Comparing School Franchises, Management Contracts, and Direct Ownership Models
When it comes to international school expansion or new school setup, thereβs no one-size-fits-all approach. Investors and operators have several structural models to choose from. Each has its own risk profile, control dynamics, and return potential.
The three most common frameworks are:
- Direct Ownership
- Franchising
- Management Contracts
Understanding how these models differ and when to use each is essential for education investors, family offices, school groups, and entrepreneurs seeking to scale or monetise their educational vision.
ποΈ 1. Direct Ownership Model
In this model, the investor or operator owns the school outright. They are responsible for setup, operations, staffing, licensing, and performance.
β Pros:
- Full control over strategy, brand, and quality
- Greater share of profits (or losses)
- Asset ownership (often includes real estate)
- Ability to build brand equity and long-term value
β Cons:
- High capital outlay and operational risk
- Requires deep sector expertise
- Slower to scale unless systems are well developed
π Best For:
- Family offices seeking long-term legacy assets
- Operators with in-house academic and business teams
- Investment funds building a branded school portfolio
π€ 2. School Franchise Model
In a franchise model, the brand owner (franchisor) licenses the brand, curriculum, systems, and know-how to a third-party school owner (franchisee). The franchisee pays initial and ongoing fees, and agrees to operate under set quality standards.
β Pros:
- Rapid scale with lower capital commitment
- Recurring revenue via royalties and training
- Shared risk with local partners
- Brand awareness grows with each new franchise
β Cons:
- Less control over daily operations and quality
- Reputation risk if the franchisee underperforms
- Legal complexity across jurisdictions
- Requires significant franchisee support and monitoring
π Best For:
- Well-established brands with proven operating systems
- Groups aiming to expand across multiple markets
- Entrepreneurs wanting education impact with shared risk
“The term franchise is often misunderstood in the context of schools. Brand licensing agreements are not the same as true franchise models. While some schools suggest that their brandβs headquarters operates their international campuses, this is rarely the case. Most are simply licensing arrangements. A few photos of visits from head office do not equate to direct leadership. In reality, a foreign school, most often, cannot be fully operated by a distant headquarters. It serves a different community, culture, and context.”
Greg Parry GSE CEO
Learn more…..
π 3. Management Contract Model
Here, the school is owned by an investor or entity, but the operations are run by a professional education management company. The contract outlines responsibilities, KPIs, and fees (fixed or performance-based).
β Pros:
- Asset owners benefit from education expertise
- Operators earn management fees without owning capital assets
- Clear division of roles and responsibilities
- Fast entry for investors without building internal teams
β Cons:
- Requires mutual trust and alignment
- The operator may be incentivised by fees rather than long-term value
- Legal disputes may arise if KPIs are unclear
- Success is dependent on the strength of the operator
π Best For:
- Investors or property developers entering education for the first time
- Government/private partnerships
- International expansion using trusted education brands
“A management contract may stand alone or be paired with a brand license agreement. Many school brands prefer this approach because it offers greater assurance that their educational model, brand identity, and standards are upheld. It also helps protect their reputation and legacy. In most cases, a professional school operator is far better equipped to implement the schoolβs vision than a local investor lacking specialised education expertise.”
Greg Parry CEO GSE
βοΈ Model Comparison at a Glance
| Criteria | Direct Ownership | Franchise | Management Contract |
|---|---|---|---|
| Capital Required | High | Low | Medium |
| Control | Full | Medium | Low |
| Revenue Potential | High (but riskier) | Moderate | Fixed + bonus |
| Scalability | Slower | High | Medium |
| Brand Risk | Low | High | Medium |
| Operational Complexity | High | Medium | Low |
Learn more….
π§ How to Choose the Right Model
Ask yourself:
- What is your capital appetite?
- How much control do you want over the educational experience?
- Do you have the operational expertise in-house, or will you need support?
- Is this a one-off project or part of a scalable portfolio?
- What is your exit plan? (sale, leaseback, IPO, consolidation)
Each model serves a different purpose, and in some cases, hybrid models can be structured (e.g. ownership + external operator or franchised brand + local JV).
π§ GSE Insight
At Global Services in Education (GSE), we help clients design models that match their vision and resources. We’ve supported:
- Full-service school launches under direct ownership
- Franchise frameworks for international expansion
- Education management partnerships with governments and developers
The right model balances risk, control, capital, and purpose.
π£ Final Thought: Structure Shapes Success
Whether you’re building one school or a global network, the structure you choose can make or break your outcome.
Know your strengths. Partner smart. Align incentives.
And above all, build something that lasts.
About the Author
Greg Parry is the CEO of Global Services in Education (GSE) and co-founder of GSE Capital Advisory Group. He advises school owners, investors, and developers on structuring, launching, and scaling education projects worldwide.
Want help choosing or structuring the right education investment model?
Letβs connect via or LinkedIn
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