Mathnasium Franchise Costs: Estimated Initial Investment (Item 7, 2022 FDD)

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

• The standard initial franchise fee is $49,000 for the first Mathnasium center and $26,500 for each subsequent Mathnasium center. You may be eligible for a reduced initial franchise fee under certain circumstances.

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

• This estimate covers the travel costs of 1 person attending the initial training program.

• The initial franchise fee covers the cost of up to 2 people to attend the 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 at least one trip 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:  $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 disclosure document) before you open.

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

• In addition, if you are approved to offer instruction online, you will be required to pay an additional technology fee to cover Mathnasium’s costs of the online platform. This fee is currently $45 per month per Mathnasium center.

5.  Additional Technology Fee:  $0 to $45 per month

6.  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 Mathnasium center.

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

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

7.  Paint, Carpet, and Tenant Improvements:  $5,500 to $13,500

• This estimate is for painting and carpeting your center space, and minimal tenant improvements. The extent of the tenant improvements will depend on the condition of the space you rent.

• 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 Laws, Rules, and Regulations.

8.  Furniture, Signs, Equipment, and Supplies:  $10,000 to $17,000

• The estimate includes initial lease payments for computers, peripherals, and other office equipment of $500 to $1,000. 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, as well as other costs.

9.  Insurance:  $1,200 to $1,500 annually

• The figure given is the current annual rate if you obtain all insurance required in the Manuals, based on an assumed enrollment at your center of 100 students. You must obtain insurance from the vendor Mathnasium designates, as set forth in the Manuals. You must also obtain property and casualty insurance, which varies by size and location of the Mathnasium center.

• Mathnasium estimates that the annual cost of all required insurance coverage would range from $1,200 to $1,500.

• You must also obtain workers’ compensation insurance and may also have an obligation under state law to obtain 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.

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

11.  Professional Services (Legal and/or Accounting):  $1,300 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.

• Additional professional services that may be incurred during the first 4 months of operations are included in the “Additional Funds” category.

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

• The estimate includes purchase of phones and router/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.

13.  Video Surveillance and Related Equipment:  $500 to $2,500

14.  Pre-Open Advertising:  $4,000

• You are required to spend at least $4,000 on local advertising in the 2 months before 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.

15.  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, including legal and accounting

• 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 sign the Franchise Agreement. However, for your first Mathnasium center only, the initial franchise fee covers the cost of the first 6 months of the base royalty.

16.  Total (first Mathnasium center):  $112,860 to $149,155; Total (subsequent Mathnasium center):  $90,360 to $126,655

• 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 for your first Mathnasium center, but it may offer financing for a portion of your initial franchise fee if you are purchasing an additional franchise or are employed as a Center Director at a Mathnasium center and meet Mathnasium’s eligibility requirements stated in the Manuals.