## Highlights of KidzArt’s Item 19 Financial Performance Representations (2013 FDD) – Part 2

### Explanatory Notes for Part II – Average Students Per Month and Price Per Student Per Class

**Average Students Per Month **

- One Reporting Franchisee receives a substantial grant to provide art instruction for an entire local school district and, because of this grant, services 47,736 students per month (the “Large Grant Franchisee”).

- While this is a substantially higher number of students than all other Reporting Franchisees, this Reporting Franchisee purchased a “Teach Plus” franchise under the franchisor’s standard offering and was able to secure a stream of revenue that the franchisor highly encourages all franchisees to pursue.

- However, because the number of students is significantly higher than that of any other Reporting Franchisee, the franchisor is including columns in the Table that both include and exclude the Large Grant Franchisee.

- Average Students per Month is calculated by taking the total number of students to whom each of the Reporting Franchisees provided instruction during the Measurement Period and dividing that sum by twelve.

- The Average Number of Average Students per Month is defined as the sum of the Average Students per Month of the Reporting Franchisees for each offering (i.e. “Teach” vs. “Teach Plus”), divided by the number of Reporting Franchisees for each offering.

- The Median Number of Average Students per Month means the amount that falls in the middle when all other amounts disclosed are arranged highest to lowest. In other words, half of the Reporting Franchisees exceeded the median value and half did not (for each column in the Table).

- Of the 10 Reporting Franchisees operating a KidzArt “Teach” Franchise, 5 Reporting Franchisees, or 50%, exceeded the Average Number of Average Students per Month.

- Of the 26 Reporting Franchisees operating a KidzArt “Teach Plus” Franchise, 1 Reporting Franchisee, or 4%, exceeded the Average Number of Average Students per Month.

- Of the 25 Reporting Franchisees operating a KidzArt “Teach Plus” Franchise, which excludes the Large Grant Franchisee, 12 Reporting Franchisees, or 48%, exceeded the Average Number of Average Students per Month.

**Average Price Per Student Per Class **

- Average Price Students Pay per Class is calculated by taking the total revenue generated from providing instruction during the Measurement Period and dividing that sum by the number of students to whom each Reporting Franchisee provided instruction during the Measurement Period.

- The Average Amount of Average Price Students Pay per Class is defined as the sum of the Average Price Students Pay per Class of the Reporting Franchisees for each offering (i.e. “Teach” vs. “Teach Plus”), divided by the number of Reporting Franchisees for each offering.

- The Median Amount of Average Price Students Pay per Class means the amount that falls in the middle when all other amounts disclosed are arranged highest to lowest. In other words, half of the Reporting Franchisees exceeded the median value and half did not (for each offering).

- Of the 10 Reporting Franchisees operating a KidzArt “Teach” Franchise, 6 Reporting Franchisees, or 60%, exceeded the Average Amount of Average Price Students Pay per Class.

- Of the 26 Reporting Franchisees operating a KidzArt “Teach Plus” Franchise, 16 Reporting Franchisees, or 62%, exceeded the Average Amount of Average Price Students Pay per Class.

### Explanatory Notes for Part III – Average Classes and Locations Per Month

**Average Classes Per Month **

- Average Classes per Month is calculated by taking the total number of classes each of the Reporting Franchisees taught during the Measurement Period and dividing that sum by twelve.

- The Average Number of Average Classes per Month is defined as the sum of the Average Classes per Month of the Reporting Franchisees for each offering (i.e. “Teach” vs. “Teach Plus”), divided by the number of Reporting Franchisees for each offering.

- The Median Number of Average Classes per Month means the amount that falls in the middle when all other amounts disclosed are arranged highest to lowest. In other words, half of the Reporting Franchisees exceeded the median value and half did not (for each offering).

- Of the 10 Reporting Franchisees operating a KidzArt “Teach” Franchise, 2 Reporting Franchisees, or 20%, exceeded the Average Number of Average Classes per Month.

- Of the 26 Reporting Franchisees operating a KidzArt “Teach Plus” Franchise, 12 Reporting Franchisee, or 47%, exceeded the Average Number of Average Classes per Month.

**Average Locations Per Month **

- Average Locations Per Month is calculated by taking the total number of locations each of the Reporting Franchisees used to provide instruction during the Measurement Period and dividing that sum by twelve

- The Average Number of Average Locations Per Month is defined as the sum of the Average Locations Per Month of the Reporting Franchisees for each offering (i.e. “Teach” vs. “Teach Plus”), divided by the number of Reporting Franchisees for each offering.

- The Median Number of Average Locations Per Month means the amount that falls in the middle when all other amounts disclosed are arranged highest to lowest. In other words, half of the Reporting Franchisees exceeded the median value and half did not (for each offering).

- Of the 10 Reporting Franchisees operating a KidzArt “Teach” Franchise, 4 Reporting Franchisees, or 40%, exceeded the Average Number of Average Locations Per Month.

- Of the 26 Reporting Franchisees operating a KidzArt “Teach Plus” Franchise, 11 Reporting Franchisees, or 42%, exceeded the Average Number of Average Locations Per Month.

### Part II – Average Students Per Month and Price Per Student Per Class

**Average Students Per Month **

**Teach**

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