fowler. I took a look at it, but decided it wouldnt work. It became apparent very quickly that we werent going to be able to raise the money.
Without money to build a chain from the ground up, Fowler decided in the late summer of 2000 to shift gears back to franchisingthe business model he had succeeded with before and knew he could pursue without a lot of capital. By December of that year, he had sold his first A Thousand Points off Knowledge franchise, in Southern Oregon.
He kept the idea of using nonprofits and government agencies, such as YMCAs and parks-and-recreation departments, to run the tutoring centers, which provide after-school instruction at below-market rates to children who need help with reading, math, and general study skills. But he injected into his business plan regional franchisees, who could use their community knowledge to establish and oversee the centers in return for a share of the revenues.
Just over a year into that new plan, it appears to be a success, Fowler says. A Thousand Points of Knowledge has sold 43 territorial franchises across the country, which have agreed to open a combined 220 tutoring centers within the next 12 to 18 months, he says. Thirty centers already are open.
Last year, the companys first as a franchiser, A Thousand Points made $542,000 in profit on $2.1 million in revenue, Fowler says.
Ive never made money in the first year at anything, he says with a chuckle. I normally sell a company before it makes any money.
Recently, the company was named 2001 Franchisor of the Year, by FranNet Group, a national network of franchising consultants. Fowlers says hes enjoying himself again. Hes hired his sister, Barbara Garber, as company president, and other family members also are involved in the company.
Being a franchiser rather than a chain allowed the company to remain mean and lean, Fowler says. Based in the back room of a YMCA-operated tutoring center at 3016 S. Grand on the South Hill, the company employs just 15 people. Under the old plan, A Thousand Points was expected to employ 50 people within two years.
Dividing the duties
Heres how the franchise system works.
A Thousand Points seeks out people with management experience to buy the exclusive franchise territories the company offers. Thats because the franchisees dont do the actual tutoring at the centers. Instead, they find nonprofit organizations and government agencies to operate the centers at their own locations and with their own employees. The franchisees then simply oversee the organizations that operate the centers.
For its part, A Thousand Points provides the entire educational method used in the centers, and also trains the centers workers to become tutors.
Each party gets a cut of the tutoring fees the centers charge. The centers operator gets 50 percent of all gross revenues. The franchisee gets 37.5 percent, and A Thousand Points receives the remaining 12.5 percent.
Franchise territories must have a minimum population of 500,000 people, but can include a large geographic area to reach that number. The franchise fee is 10 cents per resident, so the minimum fee is $50,000 for a territory. The company has sold franchises in 21 states, as far away as Massachusetts and Florida.
The franchisee agrees to open within one year at least one tutoring center for every 100,000 residents in that territory, so theres a minimum of five centers per franchise. Fowler expects this year to sell franchises that will commit to open a total of between 300 and 400 centers, which would give it total commitments for as many as 600 centers. The goal, he says, is to have 1,000 centers open, fulfilling the companys name, A Thousand Points of Knowledge.
Fowler says nonprofits are drawn to the idea because it can provide them with some extra revenue, perhaps using people they already have on staff, as well as a chance to cross-sell enrollment in their other programs.
Like the Sylvan Learning Centers franchise chain Fowler created in 1979, A Thousand Points offers tutoring to school-age children who need extra help away from school with reading, math, and general study skills. Fowlers new company, however, is targeting children whose parents likely cant pay market rates for such tutoring. He says big national tutoring chains, which together control less than 25 percent of the estimated $2.7 billion U.S. tutoring market, typically charge $45 to $90 an hour for their service. By contrast, the centers operated under A Thousand Points franchisees charge an average of about $25 an hour, and because the centers are located within nonprofits facilities, scholarships for the poor are more likely to be available, he says.
Three A Thousand Points tutoring centers currently are operating in Spokane, all under the auspices of the downtown YMCA, where one of the centers is housed. Another is in the Manito shopping district on Grand Boulevard, and the third is on the Whitworth College campus. The latter center is sponsored by Whitworth, but run in affiliation with the YMCA.
A Thousand Points kept the franchise rights to the Spokane area.
Separately, a couple of independently owned A Thousand Points tutoring centers are still operating in Arizona under licensing agreements created long before A Thousand Points switched to a franchising model, and will continue to operate outside the franchise system, Fowler says.
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