Highlights of Tutoring Club’s Item 19 Financial Performance Representations (2013 FDD) – Part 1

Explanatory Notes to the Financial Information

• The following tables present pro forma examples of monthly revenue and expense information for hypothetical Tutoring Centers based on 4 different levels of students and 3 different levels of monthly tuition and initial testing and registration fees for new students.

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  This summary was prepared based on the franchisor’s experience in operating Tutoring Centers in Nevada, and on the experience of its predecessors and affiliates in operating Tutoring Centers in California and Nevada, as well as based on its experience as a franchisor of many Tutoring Club Tutoring Centers since 2006.

• This summary was prepared by the franchisor, without the assistance of an independent CPA. As a result, this summary probably is not prepared in accordance with the American Institute of Certified Public Accountants’ Statements on Standards for Accountant’s Services on Prospective Financial Information.

• The following notes are an integral part of the information presented in this Item, and provide information to help you better understand the financial information. Explanatory notes on revenues are presented in this Part 1, while explanatory notes on expenses are presented in Part 2.

Explanatory Notes on Revenues

• Student Levels. When you first open your Franchised Business, you will probably not have any students. It is your responsibility to recruit new students.

• The student levels at your Franchised Business will depend on various factors, such as the demographics of your market area, the location of your Franchised Business, the tuition and other fees you charge, your marketing efforts, your ability to recruit new students, and your ability to retain existing students.

• If you have an In-Home Business, you are restricted to having no more than 20 students at any time (for Tutoring Centers there is no such restriction).

• You should expect an ongoing natural turnover of students as your students benefit from the tutoring services you will provide to the point where they no longer need tutoring services. A typical retention period for your clients will be about 6 months. Therefore, ongoing recruiting efforts will be critical to maintain and expand your level of students.

• It may take you many months (or even years) to reach the student levels shown in these tables. Or it is possible that you may never reach the student levels shown in these tables.

• Amount of Tuition and Other Fees. You are free to set the amount of fees you will charge. The amounts you decide to charge will affect the profitability of your Franchised Business.

• Testing/Registration Fees. For a Tutoring Center (Pro Formas 1-3), the figures shown in the tables for Testing/Registration Fees assume the following levels of recruiting new students:

• 25 students:  recruiting 1 new student per week
• 50 students:  recruiting 2 new students per week
• 75 students:  recruiting 3 new students per week
• 100 students:  recruiting 4 new students per week

• For an In-Home Business (Pro Forma 4), the figures shown in the tables for Testing/Registration Fees assume the following levels of recruiting new students:

• 4 or 8 students:  recruiting 1 new student per month
• 12 or 16 students:  recruiting 2 new students per month

Pro Forma 1:  Monthly Revenues and Expenses for Tutoring Centers Only (Not Applicable to In-Home Businesses); $295 Monthly Tuition and $100 Testing/Registration Fee

25 Students

Revenues

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