Childcare & Education, Part 2: Growth Is Only Half the Story

Part 1 counted units. This one asks the harder question — are the franchisees underneath that growth actually earning more? The two don't move together.

Last week I looked at unit growth across childcare and education — who's adding locations, who's shedding them. It's the easy axis, and it's only half the story. It may not be the story at all. Michael Seid made that case better than I will in a recent piece: growing isn't winning. A brand can sell thousands of units on its way down. The measure that matters is whether the franchisees are making a return.

So here's the other half. Part 1 was Item 20 — the unit counts. This is Item 19 — what those units bring in, read the only way that tells you anything: against last year's filing. The question isn't who's opening the most doors. It's who's growing and improving the economics behind them.

Those turn out to be two different lists.

Growth and revenue don't move together

For some brands they line up. Sylvan lost locations, and its reported gross sales fell across every quartile. School of Rock added locations, and its franchised average rose with them ($672K to $683K). Tidy.

For just as many, they split:

• Huntington shrank — and its reported average rose, $589,575 to $609,454.
• Goldfish and British Swim both grew fast — and their averages fell. Goldfish added 22 schools while its mature-school average slipped about 7%; British Swim added 31 while its average dropped.

The Goldfish and British Swim pattern isn't a warning — it's arithmetic. Open a wave of new locations and the newer ones, still ramping, pull the system average down even as the footprint grows. A falling average can mean a brand is expanding, not faltering. Which is the first reason you can't read franchisee health off a single year's Item 19: the headline moves for reasons that have nothing to do with how anyone is doing.

Primrose Schools lays that mechanism out in its own Item 19 — the clearest version I've seen a brand put on paper. Its newest schools (2024 vintage) averaged about $1.9M in gross revenue last year; its 2022-vintage schools averaged about $3.6M. Same brand, same year — the only variable is how long the doors have been open. Primrose grew last year (36 schools opened against 3 closed), so that lower-revenue young cohort is also its largest. Blend it all together and the system average reads softer than the mature schools earn — not because anything's wrong, but because a new school is still filling its classrooms. The ramp isn't weakness; it's math.

The number moves even when the business doesn't

Here's the part that does the real damage to a one-year read: brands change what they count between filings. Not the dollars — the basis. Who's in the sample, how long they've been open, whether the figure is even franchised.

None of this is hidden, and none of it is news to anyone who reads these for a living. What's missing is that nobody lines the years up to catch it. When you do:

• Celebree had no franchised revenue to show last year, so it used the average of its company-owned schools as the stand-in — about $2.32M. This year it disclosed the real thing for the first time: its mature franchised schools averaged roughly $2.19M — a little below the company-store figure that had been speaking for them. The stand-in was the flattering one. (And the real number still has no prior year to compare against.)
• i9 Sports swapped its headline from total franchisee revenue to registration revenue only — a narrower definition over a different period. The franchisor says outright the two aren't comparable. Diff the averages and you'd "find" a change that's pure bookkeeping.
• Soccer Stars nearly doubled its reporting base, 30 owners to 55, and tightened the inclusion rule in the same cycle. The average rose — on a different population.
• LearningRx filed identical figures two years running, both pointing at the same fiscal year.

Even Huntington's increase comes with an asterisk: its reporting cohort tightened too, from centers open the full prior year to a smaller "mature" set. The rise is real, but part of it lives in the basis, not the business.

So the rule for anyone comparing filings — buyer, broker, supplier, lender: read the basis line, not just the average. Two numbers can differ for reasons that have nothing to do with performance.

Revenue is not profit

One more, because the filings make it tempting. Several of these Item 19s put profit or margin lines next to revenue — gross profit, EBITDA, "profit before other expenses." They read like earnings. They aren't. They routinely leave out owner pay, taxes, and depreciation, and at the bottom of more than one system they run negative. We lead with revenue, we call it revenue, and we leave the profit lines where they sit: partial, often underwater at the low end, and not take-home.

The two with no Item 19

Kumon and JEI don't file a performance representation — they charge per student, not a percentage, so there's no revenue table to compare. But the fees talk. JEI's held flat. Kumon's rose about 5.6% on both tiers. Recall from Part 1 that Kumon was the exception: the category's biggest brand, still growing while legacy tutoring pulled back around it. A leader raising prices and adding locations into a softening corner of the market is worth watching. Item 6 won't tell us how it lands.

The point

The clean story would have been "brands that grow, earn more." The filings don't tell it. Unit growth and franchisee economics are two different axes — and the second one shifts its own basis often enough that a single year can't be trusted on its own.

None of this needs a tool nobody has. Anyone can pull two years of a filing and set them side by side. What's rare is doing it across a whole category and saying it out loud, instead of treating it as a paid review or a reason to log into something. That's the half of the conversation franchising keeps skipping — the half Seid is arguing for. So: who's growing and improving the economics underneath them? That's the brand worth watching. The filings can tell you — but only two years at a time.

And if you sell into franchising and want the data under a category rather than the read on top of it — brand-by-brand, each field traced to its FDD Item and page — that's what ClearlyData builds for suppliers: clearlyfdd.com/suppliers.

Figures are franchisee-reported and unaudited per each Item 19; treated as disclosed, not verified earnings. Drawn from the 2025 and 2026 FDDs in the ClearlyFDD library.