Why Skill Development Institute Franchise Is a Profitable Business Opportunity

Sneha Santra
Sneha Santra Jul 22 2019 - 3 min read
Why Skill Development Institute Franchise Is a Profitable Business Opportunity
The industry-academia gap has created an array of opportunities for skill development & training institute franchises

India’s transition to a knowledge-based economy requires a new generation of educated and skilled people. In today’s competitive world, it has become a back-breaking task to find a good job. Employers nowadays don’t hire someone only on the basis of a degree; they want to see relevant skills in a prospective employee. 

Our education system focused more on rote learning and less on developing skills. This has resulted in a lower percentage of people who are formally trained in India, at a mere 4.69% of the total workforce. Moreover, the gap between formal education and industry expectation has led to a huge skill gap.

In order to bridge this industry-academia gap, the government of India is focusing on skill development. This has created an array of opportunities for skill development & training institute franchises.

Increasing Demand

Job seekers have realised the importance of the integration of skills along with educational qualification to meet the changing preferences of industries and the options they can vouch for if they are skill-trained. One needs to have the right skills to ensure employment, which will further lead to empowerment.

Skill-based learning leads to comprehensive specialisation and equips them with appropriate hand-on skills, which aid in enhancing employability and makes them job-ready. Understanding the importance of skills in the labour market today is encouraging more students to opt for skill development courses.

In the coming years, there will be a demand for 6,000,000 trained hotel management professionals, 5,000,000healthcare professionals and 2,000,000 aviation professionals thus increasing the demand for skill development franchises.

Investment Required

The investment required for a skill development franchise ranges from INR 25-30 lakhs, which includes the franchise fee, infrastructure, computer & startup kits, with a minimum area requirement of 3000 sq. ft.

The infrastructure includes interior & furniture which costs about INR 6 lakhs; air conditioning around INR 1.2 lakhs; and chairs & other items that costs about INR 1 lakh. Computers & peripherals require approximately INR 2.3 lakhs. The startup kit, which includes marketing material, stationery, brochures, signboard etc, costs about INR 2.5 Lakhs.

Operational Costs

Apart from the initial investment, you will require capital for day-to-day management. Operational expenses include staff salaries, administration expenses & local marketing.

You will need 7-8 staff members (receptionist, counsellor, faculty etc.) whose salaries will cost about INR 1.5-2 lakhs. The administration expenses include rent, electricity, telephone, maintenance etc, which will require around 2.5 Lakhs, while local marketing will cost you about INR 20000. Therefore, monthly operational expenses for a skill development franchise will be around INR 4-5 lakhs.

Higher Revenue

A skill development institute consists of various courses, majorly hospitality, aviation & healthcare. An average fee for one year course is INR 50,000, with 50-60 students per batch. Thus, anticipated revenue from a single course is around 30-40 lakhs.

Revenue gained from all the courses would be around 80-90 lakhs with a profit margin of 15-35%. Thus, investing in a skill development institute franchise is a lucrative business opportunity.

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