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October 2008 issue

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Satellite business

Working with sub-agencies to expand a company’s reach is a tried-and-tested business strategy in a number of countries. Amy Baker investigates.

A relationship involving schools, sub-agents and super agents is quite natural and desirable,” says Yongwoo Kim at Uhak.com in Korea, one of the oldest Korean agencies with a 26-year history. “All parties benefit,” he says, “but especially the students themselves.”

A number of language travel agencies use a network of “sub-agencies” to promote their carefully chosen and vetted educational products abroad: the agency gets to expand its geographic reach in a particular market and the sub-agency obtains access to a world of information that has taken years to build up and, essentially, adds a string to its bow.
Artem Grigoriev at Students International (SI) in Russia also presses home the all-round advantage of such an operation. Pointing to a steady rise in student enrolments each year, he says, “All of the required work [when organising language travel trips] can’t be done in our central offices. It is quite advantageous to have these regional agents so we don’t have to overstretch our own staff.”

SI has 13 SI offices in Russia and several countries in the Commonwealth of Independent States (CIS). It also has 43 representative offices (or sub-agents), “in many rural and regional cities in Russia and the countries of the CIS”.
It is often in large countries such as Russia or Brazil where a network of sub-agencies will be more common. In China, William Trevillien, Director of Beijing WZT Overseas Education & Consulting Service Centre, confirms that using sub-agencies is typical in a country with a huge population and significant appetite for education overseas. “China is such a big country and it would cost us a lot of money to invest in our own office in an area we are not familiar with,” he recounts, adding, “On occasion, we have them in the same city we already have an office in, as again, it saves on marketing costs.”

Sub-agency or licensee?
There seems to be two models used when teaming up with a subsidiary company – offering a sub-agency opportunity or a franchise opportunity. Kim explains, “Uhak.com uses both systems, but prefers the use of sub-agents rather than licensees, which generally means a franchise system.” She explains this is because a licensee uses the Uhak.com name and is required to maintain a certain level of quality, provide the same standardised services and follow the same standards. “These requirements are not easy to achieve simply by signing a franchise agreement,” he says. “We feel comfortable using sub-agents, rather than franchisees, as they do not have to follow our business standards or share our company brand.”

In China, Trevillien says they also have licensed partners in several cities as well as partner offices that use Beijing WZT exclusively, unlike other sub-agencies who may work with more than one partner. “There is some extra financial burden on us with this set-up, but still less than if we run our own office exclusively,” he details, adding, “There is more trust in this type of relationship than with sub-agents, but both can be very effective if you know how to proceed correctly.”

Possible problems
The one major problem signalled by all those companies using sub-agencies is that of trust. As Marcia Nassif at AG Study in Brazil explains, “After they know something about the business they can try to contact the schools by themselves.” In her experience, these problems can be avoided by “establishing clear rules and making things very easy for the sub-agents while working with us”. AG Study currently has two sub-agents that contribute 10 per cent of overall business.

Other companies, however, don’t find it so easy to avoid this problem. In Canada, Vivian Hart of EduTour, says, “We are less enamoured of the idea of sub-agents right now. It may take longer to develop staff in areas of Canada that we would like to open but right now, hiring and training in-house seems the better solution than sub-agents who have their own agendas.”

Hart relates that she has experienced a number of instances “where sub-agents have breached our contract and gone direct to our overseas suppliers and schools”. She points out that even with a contract forbidding sub-agents to do so, it is difficult to stop such practice. “The reality of any contract is that it takes a lot of money to deal with the legal aspects of enforcing it,” she says. “We just didn’t want to get into that kind of situation and cost.”

Other agencies stress the need for a good trusting relationship with any potential partner before a working relationship is established. Trevillien notes, “You give [sub-agencies] access to your resources, so how do you know they won’t use you for a short time, and then just do it themselves? Most importantly, ensure you know the sub-agent pretty well before getting into business with them to reduce these risks. It is also very important to have a very open, honest and transparent flow of communication.”

Another problem that Kim highlights is one of due diligence to business standards. He says, “Unless those running the sub-agent business have the will to deliver the information appropriately and to follow our business principle, especially in terms of financial matters, we may experience problems.” He advises trying to verify a company’s business ethics by undertaking company visits as well as by conversation.

Finding sub-agents
The agencies we spoke to for this article said it was not a problem to find potential business partners. Trevillien points to the good name Beijing WZT has as helpful and Hart says that when she worked with sub-agents, they were referred to her by some of her field staff; “They are small independent agencies that want to sub-contract to increase their business revenue.”

Kim in Korea also paints a picture of nascent businesses working with Uhak.com, explaining that as the market for study abroad grew since the 1990s, many companies jumped on the bandwagon without really knowing much about the market. “They soon learned, however, that it was more difficult than they had anticipated,” he says, commenting that they receive frequent enquiries from agencies keen to cooperate with them.

In Russia, Grigoriev also notes that educators act as sub-agents (a strategy also used by a company in Spain): “Many educational institutions such as language schools, high schools, vocational education providers and universities have been our partners for a long time,” he explains. “We don’t see ourselves having 13 offices and 43 agents, but rather we see our company as one big team where each and every member is valued and always approachable.”


The schools’ role

“From the point of view of schools, it is far more effective to work with a limited but select number of agencies than to be involved with hundreds… especially in terms of effective management and relationship-building,” says Yongwoo Kim of Uhak.com in Korea, which has 110 active sub-agents.
While this is a likely assumption, Kim also notes that some partner schools have attempted to create a new agreement with a particular sub-agent, without first acquiring consent.
Strict rules must be observed between agency, sub-agent and partner schools for a harmonious business balance to be maintained. Vivian Hart at EduTour in Canada notes that her partners were very supportive when sub-agencies tried to work directly with them, underlining that their loyalty remained with EduTour.
At Wimbledon School of English in the UK, Jane Dancaster notes that some agencies point out that they operate a network of sub-agencies – “normally to ensure we don’t accidentally work with a sub-agent direct”.
She cites no problems with sub-agencies. “I can think of only two of our most productive agents [using sub-agencies] and even then, the bookings always come through the mother office,” she says. Juan Manuel Sampere of Estudio Sampere in Spain concurs. “We do work with agencies that use sub-agencies, mainly in Germany and Switzerland,” he says. “We have had no problems with this at all. Student counselling can be very good [from sub-agencies]; even better than from some agents representing hundreds of schools.”

Contact any advertiser in the this issue now

The following language schools, associations and accommodation providers advertised in the latest edition of Language Travel Magazine. If you would like more information on any of these advertisers, tick the relevant boxes, fill out your details and send.

Name

Company
Country

Telephone

Email


ASSOCIATIONS/GROUPS
English Australia  
Feltom Malta  
IALC International  
MEI-Relsa Ireland  
Perth Education City  
Quality English  

SERVICES
Internet Advantage  
InTouch
Your World on Monday  

TOURIST BOARDS
Malta Tourism Authority  

WORKSHOPS/EXPOS
Alphe Conferences  
English Australia  
IALC International  
MEI-Relsa Ireland  
Quality English  

ARGENTINA
Austral Idiomas Srl  
Ecela - Latin Immersion  

AUSTRALIA
English Australia  
Perth Education City  

CANADA
Bodwell College  
Canadian & International Student Services  
Centre Linguista Canada (OISE)  
College of New Caledonia  
Richmond School District #38  

ENGLAND
Bell International (Malta, UK)
Bournville College of Further Education  
Hampstead School of English  
IP International Projects GmbH 
      (England, France, Germany, Spain)
Kaplan Aspect
      (Australia, Canada,Ireland, Malta, New Zealand,
      South Africa, UK, USA)
LAL Language and Leisure
      (England, Canada, Cyprus, Ireland, South Africa,
    Spain, Switzerland, USA)
Malvern House College London  
Northumbria School of English  
Oxford Intensive School of English
      (Australia, France, Germany, Spain, UK, USA)
Princes College School of English 
Queen Ethelburga's College  
Scanbrit School of English  
St Giles Colleges (Canada, UK, USA)
Study Group (Australia, Canada, England, France,
     Germany, Ireland, Italy, New Zealand, South
     Africa, Spain, USA)
Wimbledon School of English  

FRANCE
Alliance Française Paris Ile de France  
SILC - Séjours Linguistiques  

GERMANY
Carl Duisberg Medien GmbH  (England, Germany) 
International House Berlin - Prolog  

MALTA
Educational English Culture  
Feltom Malta
Linguatime

NEW ZEALAND
Languages International  

SCOTLAND
EAC Language Centres and Activity Camps.
      (England, Ireland, Scotland, Wales)

SOUTH AFRICA
Cape Studies  

SWITZERLAND
EF Language Colleges Ltd 
      (Australia, Canada, China, Ecuador, England, France,
    Germany, Ireland, Italy, Malta, New Zealand,
     Russia, Scotland, Spain, USA)

USA
ALCC - American Language Communication Center  
Boston University  
Eastern Washington University  
LAL Fort Lauderdale  
Rennert Bilingual  
University of California San Diego  
Zoni Language Centers (Canada, USA)

WORK WISE

AUSTRALIA
Perth Education City

ENGLAND
Princes College
      School of English 
Twin Group
      (Ireland, UK)