The top ten things to do when internationalising a school
“If a partner offers to open a large number of schools in the short or mid term, they are usually either naive or disingenuous”
From communication with partners to understanding the regulatory landscape in a new market, expanding abroad can be fraught with challenges. Dr Mark Abell of international law firm Bird & Bird offers some advice on the steps to take when internationalising a school.
Expanding British Schools overseas presents real and unique challenges.
Perhaps in part due to the enthusiastic support that internationalisation of British schools is receiving from both UKTI and the Business Secretary, Wellington College, Brighton College, Dulwich College, Repton and Sherborne are just some of the schools that have embraced this challenge and secured new income streams that help ensure their long term future.
However, such projects are not without their challenges. One slip can cause serious damage to a school’s reputation and financial well-being.
1. Conduct an Intellectual Property Audit
The school’s brand/name is its most valuable asset. Before starting any discussions with potential partners overseas you must have your brand and other intellectual property assets audited by a legal expert and decide on an appropriate registration strategy. There are many brand trolls out there who will register the school’s brand in their market before approaching you to negotiate a deal. Protecting the school’s trade marks is not merely a matter of filing a couple of applications in one or two classes. It requires careful consideration of both the longer term commercial and legal issues involved.
“There are many brand trolls out there who will register the school’s brand before approaching you to negotiate a deal”
2. Don’t be Seduced by Promises of Large Profits
Establishing a school in a new market that truly reflects your school’s ethos and delivers the same quality of academic and pastoral experiences for students takes a great deal of time and money, especially so if a potential partner has no previous experience of operating a school. If a partner offers to open a large number of schools in the short or mid term, they are usually either naive or disingenuous. Appealing to the governors’ desire to secure substantial long term income streams often suggests that the partner is going to be focused less on operational issues and more on the profits. Either way, you need to be extremely cynical about extravagant claims and focus on a deal that has far more modest and realistic objectives.
3. Conduct Due Diligence on Potential Partners
Don’t trust anyone. Too many potential partners think a school is just another way of making money and will have little regard for the school’s traditions, ethos and overarching objectives. You need to know what skeletons there are in the cupboard before you spend time and money on negotiating a deal with an inappropriate third party.
“You need to know what skeletons there are in the cupboard before you spend time and money on negotiating a deal”
4. Understand the Regulatory Environment in the Target Markets
Every market is unique. All countries regulate education to some degree. The Middle East and China, both areas of prime interest for British schools, regulate education in strict and very different ways. Some regulators, such as China, differentiate between education for ex-patriate children and that for their own nationals. Others, for example Dubai, require full, hands-on involvement by the British school. It is important to engage with the regulator early on in the process and way before the deal is agreed.
5. Don’t Bite Off More Than You Can Chew
Be realistic. How much resource do you have? How much support will you be able to deliver an overseas school? Will you be able to assist in staff recruitment and training sufficiently? Can you support more than one school? Will you have to invest in more resource and how much will that cost?
6. Make sure that you receive an appropriate income stream from the school
As more and more British schools internationalise through local partnerships, a general “going rate” is developing. This varies depending upon exactly what the school is delivering to the local partner, of course. Opening fees as well as ongoing royalties are the norm. Thought also needs to be given to the financial implications of a sale or even an IPO by the local partner. Tax planning is also essential. The impact of withholding taxes is particularly important considering the charitable status of schools. Expert legal advice is essential.
“It is essential that you ensure the ongoing quality of the education delivered by your overseas school”
7. Ensure that you adopt a structure that enables you to have full and proper input into the running of the overseas school
It is essential that you ensure the ongoing quality of the education delivered by your overseas school. However, it will probably be financed by your local partner. You need to ensure that the corporate governance of the school enables you to have a full say on the annual budget and how it is spent.
8. Be prepared to monitor the ongoing performance of your overseas school
You must ensure that they comply with the relevant KPIs. Rigorous auditing of the local partners’ performance is an essential part of quality assurance. This may involve the acquisition of new skill sets.
9. Take expert professional advice
The stakes are high, so invest in the appropriate legal expertise from lawyers with proven track record in internationalising schools. Education is like no other sector and you will need more than the generation of legal documentation. You will need strategic, structural and commercial advice from lawyers who have been there, done it and got the metaphorical T-shirt.
“The stakes are high, so invest in the appropriate legal expertise from lawyers with proven track record in internationalising schools”
10. Communicate with your local partner
Listen to what your local partner says. They should be able to help you improve your overseas school through sharing their experiences operating it. Ensure that they are happy and feel that they are deriving real value from the relationship. Make sure that they feel able to inform you about issues before they become problems.