Kumon Franchise Costs: Estimated Initial Investment (Item 7, 2023 FDD)

1.  Training Agreement Deposit Fee:  $1,000

• If you are applying for your first Kumon Center franchise, the Deposit Fee is $1,000 for an Instructor Development Program Kit. Kumon will apply the Deposit Fee towards your Initial Franchise Fee if you successfully complete the Instructor Development Program and sign a Franchise Agreement.

2.  Initial Franchise Fee:  $2,000 less the $1,000 Deposit Fee if you are obtaining your first Kumon Center franchise

3.  Initial Purchase of Materials:  $2,000

• The fee for your initial purchase of the materials you will need to operate your Center, such as instruction answer books, student achievement tests, student placement tests, and promotional posters, is $2,000.

4.  Architect Design:  $0 to $10,000

5.  Leasehold Improvements:  $30,000 to $60,000

• If you are opening a new Kumon Center, Kumon will reimburse you for the cost of initial carpet, window blinds and shades, and paint for your Center in an amount Kumon determines, currently up to $5,500. The amount provided above accounts for this reimbursement of $5,500 to you. Without this reimbursement, your estimated costs would be $35,500 to $65,500. If you are taking over an existing Kumon Center, Kumon will not reimburse you for carpet, window blinds, shades, or paint.

6.  Security Deposit, If Required:  $0 to $15,000

7.  Rent:  $1,000 to $4,000

• The estimate includes the first month’s rent. You must operate your Center in retail facilities such as a storefront, shopping center, or mall.

• Kumon strongly encourages you to have the capability to operate virtually and conduct online instructional sessions from your physical Center.

• Kumon will not accept a location where the lease term is less than five years, the space is less than 1,000 square feet, or you are unable to affix one of its exterior signs.

• Kumon will not permit any activity other than the operation of a Kumon Math and Reading Center for any site it approves.

• If you are signing your first Franchise Agreement with Kumon for a new Kumon Center or for an operational Kumon Center that you are purchasing, which has been open for instruction sessions two days per week, and you agree to comply with Kumon’s four instructional sessions per week operating requirement, Kumon will subsidize your Center’s rent payment by providing you a payment of 50% of your monthly rent payment per month for the first 12 months of your Center’s lease, with a maximum subsidy of $1,000 per month. The amount provided above accounts for this reimbursement of $1,000 to you for first month’s rent. Without this reimbursement, your estimated costs would be $2,000 to $5,000.

8.  Furniture, Equipment, Primary Sign, and Supplies:  $5,000 to $15,000

• At no cost to you, prior to the opening of a new Kumon Center, Kumon will select and have delivered to your Center the furniture and fixtures needed to open and initially operate your Center. If paid by you, the cost of these items would be $10,000. The items that Kumon will provide will include what it deems to be a sufficient number of tables, stools, cabinets, shelves, and chairs.

• You may wish to purchase additional items of furniture and fixtures for your Center, the cost of which Kumon estimates to be between $0 and $15,000.

• The company will approve in advance and you will purchase the carpet and paint to be used at your Center meeting the specifications contained in the Operations Manual.

• If you are taking over an existing Kumon Center, Kumon will not deliver furniture and fixtures to you, nor will it pay for these costs.

• If you are opening a new Kumon Center, Kumon shall have fabricated, delivered, and installed at your Center at Kumon’s expense one exterior sign for the facade of your commercial space. The cost of sign fabrication is currently estimated by Kumon to be between $4,800 and $7,000. The amount provided above accounts for Kumon’s payment of $4,800 to $7,000. Kumon will own the sign.

• If you are taking over an existing Kumon Center with existing signage, Kumon will not supply your Center with any new signage.

• You may install additional signs at your Center. If you do, the signs must comply with the specifications contained in the Operations Manual. You will own any additional signs that you install.

9.  Notebook Computer at Kumon Center:  $500 to $2,000

• You must obtain a notebook computer for use at your Center. Your computer must be at your Center at all times when your Center is open. Your notebook computer must have the minimum specifications set forth in Kumon’s Operations Manual.

• Your Center must have operational Internet access and capability.

• You must use Kumon’s proprietary software, applicable to your Center, and Kumon’s customer management system, which each will assist in various aspects of operating your Center.

10.  Professional Fees:  $1,000 to $3,000

11.  Liability Insurance:  $480 ($4.80 multiplied by the number of students enrolled in the Math Subject)

• This figure is the current annual rate if you purchase the package policy liability insurance, inclusive of sexual misconduct liability coverage, that Kumon makes available through its insurance carrier, based on an assumed Center enrollment of 100 math students.

• Many franchisees also obtain other types of insurance coverage for their Centers, such as property and casualty coverage, although Kumon currently requires only liability coverage. Kumon estimates that the annual cost of property and casualty coverage would range from $1,000 to $2,500.

• Should you elect not to participate in the insurance package offered by Kumon, you must also purchase sexual misconduct liability insurance for yourself and your employees.

• Almost every state requires you to purchase workers’ compensation insurance for employees of your Center.

12.  Business License, Name Registration:  $100 to $200

13.  Kumon Lead Management Telephone System:  $480 to $600

• Your Kumon Center must utilize the Center operating systems Kumon will make available to you which will aid you in the operation of your Center, such as Kumon’s Online Scheduler and Customer Relationship Management platforms (provided to you at no cost), and the Kumon Lead Management Telephone System. This system utilizes Voice Over Internet telephone technology. To utilize this System, your Center must have its own telephone number and dedicated Voice Over Internet Protocol telephone line used exclusively for Center business.

• You must purchase this System from Kumon’s designated vendor. The cost for the purchase and installation of the System currently is between $480 and $600.

• Kumon will reimburse you for the cost of installation of the System. The amount provided above does not account for this subsidy.

14.  Recommended Reading List:  $2,600

• You must purchase the books included on the Kumon Recommended Reading List. The list consists of approximately 378 books in Levels 7A-L, chosen with the purpose of enhancing the student’s joy of reading, to be assigned by the Instructor for use at home as needed on an individual basis.

15.  Fingerprinting, Criminal Background Check:  $18 to $60

• You must have your fingerprints taken on Form FD-258, the fingerprinting card used by the FBI to conduct a criminal background check.

16.  Payroll Cost for Assistants:  $9,750 to $11,700

• You may need to hire assistants as the number of students enrolled at your Center increases.

17.  Additional Funds (3 Months):  $13,500 to $18,000

• This is an estimate of the additional funds you will need during the initial period of operation, which Kumon defines as 3 months from the opening of the Center.

18.  Total:  $68,428 to $146,640

• In compiling these estimates, Kumon relied on its and its predecessors’ more than 37 years of experience in operating and franchising Kumon Centers in the U.S.