The Benefits of School Ownership Versus Rental/Lease Options

By: Greg Michael (VP of Franchising)

When it comes to operating an early child education school, real estate research and planning plays a crucial role in the success of your business. While site location is the first and most important factor to consider, determining whether you will own the building or lease from a developer is a close second. Here at Creative World, we believe that fully owning your land and building provides greater financial success and opportunity compared to leasing.

Owning property is a long-term investment that grows in value over time. Instead of paying rent on a monthly basis for your school, monthly ownership costs can essentially be the same with the added benefit of building equity in your business. The benefits are numerous, including future leverage for additional locations and profitability of an overall exit strategy down the road.

Although every owner’s financial picture is different, ownership may also allow for additional benefits in tax deductions of mortgage interest and property taxes. Taking part in depreciation deductions allows for significant tax savings that you cannot get with leasing.

Lastly, buying your property allows you to feel more secure in the fact that your location can’t be leased out from under you by the landlord at the end of the term of your lease agreement. This also allows you to keep your costs fixed as rent escalations are common after a few years. Instead of needing to ask for permission to make any customizations to match the franchise brand, as an owner you won’t be forced to adhere to remodel restrictions.

With our many years of development expertise, we have been involved in the purchase, construction and upkeep of many school locations. We have seen first-hand the benefits to our franchisees both on a financial level and by the sense of freedom that comes from full site ownership. If you are interested in a discussion regarding the overall benefits of school ownership, we would love to explore the opportunity with you further. The first step is to contact our franchise development team at (800) 362-5940.