Franchise Costs: Detailed Estimates of Mathnasium Franchise Costs (2018 FDD)

Updated April 26, 2018.

Detailed Estimates of Mathnasium Franchise Costs Based on Item 7 (Estimated Initial Investment) of Mathnasium’s 2018 Franchise Disclosure Document

1.  Initial Franchise Fee:  $49,000 for your first franchise; $26,500 if you are buying an additional franchise

2.  Expenses While Training:  $3,500 to $4,000

• This estimate covers the travel costs of one person attending the initial training program.

• The initial franchise fee covers the cost of up to two people to attend the same initial training program.

• You are responsible for all travel, lodging, and incidental expenses associated with attending the initial training program. The initial training program is conducted in different stages and will require 2 separate trips to Los Angeles, California.

• You may incur additional training fees if you send more than 2 people to training.

3.  Base Royalty Fee:  $0 to $500 per month

4.  Technology Fee:  $0 to $110 per month

• Depending on when you open your Center, you may be required to begin paying Mathnasium the Base Royalty Fee ($500 per month) and/or the Technology Fee ($110 per month as of the date of the 2018 disclosure document) before you open.

• The initial franchisee fee covers the cost of the first 6 months of your base royalty (first center only).

5.  Rent (first and last months’ rent):  $6,000 to $14,000

• The estimate is for the first and last months’ rent. Rent will vary according to location and whether the landlord requires a security deposit. Depending on the landlord and property, you may be required to pay additional common area charges and/or tax and insurance allocations.

• In highly desired business and commercial districts or when franchisees elect to lease spaces larger than the standard recommended space, rent might be higher.

• The size of the space should be 1,200 to 1,600 square feet.

• Mathnasium strongly recommends waiting to finalize a location until you have attended the initial training for business operations.

• You may not use your home or other residential property as your Center.

• Mathnasium must review and consent to the physical layout of each Center.

• If you don’t complete the build out of the Center in a reasonable time, Mathnasium may (but is not obligated to) complete the build out, all expenses of which will be paid or reimbursed by you.

• This estimate does not include any amount for tenant improvements.

6.  Paint, Carpet, and Tenant Improvements:  $2,500 to $10,000

• This estimate is for painting and carpeting your Center space, and basic tenant improvements. The cost of tenant improvements may also be covered by the landlord or amortized in your rent, depending on lease negotiations with your landlord.

• Tenant improvements can be required and/or expensive if applicable laws require certain facilities described in Item 1 under Industry-Specific Regulations

7.  Furniture, Signs, Equipment, and Supplies:  $10,000 to $15,000

• The estimate includes initial lease payments for computers, peripherals, and other office equipment of $500 to $1,000, for which financing is generally available. The total purchase price of computers is estimated to be under $2,500.

• The estimate also includes the costs of exterior signs; interior wall art; desks, chairs, and other furniture; and other costs.

8.  Insurance:  $2,000 to $3,500 annually

• The figure given is the current annual rate if you obtain all insurance required in the Manuals, based on an assumed center enrollment of 100 students. You must also obtain property and casualty insurance, which varies by size and location of the Center.

• Mathnasium estimates that the annual cost of all required insurance coverage would range from $2,000 to $3,500.

• You may also have an obligation under state law to obtain workers’ compensation or other forms of insurance.

• This estimate does not include an amount for workers’ compensation insurance since those rates can vary widely depending on your state and number of employees.

9.  Business License, Name Registration:  $250 to $1,000

10.  Professional Services (Legal and/or Accounting):  $1,500 to $2,000

• The estimates include legal and accounting services that may be required to start your business, including a legal review of your franchise agreement.

• Ongoing professional services are included in the “Additional Funds” category.

11.  Phone and Utilities:  $500 to $1,000

• The estimate includes purchase of phones and modem, installation of Internet service, and utilities setup deposits.

• You must have a separate business phone line and answering machine (or voicemail) used exclusively for your Center, and a broadband Internet connection.

12.  Video Surveillance and Related Equipment:  $1,500 to $5,000

13.  Pre-Open Advertising:  $4,000

• You are required to spend at least $4,000 on local advertising in the 2 months prior to the opening of your Center and at least $6,000 on local advertising in every 3 consecutive months thereafter during the term of the Franchise Agreement.

14.  Additional Funds (4 months):  $32,000 to $40,000

• This is an estimate of the additional funds you will need during the initial period of operation, which Mathnasium defines as 4 months from the opening of the Center.

• It includes rent for months 2 through 4, and 4 months of other expenses including advertising, utilities, office supplies, and outside services.

• It includes payroll for one employee but does not include any compensation that you elect to pay yourself, or any royalties that you would pay Mathnasium.

• You must pay the base royalty beginning the first full month after you execute your Franchise Agreement. However, for your first Center only, the initial franchise fee covers the cost of the first 6 months of the base royalty.

15.  Total (first center):  $112,750 to $148,610; Total (subsequent center):  $90,860 to $126,610

• These are estimates only.

• None of the expenditures described in the chart are refundable. The one exception is if Mathnasium elects to terminate the Franchise Agreement during or at the conclusion of the initial training program, in which case it will return the initial franchise fee to you, less the costs it has incurred in marketing, awarding, and processing your franchise and in providing training to you.

• Mathnasium does not finance any portion of your initial investment on your first Center. Financing may be available for second and subsequent Centers.