HOW SYLVAN LEARNING AIMS TO SCHOOL ITS RIVALS

The News and Information Source for Franchising
June/July 2013
ARKANSAS
FRANCHISEE
ASHLEY HILL
IS LEADING
SYLVAN’S
CHARGE
HOW SYLVAN LEARNING
AIMS TO SCHOOL ITS
RIVALS
WANT TO ENLIST A VETERAN?
TOP TIPS TO MAKE IT WORK
www.franchisetimes.com
Photographs by Josh Stokes
“We have the opportunity to be
innovative again,” says Sylvan’s CEO Jeff Cohen.
A teacher with an Arkansas drawl and a sweet smile is leading Sylvan Learning’s charge to get the 30-yearold system growing again. Ashley Hill believes in CEO Jeff Cohen’s vision for the brand—and her shrewd
business moves are setting the pace for once-skeptical franchisees.
By Beth Ewen
“I
have an elementary ed degree,
not an MBA,” says Ashley
Hill, the multi-unit franchisee
in Jonesboro, Arkansas, who is at the
forefront of Sylvan Learning’s attempts
to get growing again—and realize
a return on a massive investment in
technology that its CEO convinced
investors will transform the 34-yearold supplemental education company.
Hill probably reminds most people
of their favorite grade-school teacher,
with her ready smile and kindly voice.
She first bought a franchise because the
owner of the center where she worked
was either finding a buyer or closing
it down. She got a loan only after her
parents and her husband’s parents
guaranteed the note, which she found
“humiliating.” “I considered it taking
one for the team,” she recalls about
stepping up to buy. “If I didn’t do it,
who would?”
She has since developed into a shrewd
negotiator with the rights to six centers,
including all of central Arkansas, honing
her business skills each time corporate
has called. In December 2010 they
offered Memphis and she agreed on one
condition: “If you can cut me a good
Ashley Hill, left, multi-unit franchisee for Sylvan Learning, with CEO Jeff Cohen,
are experimenting with the best ways to roll out the new Sylvan Satellites.
deal on it—because you work your butt second fast wave of revenue growth akin
to its early years. That platform, in turn,
off,” she says.
is allowing existing Sylvan franchisees
‘We’re going to be there’
with a bricks-and-mortar center to open
She is also an early adopter of Sylvan Satellites, sending teachers armed
SylvanSync, the new platform for with iPads to a community center or
educational materials that teachers YMCA or school.
deliver via iPad, and that President and
“If there’s a way to bring Sylvan there,
CEO Jeff Cohen believes will start a then heck yeah! We’re going to be there,”
COVER STORY
Hill exclaims, and she’s not alone. More
than 150 satellite locations have been
approved with 75 operating in less than a
year since launch, adding top-line revenue
for each franchisee, and royalties to Sylvan,
without adding fixed costs.
Now this teacher has been able to
remove everybody’s names off that original
note, gaining new loans and credit lines
based on her operating history, and she’s
setting an example for other franchisees
about the future of Sylvan. As for her
own future, she claims she is done adding
centers, just as she did when she had none,
then one, then three, and now the rights
to six.
“Six is it! Put that in writing,” Hill says,
but just a bit later she gives away the fact
that her business mind is already churning.
“I’ve had my eye on Northwest Arkansas…..”
Jumping the curve
Jeff Cohen, CEO of Baltimore-based
Sylvan Learning since 2008, borrows a
sheet of yellow legal paper and draws the
classic business growth curve everyone
remembers from economics class. The
lesson is about as low-tech as it can get and
more than a little nerdy, which he admits
with a laugh.
Here’s the early years of Sylvan, begun
in Sylvan, Oregon, in 1979, and a leader
in delivering individual education as a
supplement to the schools. Cohen draws
the typical steep spurt. The curve flattens,
then takes off again in the early ‘90s, along
with big growth in franchising in general
and education in particular.
By 2008 when Cohen arrived that line
was flat, and without him knowing, was
about to plunge as the economic crash cut
parents’ pocketbooks and their willingness
to pay for tutoring services. “Here’s the
challenge,” he said at the time. “We’re
sitting here, we’re mature. What are you
going to do when you’re at the top of the
cycle? Probably it’s going to be a downward
trend if we didn’t change.
“I said we have an unbelievable brand,
so we could sustain ourselves on the brand
for years,” Cohen recalls. “But the real fun
is to jump off this curve—and start a new
S curve. We saw an opportunity to get off
that curve.”
The economic crash put urgency behind
his words, ironically convincing anyone
resistant that change was imperative. “To
“That was a no-brainer,” says franchisee Ashley Hill, about becoming an early adopter of
SylvanSync technology. “I couldn’t find a reason not to do it.”
have someone come and say we’re going
to change everything—it was the perfect
timing,” Cohen says, who insisted, “This is
the moment that we should invest.”
Cohen convinced the company’s
primary investor, Sterling Partners, which
took Sylvan private in 1997 and owns a
wide array of educational companies under
the Educate Inc. umbrella. “It was not a
hard sell” to Sterling, Cohen says. “We
have the opportunity to be innovative
again.”
SylvanSync has been in the works for
several years and still has a long way to go,
with tens of millions of dollars invested
already and several patents obtained and
pending. So far two of Sylvan’s courses are
available via the platform, with teachers
reporting more engaged students and
stronger results. Developers are racing to
add additional courses until the entire
Sylvan curriculum can be delivered
digitally rather than via pencil and paper.
Cohen says he makes all his decisions
based on two objectives: educational
excellence, and he believes the digital
coursework taught by a gifted teacher—
bot h key elements to t he Sylva n
formula—meets that standard. The second
is profitability, and here is where he believes
the new Sylvan Satellite model that the
mobile platform enables will shine.
“This is the game changer. I think the
multiplier will be the satellites,” Cohen
says, admitting the model is still being
worked out, in a partnership with leading
franchisees like Hill. “We lay out the vision
and you have hundreds of entrepreneurs
out there making it better,” he says, and
the bottom line looks promising.
“This allows more revenue with no
increase in fixed costs,” Cohen says. “By
this time next year I think there will be
500 satellites.” Sylvan has about 770 bricksand-mortar centers, and will award satellite
locations only as additions to franchisees
with such centers.
Photographer Josh Stokes captures Ashley Hill and Jeff Cohen on their visit to a
Sylvan center in Minneapolis.
a much lower rate—and the competitors
for funds are many.
Ashley Hill says many franchisees who
were initially skeptical of the changes—
she puts the number at about 50 percent
as recently as last summer—are starting to
become supporters. Part of the resistance
came from franchisees who had suffered
through the flat times that are the hallmark
Early adopters
of mature companies, and then the decline
Cohen is positive he’s leading Sylvan post-2008.
She moved quickly because she saw
in the right direction. “It’s a winner and
we’re first,” he declares. But the expensive students were more engaged using iPads,
truth is he has made a big bet, committing and for a teacher, that’s gold. Plus, corporate
the company fully to a new direction— offered incentives to early adopters. At first,
and still facing plenty of rivals intent on corporate purchased iPads and leased them
pursuing strategies of their own.
to franchisees for 24 months at no interest
Education in general is one of the (the 0 interest rate is no longer in place).
She leased 10 iPads at a cost of about
hottest sectors attracting private equity
investors these days, meaning plenty of $4,000 for each center. Then there’s a fee
money is backing multiple companies with every time a student has a session on an
competing strategic visions.
iPad, for an incentive rate of $2. (That rate
Tutoring franchises in particular are is now $2.50 per session.) Compare that
plentiful, from Kumon with an enormous to the former mandate to spend $3,000 to
25,000 units worldwide and a far lower $10,000 to buy a new set of paper-based
initial franchise fee than Sylvan, to Tutor materials each time Sylvan rolled one
Doctor, a home-based model that is smaller out, and the decision was easy. “That was
domestically but well ahead of Sylvan a no-brainer,” she says. “I couldn’t find a
overseas.
reason not to do it.”
Add the “hidden” rivals for Sylvan and
She’s still plotting her expansion plan,
other brands—the hundreds of individuals always with an eye for cutting the best
who offer tutoring services on their own at possible deal. “In this world you have to ask
for things,” she says, a belief she credits to
her stepfather, a CPA who’s been a business
mentor all along the way.
Her philosophy, revealed over the course
of a long, in-person interview, is all her own,
and could be summed up like this: Kindly,
and politely, let’s go kick the competitor’s
butt.
She laughs when told she’s obviously
developed a keen business sense that her
polite manner belies. “Maybe it was the
way I was raised, maybe it’s being from the
South. But I know likability is everything,”
she says. “If they don’t like you they’re not
going to use your services.”
She instructs her employees never to
speak poorly about the competition, even if
they bash Sylvan. “When your competition
bad-mouths you it’s because they’re scared,
and we’re not scared,” she says, adding
later she’d rather arm her teachers with a
bunch of iPads and send them directly out
to compete.
As she figures where to put her satellite
locations she has one thing in mind.
“Where are our competitors?” she thinks.
“So let’s put one right next door.” It’s a
lesson spoken like a true tycoon.