Phillip Hortis at a Kool Kidz centre.
Phillip Hortis breaks into the South East Asian market by selling off 30 licensing agreements for his child care centre business in the Malaysian capital.
Greek Australian entrepreneur Phillip Hortis recently tapped into an unknown Malaysian market, in an industry that he never pictured himself being involved in – child care.
Phillip, along with his wife of 23 years, Sylvia, is the co-founder and licensor of Kool Kidz, a child care centre group that finds its roots largely thanks to a mix of luck and good timing.
The couple has three franchises in Melbourne, with another one set to open later this month and a further five by the end of 2015. Alongside his Melbourne ventures, Phillip was approached by a wealthy trucking tycoon in Malaysia about the prospect of opening up centres in Kuala Lumpur. Now 30 child care centres are on the cards over the next five years in the Malaysian capital.
From his modest beginnings, Phillip (by his own admission) had no idea what child care was. When he was first approached by his prospective business partner, Ralph Sellentin, about starting a joint venture, his response was ‘what’s a child care centre?’. Now, 20 years on, Phillip’s dealings have landed him in South East Asia. Ralph Sellentin, Phillip’s then Rowville neighbour, owned a child care centre in an outer Melbourne suburb and suggested to Phillip that they open one together. It was by coincidence that Phillip had bought an empty block of land next to Ralph’s empty lot, and it was Ralph’s keen eye for business that got Phillip thinking. After careful consideration and with a primary school and a medical centre nearby, it seemed like the perfect idea at the time.
With his ‘goer attitude’ he took Ralph up on his offer, and together they opened Fun Skool. Ralph was nearing retirement and not particularly keen on
expanding beyond his current dealings, but Phillip was “young and full of life” and recognised the opportunity that was put before him. So in a mutually beneficial deal, Phillip sold Ralph his half of the property and Ralph sold Phillip his half of the business, so that Ralph effectively became Phillip’s landlord.
From there Phillip assembled his portfolio. He bought properties, built them up and swiftly sold them off, but it was his dissatisfaction with the business model he was using, and the one being used within the industry, that was leaving a sour taste in his mouth. He was adamant about finding a more commercially vibrant product than the standard managerial one used within the industry, so based on his own research and instigation, Phillip established an owner/operator model, or a licensor/licensee model, to succeed with his business, and so far it has proved wonders.
“I kept thinking to myself ‘how can we do this another way that will actually secure and make sure that there’s quality there?’, and then I came up with franchising and I thought why can’t we franchise it? Why can’t we franchise it?”
Now, instead of managing properties, he acts as a ‘central support’, providing training, assistance and guidance, operations checklists and policies, and anything else required to keep his licensed businesses running.
“All our services are branded the same. You’ve got a network of people who are under the one umbrella, sharing their experiences and can support one another, and that’s what our model is really based on. And we find it works. It’s very assisting for the person who runs a business, it’s not as stressing as it would be if they were going to do it on their own and not as risky. You know, you mitigate the risk.”
Phillip engaged consultancy firm PwC (PricewaterhouseCoopers), which helped set up the licensing agreements. Despite its legal framework, Phillip stresses that the nature of his business steers him away from using the term ‘franchise’, preferring the reference ‘licence’, because he builds his market success on consumer and client confidence.
“The key thing here is that we’re the only company in Australia at the moment that is using a franchise model. We call it a licensing model because we’re not flipping hamburgers, we’re looking after children. But the law that it’s set up around is the franchising code of conduct.”
Accordingly, the self inspired model is completely sustainable, because it’s not reliant on him, or Sylvia, dividing their time among their centres. He
wanted to focus on delivering quality, and for Kool Kidz that meant having a self-sufficient around the clock model, with a licensee controlling the books and operation of the company.
As for his Malaysian undertakings, it was this very business model that presented the unique opportunity.
“They actually found us. This person, or the company that found us ARCA Corp, from Malaysia, basically his daughter was going to school here, she actually came to uni here and she graduated here. Her name is Amira. Amira did some research in Australia and said ‘yep, you are the only guys that can actually offer a business model that we can actually purchase’. So we negotiated the sale of a master licence agreement about two years ago.
“They came and saw our operation and they were very impressed with the quality in what they saw. They could see a market in Malaysia, in KL, where there’s a lot of expats and lot of local Malays that want a curriculum, like what we’ve got here, based on Australian standards. And the families over there want quality that has a connection back to Australia, so they’ve gone ahead and purchased a licence to roll out 30 of these things.”
With the first Kool Kidz recently opening up in Kuala Lumpur, Phillip never had any immediate intentions of expansion beyond Melbourne. But now with the foundations and connections of his ‘business partner’ in Malaysia, whose logistics business stretches “five to six countries”, there is room and opportunity for further international development.
But for now, whilst Amira and her father oversee business in Malaysia, Phillip will concentrate his efforts on Kool Kidz’s gradual reach throughout Melbourne.
“For now we’re quite happy for the next five years to just concentrate on Melbourne because the market is so big here. I mean, for us it’s really about growing steady and strong rather than growing too fast, because if we grow too fast we could have problems. Although we’re comfortable opening up five to 10 a year, it’s a very big job but I’ve got a very experienced team. And we’re quite happy to handle the growth.
“The key for us is that they are owner-occupied, they’re owner run, and once we’ve set them up and we’ve licensed them and we’ve done all the training, and we do a handover, really then the primary shift to run the service is on the shoulders of the approved provider.”
He emphasised that the changing shift amongst second and third generation migrant children, including Greeks, “who aren’t as reliant on yiayia to look after the kids”, is creating new and demanding opportunities for business.
“Everybody wants child care and clearly it’s our generation that actually uses it. Obviously the old school Greeks don’t, they wouldn’t even think about it, they’d say ‘you’re an idiot, bring them to yiayia’. So basically their kids are having kids and their grandchildren are going into child care.”
His own three boys – Zachary, 17, Alexander, 15 and Peri, eight – were cared for by yiayia and pappou, both from Lefkada, but Phillip always wanted to maintain a healthy balance, where his kids could interact with children their age.
“Our generation is a bit more open to it (child care), and I think as the generations go forward, I think the yiayia thing is going to be a bit more obsolete. I can’t see me providing child care to my grandkids, you know what I mean? I mean, we’d love to have them over and look after them and have them around us, but I don’t want to make a job out of it, and I think that’s where the community’s going. So I think that’s why there’s even a bigger boom in child care, it’s crazy.”
source: Neos Kosmos
STUDIO 3 NEWCASTLE AUSTRALIA 