International expansion for independent schools: key considerations and insights

For many years, independent schools in the UK have been collaborating with overseas partners to open or develop British schools worldwide. Today, it is estimated around 45-50 UK schools have opened or announced international campuses; and there are around 150 schools worldwide with a UK partner.

In the context of ever-increasing operational costs, reports of declining pupil numbers and significant changes to the financial landscape at home (not least of which is the recent imposition of VAT on school fees), international collaborations can represent welcome and important sources of revenue; as well as inject some morale-boosting positivity. Research by the Private Education Policy Forum found 40 British schools received c. £29m in 2020-2021. For charitable schools, those funds are often channelled back (via a trading subsidiary) to support them with their core objectives – for example, by supporting with bursary funds, capital projects, other partnerships, etc. 

We have acted for many schools with international expansion projects over the last 15 years and know how they have developed and changed over time, and how varied they can be, depending on the parties, the territories and the structure of the collaboration.

This article is the first instalment in a three-part series, offering observations and tips for schools based on our experiences in this field, which allow us to 'step-back' and consider the projects from first principles and, without undermining the sophistication of the market or those operating in it, rehearse some of the basics to ensure those are not forgotten.  

In part one, we focus on how to scope the project, with three key stages: identifying and understanding the market, knowing your partner, and establishing the right structure.

Identify and understand the market

An obvious point, but it is important to carefully and strategically identify the territory into which you expand. A few key questions:

Will local laws and regulations accommodate the project?

Are there any restrictions on the involvement of an overseas (UK) partner with a local school (at the governance level or otherwise); on the teaching of an international or British curriculum; or on transferring funds out of the territory? These are often long-running collaborations. So, consideration should be given to any projected or anticipated changes to the political, legal and regulatory landscape over the course of the collaboration, and the contract(s) should provide a means for seeking to accommodate those changes or to respond to them (which may include termination if the change fundamentally distorts the business model and the risk-reward ratio for the UK school).

Economic nationalism and trade barriers are on the rise. Any legal structuring and risk assessments must therefore consider the fact that the arrangements covering cross-border trade can change swiftly, and currency fluctuations can (if not properly catered for) have a major impact upon revenue streams and the economic viability of the venture more generally.

Is there sufficient local demand?

Some areas have arguably become saturated with premium international schools (a much-used phrase exuding exclusivity but which every school aspires to); whereas, in others, there might not be sufficient demand (eg if there is not an appetite or ability to pay tuition fees at the relevant price-point).

The 'tried and tested' territories remain circumspectly popular, but there is a growing sense of adventure in seeking partners in what may be untapped markets. The idea of establishing in a particular territory first is clearly a motivation for a growing number of schools, especially those who have been successful in other territories and have a confidence in their proposition and commercial model as a result.

A good rule of thumb once shared with us, was to watch those territories where the middle-classes are beginning to burgeon, as this is where the next wave of demand could come from.

Conversely, is there local supply?

Here we mean teaching staff. Recruitment has arguably become the number one challenge in the overseas schools' market. With a commitment and drive to deliver high-quality and something uniquely 'British', attracting the right staff is no easy feat, especially given the current geo-political volatility and increased competition. The once seemingly abundant pool of teaching staff prepared to work in these territories has shrunk, and the competitive pressure is having an impact on underlying costs and in turn revenues. It is a key factor to build into a school's business plan and commercial modelling.

What will key stakeholders at home think?

As with any international expansion project, it will be important to ensure that key stakeholders at home 'buy-in' – including governors, staff and parents. These projects can come with reputational, as well as legal, considerations. With governor buy-in being essential, it then becomes a sophisticated exercise in communications and PR to bring everyone along on the journey and reassure, at the very least, that it is not compromising the educational provision and ethos in the 'home' UK school and, at best, engaged and energised to embrace and enjoy the opportunities an overseas school (or group of schools) brings.

Know your partner

With any relationship, it is important you know your partner and ensure there is mutual trust, confidence and understanding to be able work constructively together over potentially many years. UK schools with successful operations overseas will tell you that much of the success comes down to having chosen the right partner.

Over our time working in this area, we have found the most successful and enduring collaborations are those driven by mutual expertise and motivation from educationalists on both sides. That is not to downplay the underpinning commercial or business model, which has to be robust and taken as read – but what follows very closely after is the place that education occupies in the partner's priorities and motivations.

This issue has such a broad reach, with touchpoints across the collaboration at both strategic and operational levels. It is therefore worth investing what may seem like disproportionate time and resources to 'test' the appropriateness of the partner at the outset, with a willingness and conviction to say 'no' and move on if things do not feel right.

Looking from the other side of the partnership: the UK school ultimately entrusts its partner to run and operate the international school under the UK school's name and brand – with the UK school exercising more or less control, depending on the style and structure of the collaboration (which may be driven by local law and regulation). Wherever the UK falls on that spectrum, by licensing its brand, the UK school will – in the eyes of the public – inevitably be linked to the success (or the failure) of the international school. So, entrusting the brand to the right partner is all-important from a reputational perspective. 

In this context, and from a legal perspective, we recommend schools carry out due diligence to ensure at a minimum:

• it is comfortable that the partner is who they claim to be and is validly incorporated and established – up the chain to the ultimate beneficial owner(s) of the partner entity;
• the partner (and those behind it, whether corporate entities or individuals – typically a mix) has a solid and established reputation, credentials and track-record to satisfy the UK school that can make a successful collaboration;
• it understands how the partner will structure the operation and management of the school (eg will they involve group companies to contract with staff, parents and third parties?); and what is the role of other stakeholders within all this, including (most obviously) local regulators, investors and property developers/owners; and
• the partner has sufficient funds and assets to meet its financial obligations under the collaboration. If they do not, it may be worth obtaining a guarantee from a parent company or other third party (eg an investor).

Generally speaking, it is sensible to carry out a reasonable level of due diligence on the partner as well as the partner’s group, funders and ultimate beneficial owners. Much of this can be gleaned from publicly available information, but specialist firms can delve deeper and provide a clearer picture of who exactly you are dealing with.

Establish the right structure

Structuring the collaboration – both for internal purposes and for the purposes of contracting with the overseas partner, is key – from a compliance, tax and liability exposure perspective.

If the UK school is a charity, it must ensure that its internal structuring is correct and to ensure compliance with its obligations under charity law. This will typically involve the establishment of a trading subsidiary. Contractually, the relationship between the school and the subsidiary is usually governed by an Operating & Licence Agreement (or equivalent), under which the school: (a) licenses its brand to the subsidiary; (b) grants the subsidiary access to staff and other resources as necessary; and (c) permits the subsidiary to negotiate and contract with overseas partners (and sub-license the brand to those partners), subject to certain controls and restrictions and recognising the proper value of those 'things' as charitable assets (which typically involves a level of cross-charging between charity and subsidiary).

In any event, establishing a special-purpose-vehicle for the overseas venture (which is typically separate from the subsidiary that undertakes the school's domestic commercial activity, but within which all overseas collaborations can be run) can be a useful way to try to ring-fence any liabilities or exposure for the UK school – albeit, as mentioned above, this might not help with any reputational risks inherent in licensing the brand.

In this area, in particular, expert tax and charity law advice is highly recommended to ensure the UK school's own house is in order before venturing overseas.

Stay tuned for more reflections and learnings in this series!

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, September 2025