How School of Rock

Used Tech to Create a

Franchise Boom
J ohn Cappadona is not your typical CFO. He is not
an accredited accountant, and he works for an
unusual business - School of Rock (yes, that one).
In fact, Cappadona said that he never saw himself
becoming a CFO, having spent much of his career
in operations – mostly at tech companies. But this
alternative route to the top of finance has allowed
Cappadona to see and do things differently – and it
has helped propel School of Rock to significant growth.
COMPANY DETAILS
NAME: School of Rock
FOUNDED: 2002, Pennsylvania
SCHOOLS IN THE U.S.: 335 total;
290 are franchise-owned
STATES WITH LOCATIONS: 37
INTERNATIONAL Australia, Brazil, Canada,
LOCATIONS: Chile, Colombia, Ireland,
Mexico, Paraguay, Peru,
the Philippines, Portugal,
South Africa, Spain,
and Taiwan
CASE STUDY: SCHOOL OF ROCK
Cappadona explains that School of Rock is “the global
leader in music education, which is part of the rapidly
growing youth enrichment market space. Its patented
School of Rock MethodTM builds musical proficiency
through their proprietary MethodTM App, MethodTM
Book, SongFirst® Approach, and performance-based
music curriculum. Its hallmark offering, Performance
Program, consists of a weekly group rehearsal where
students learn by playing rock music’s most iconic
songs with a band composed of their peers.” Students
are assigned songs and parts based on age,
experience, and skill level. They work through those
parts in their weekly private music lessons with the
goal of preparing students to take the stage for live
performances at local music venues.
The company largely operates as a franchise model,
with owners of the studios paying a franchise fee to
run the program. The business now has locations in
37 U.S. states and more internationally. The number
of students has grown by 50% in the past three years,
and Cappadona expects that to continue. But its
recent growth and grit in the face of a global
pandemic has only been possible because of its
CFO’s understanding of how technology can help
do the heavy lifting.
2
I Don’t Wanna Do Your Dirty Work – Steely Dan
The franchise model represents a unique ability for organizations to grow by taking advantage of a centralized
structure, but with localized ownership. In 2023, the number of franchises in the U.S. is expected to grow 1.9%,
add approximately 254,000 jobs, and $860B of economic output,1 according to franchise.org.

NUMBER OF US-BASED FRANCHISES (2007 - 2023)

1,000,000

800,000
Number of Establishments

600,000

400,000

200,000

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* 2023**

* Estimate ** Projection

Source: Statistica.com

But franchise businesses can also be a handful to manage. The most challenging aspect for the central finance
team is ensuring that information coming from the franchise locations is accurate and consistent. If it’s not, the
financial close process won’t run smoothly and forecasts won’t be accurate. Good management – and growth –
becomes difficult. Additionally, franchisees often don’t have well-trained and experienced finance people.
Cappadona, though, has leaned into technology to solve these challenges.

CASE STUDY: SCHOOL OF ROCK 3

“When I arrived, the company was already using to restate a chunk of the revenue it had already
NetSuite,” said Cappadona. “But they were only using booked – and take a huge hit. “We went back to the
it for general ledger work, so it wasn’t being utilized to drawing board,” said Cappadona, “and really analyzed
its capacity.” He set about changing that. what was actually happening, when.” They broke down
what the initial franchise fee included – like training
“In the last few years, we’ve really doubled down and
and support – and worked out the fee that could be
started running more of the financial processes
recognized when the school opened, with the rest
through NetSuite,” he said. Two of the big jobs they
amortized over 10 years.
now manage with the software are accounting for fixed
assets and intangibles, which had been previously
handled in what Cappadona describes as “kind of
U.S. FRANCHISE STATISTICS2
a goofy” way. “Now we have all of our fixed assets
(e.g. music gear, computer hardware and software, • 7
 50,000 total as of 2022
and lease holds) logged in one place and we book
• O
 ver 300 different franchise industries
depreciation through the module,” he said, “it’s nice
in the U.S.
to finally have a single source of truth for everything.”
• F
 rom 2013-2019, the economic output of the
Cappadona said NetSuite became essential when
business services franchise industry in the
revenue recognition accounting rules changed under
U.S. increased 30%. It generated $106 billion
ASC 606. “As a franchise business, revenue
in 2019, but fell to $91 billion in 2020.
recognition surprised us,” he said. “The old way used
to be straightforward. You want a territory, you buy it,
pay the franchise fee, build the school, and open the
Now they set up customers differently through
school, and you’ve got exclusive rights to the territory
NetSuite, using the advanced revenue management
for 10 years. We’d then recognize that franchise fee
module. The franchise fee is paid and part is
in full once the school opened.”
recognized, but now customers are charged and
But under the new rules, FASB interpreted the territory invoiced monthly for royalties, advertising, and IT fees.
as having value over 10 years – meaning it also has to Cappadona clearly loves the new system.
be amortized over 10 years. The company would have

CASE STUDY: SCHOOL OF ROCK 4


“We used to have a 125-column
spreadsheet with 300 rows. It
was ripe for error and every
year the auditors would have a
problem with it. Leaning into
this rules-based tech has been
really important – it lets a guy
like me be CFO.”
John Cappadona, School of Rock
“We used to have a 125-column spreadsheet with 300
rows. It was ripe for error and every year the auditors
would have a problem with it.” Now the whole process
runs through NetSuite, is logged accurately, and
accessible through the customer’s record. “Leaning
into this rules-based tech has been really important
– it lets a guy like me be CFO,” he said.
According to Cappadona, the company has also spent
some time “beefing up” its intellectual property and
trademark activity, again using NetSuite to log and
classify its trademarks and amortize them through
the program, creating what Cappadona calls “a
one-stop shop.” Along with the advanced revenue
management, these steps have drastically shortened
the financial close.
“It used to take us about 20 days to close the books,”
said Cappadona. “Now it’s eight, maybe nine. Using
CASE STUDY: SCHOOL OF ROCK
more of the modules has helped us massively cut the
cycle time. After about five days, we’re able to give the
CEO an update, and by 10 days, we’re ready to send
out our final report to the board.” All of this allows
School of Rock to keep a lean central finance team
while adding franchisees at will.
“Over the last three or so years the company has grown
its locations by 50 percent,” said Cappadona. “That
wouldn’t have been possible without NetSuite.”
The speed of close isn’t just for speed’s sake. The idea
behind using more of NetSuite is that it frees up
Cappadona to add strategic value. “The monthly close
isn’t sexy,” he said, “it’s a lot of blocking and tackling,
but if you can do it efficiently, you can go on to do
projects that actually enhance the business.” And
that’s exactly what the business wants from him.
“The CEO said to me that he knows I can build a
spreadsheet and he wants the basics covered, but he
needs me to be his CFO – to make plans, to add value.”
NetSuite, said Cappadona, “fuels our forecasts” and
allows him to “push down” and let his team do more of
the lifting, while he uses his operational and strategic
background to build out strategic plans.
“The company was entering a new phase when I was
hired,” said Cappadona. “Over a couple of years, we’ve
gone from an accounting-centered finance team that
looked backwards.” Now the tech-enabled finance
team works quickly and simply, providing what
Cappadona calls “the story behind the numbers” and
a forward look for management.
5
 Staying Alive – The Bee Gees
“By rights I should not be here today talking to you,”
said Cappadona, meaning that COVID-19 could very
nearly have proved fatal for School of Rock.

“We’re a performance-centered program, right?”

explained Cappadona. “So our whole thing is about
being together.” When the pandemic hit, School of
Rock either had to fold or fight. They chose to fight.

“We immediately had to pivot to an online solution,”

said Cappadona. Going online kept revenue coming in,
but student numbers initially took a dive. “Before
COVID, we had 40,000 students. During COVID, it
slipped to about 26,000. But, by mid-2021, we were
back above 40,000 again - and now we’re at 60,000.”

Cappadona’s leadership, with NetSuite’s help, enabled

him to manage the company through the pandemic
and come back stronger. “Normally we’d forecast once
or twice a year,” he said, “but during COVID-19 it was
monthly – it felt almost constant.” The business
needed an instant and regular idea of where it
factored financially. “Because we could do it regularly,
we knew our new model was working. We could pull
the numbers so quickly and, as a result, make quicker
decisions,” Cappadona said. “We knew the student
count was trending downward for a bit, but because of
the KPIs we use through NetSuite that factor into our
financial model, by the end of the first summer of
COVID, we knew we’d be okay.”

“We knew we could hit the gas, make investments,

and get ahead of the game – that all happened
because of the numbers we could get through
NetSuite,” said Cappadona.

CASE STUDY: SCHOOL OF ROCK 6

The company invested heavily in its curriculum and its “I’ve never had a lesson in how to use NetSuite.
music method app and, as local in-person restrictions Doubling your locations, adding 50 percent more
eased, hired an expert to consult on how to organize students, none of this would have been possible if
its rehearsal spaces to make them safe. everyone had to have a lot of formal training,” said
Cappadona.
“While Zoom lessons were a lifesaver for a lot of
parents with bored kids, we knew that keeping people
coming back in-person was important,” Cappadona
said. “Not only do we think that’s what we’re primarily “I’ve never had a lesson in how to
about, but someone in the performance program has
use NetSuite. Doubling your
a share of wallet that’s about 3.8 times bigger than
someone who just takes online lessons.” locations, adding 50 percent
more students, none of this
By Cappadona’s telling, NetSuite helped the company
keep doing what it knows works – for students, and would have been possible if
for its bottom line. As a result, it’s not only kept the everyone had to have a lot of
iconic School of Rock experience – i.e. band formal training.”
performance – available for all its students, but has
expanded its offering, too. It wasn’t just NetSuite’s
John Cappadona, School of Rock
forecasting capabilities that underpinned the
expansion, but its intuitive nature.

CASE STUDY: SCHOOL OF ROCK 7

Don’t Look Back – Boston
School of Rock has weathered COVID well, but where
does Cappadona see it going next?

As a result of NetSuite freeing up his time and being

confident the school can scale, he’s looking at how
the school can add more students, more locations,
and more offerings. His lean finance team is better
poised to support important company initiatives such
as international growth, expansion of curriculum and
development of new program offerings.

As for Cappadona, he’s confident that his team will

continue to have ideas to expand the business. “We
just have to find a way to use the tech to make them
work.” And while he’s “just” the finance guy, he
maintains that “it’s not just rock music, it’s about a
connection.” Cappadona puts his money where his
mouth is too: he’s off to see Springsteen with his son…
for about the fifth time.

“...it’s not just rock music,

it’s about a connection”

John Cappadona, School of Rock

CASE STUDY: SCHOOL OF ROCK 8

 Sources
1 https://www.franchise.org/franchise-information/franchise-business-outlook/2023-franchising-
economic-outlook

2 https://drfranchises.com/franchise-statistics/

CASE STUDY: SCHOOL OF ROCK 9

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