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on Thursday, 12 January 2017.

As opportunities continue in the overseas British school sector, is it still possible for UK independent schools to enter this exciting marketplace, even when the school brand is not widely known?

The number of UK schools establishing new schools overseas continues to grow. So far, we do not see the popularity of these projects waning. In fact, it's just possible that the impact of Brexit, and the May Government's proposals for changes to the public benefit rules, might even cause more schools to consider the international route. If Brexit does indeed cause the economic rollercoaster that the new Chancellor predicts, and if schools are asked to invest further  in demonstrating public benefit, more schools might seek new strategies to bolster revenues.

So what are the risks?

Some key risks that often cause concern to schools are:

  • Reputational damage to the UK school (for instance, because the overseas school is unsuccessful or because it suffers a scandalous incident). This risk can be mitigated by:
    • putting in place a detailed agreement giving you extensive control over the ethos and operation of the overseas school;
    • a mechanism allowing you to terminate the arrangement if the operators of the overseas school fail to maintain standards; and
    • ongoing and systematic scrutiny of the overseas school.
  • Insufficient demand. This risk can be mitigated by commissioning an independent examination of the local market before embarking on the project. Another option is to ask your project partner to stand by its business plan by agreeing to make minimum annual payments. Structuring your revenue streams in that way can ensure that the project still makes financial sense even if demand does not meet your project partners' projections.
  • The overseas school diverts investment and management time from the UK school. This risk can be mitigated by the project agreement defining the extent of the role of the UK school's personnel and providing a mechanism for the UK school to be paid for that contribution. The project agreement should also reinforce the principle that the UK school will not contribute financially to the project.
  • Local regulations. It is important to get advice from a trusted local lawyer on the local regulatory framework.

There are of course other risks, and none of them can be eliminated entirely. However, steps can be taken to mitigate every type of risk associated with international projects.

Is the market saturated?

No. It's a big world, and there is still plenty of demand for  high quality British-style education. However, don't only consider the most established markets. A large Chinese city that you might not yet have heard of might turn out to be a better bet than, say, Shanghai, where there is already lots of competition.

When considering potential venues for international projects, don't overlook the UK. If you happen to have spare land (or even buildings) in the UK, an international study centre here might be a good option.

But our School is not Famous

My intuition is that very few schools are truly famous internationally. You and I have spent so many years immersed in the sector that it is perhaps hard to contemplate an entire city that has never heard of, say, King's College School, Wimbledon. But were the people of Wuxi (in China) aware of that school before the announcement of the forthcoming establishment of King's College School, Wuxi (and indeed vice versa)? And yet, I have no doubt that King's College School, Wuxi will be enduringly successful.

What seems to matter most is (i) the collective international reputation of British independent schools, coupled with (ii) a particular British school that emphatically embodies that reputation.

Money back?

Aside from the obvious financial benefits of a successful international project, UK schools have found that their projects can provide valuable opportunities for sporting and cultural links, exchanges of pupils and staff, the development of an international community of alumni and increased international prestige.

These projects can never be entirely risk-free, and international projects are not for everyone. However, increasingly schools are concluding that the potential benefits outweigh the risks, and there are many ways in which those risks can be reduced and managed.

For more information, please contact Doug Locke in our Independent Schools team on 0117 314 5602. 

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