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Franchise Costs: Detailed Estimates of Kumon Franchise Costs (2016 FDD)

by Franchise Chatter on June 22, 2013

in Child-Related Franchises, Education Franchise, Franchise Costs

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This post was updated on May 19, 2016 to reflect information from Kumon’s 2016 FDD (Item 7).

Detailed Estimates of Kumon Franchise Costs Based on Item 7 (Estimated Initial Investment) of Kumon’s 2016 Franchise Disclosure Document

1.  Training Agreement Deposit Fee:  $500

  • If you are applying for your first Kumon Center franchise, the Deposit Fee is $500. The franchisor will apply the Deposit Fee towards your Initial Franchise Fee if you successfully complete the Instructor Development Program and sign a Franchise Agreement.

2.  Expenses While Training:  $4,410 to $6,820

  • Kumon’s Instructor Development Program consists of preliminary homework assignments, training in a Center that it has designated, training in a Kumon Regional Office, on-line training, study of the company’s Worksheets and curriculum, and two semesters of classroom training at Kumon University in Teaneck, New Jersey.
  • If you successfully complete the Instructor Development Program and are awarded a franchise, you will be required to attend two additional classroom training courses at Kumon University in Teaneck, New Jersey.

3.  Initial Franchise Fee:  $1,000 less the $500 Deposit Fee if you are obtaining your first Kumon Center franchise

4.  Initial Purchase of Materials:  $1,000

  • The fee for your 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 $1,000.

5.  Architect Design:  $0 to $9,500

6.  Leasehold Improvements:  $35,000 to $70,500

7.  Security Deposit, If Required:  $0 to $4,500

8.  Rent:  $1,500 to $4,500

  • The estimate includes the first month’s rent. You must operate your Center in retail facilities such as a storefront, shopping center, or strip mall, unless the franchisor grants you a written exception to this requirement.
  • 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.
  • The franchisor will not permit any activity other than the operation of a Kumon Math and Reading Center for any site it approves.

9.  Furniture, Equipment, Primary Sign, and Supplies:  $0 to $5,500

  • At no cost to you, prior to the opening of your 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 $6,500. 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 $5,500.
  • 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. It will reimburse you for the initial cost of carpet, window blinds and shades, and paint for your Center in an amount Kumon determines, currently up to $5,500. Kumon can modify or eliminate this subsidy.
  • You must pay for one exterior sign for the facade of your commercial space. Upon installation, the franchisor shall reimburse you for the cost of fabrication and installation of the sign. The cost of sign fabrication is currently estimated by Kumon to be between $2,500 and $7,000.

10.  Notebook Computer at Kumon Center:  $300 to $1,500

  • 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 company’s Operations Manual.
  • You must use the franchisor’s proprietary software, applicable to your Center, which will assist in various aspects of operating your Center.

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

12.  Liability Insurance:  $445

  • This figures is the current annual rate if you purchase the package policy liability insurance that the franchisor 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 the company currently requires only liability coverage. Kumon estimates that the annual cost of property and casualty coverage would range from $1,000 to $2,500.
  • The franchisor also strongly encourages you to purchase sexual misconduct liability insurance for you and your co-workers, as such coverage is not included in the insurance offered through Kumon.
  • Almost every state requires you to purchase workers’ compensation insurance for employees of your Center.

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

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

  • Your Center must utilize 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 the franchisor’s designated vendor. The cost for the purchase and installation of the System currently is between $480 and $600.

15.  Recommended Reading List:  $2,550

  • You must purchase the books included on the 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.

16.  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.

17.  Payroll Cost for Assistants:  $4,125 to $4,950

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

18.  New Center Marketing:  $4,000 to $6,000

  • Within the first 3 months your Center is open (6 months if you take over operation of an existing Center), you must spend a minimum of $4,000 to promote, market, and advertise your Center.
  • Provided you spend at least the required minimum ($4,000), Kumon will reimburse you 50% of the amount that you spend on pre-approved Center promotion, advertising, and marketing during the first 3 months of the operation of your Center (6 months if you take over the operation of an existing Kumon Center) up to the maximum amount set forth in the Operations Manual. Currently, provided you spend at least the required minimum ($4,000), Kumon will reimburse you for $2,000 of such costs.

19.  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 the company defines as 3 months from the opening of the Center.

20.  Total:  $69,428 to $140,626

  • In compiling these estimates, the franchisor relied on its and its predecessors’ more than 33 years of experience in operating and franchising Kumon Centers in the U.S.

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