FDD Talk 2015: The Kumon Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2015 post, you’ll learn the following:

• Section I – Background information on the Kumon franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Kumon franchise, based on Item 7 of the company’s 2015 FDD

• Section III – Presentation and analysis of Kumon’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:

• average enrollment numbers, after 12 months of operation, for Kumon Centers that opened in 2013, 2012, 2011, 2010, 2009, and 2008, respectively

• average enrollment numbers, after 24 months of operation, for Kumon Centers that opened in 2012, 2011, 2010, 2009, and 2008, respectively

• average enrollment numbers, after 12 months of operation, for the top 25% of Kumon Centers that opened in 2013, 2012, 2011, 2010, 2009, and 2008, respectively

• average enrollment numbers, after 24 months of operation, for the top 25% of Kumon Centers that opened in 2012, 2011, 2010, 2009, and 2008, respectively

• average enrollment numbers for Kumon Centers that have been open for 3 years or more (“Mature Centers”), as of December 31, 2014

Section I – Background Information

Kumon bills itself as the world’s largest after-school learning program, and it’s easy to see why. Today there are nearly 26,000 Kumon centers in 48 countries on six continents. Over the past 50 years, Kumon has helped more than 16 million children succeed in school.

It all started back in 1954 in Osaka, Japan. Toru Kumon wanted to help his son succeed in math and have fun doing it. As he developed the method based on his own research of what skills were needed to succeed, parents began to notice. His son, Takeshi, worked on short assignments that increased his knowledge, self-reliance, and confidence.

Based on this success, the first Kumon Center was opened in 1958, and the first location outside of Japan came in 1974 in New York. Eventually the same method was applied to reading, a program that was rolled out in 1991. The Kumon family, headed by Toru’s wife, Teiko, owns 35% of the company.

Here’s how Kumon maintains its place as the world’s premiere education franchise:

Self-Learning

At Kumon Centers, students don’t just sit back and passively receive instruction. They actively develop self-learning skills. Students progress at their own pace through a customized program of worksheets planned by instructors. Each worksheet represents a bite-sized bit of essential learning that takes about 30 minutes to complete.

Students attend two such sessions at a Kumon Center per week, while completing an additional five worksheets at home, one each day. With each completed sheet, a student’s knowledge and confidence grow.

Decades of refinement have resulted in assignments that work together to reach the goal. The worksheets progress in an iterative fashion, building on each other moving forward.

Tried and True

With 50 years of experience under its belt, this chain knows how to tutor children in math and reading. The Kumon Method continues to work for literally millions of students around the world. That’s why Entrepreneur Magazine has ranked Kumon the #1 education franchise for 14 years running.

Solid Global Presence

As of March 2014, there were 24,955 Kumon Centers around the world (closer to 26,000 now), with 2,004 of them in North America and, of those, 1,450 in the United States. The current number of students being served at those centers number 4.2 million worldwide, with more than 271,000 in the U.S. alone.

Simple Basic Principles

What is the secret of Toru’s methods? Surprisingly simple, really, and based on three principles: 1) The level of the material being learned should correspond to the student’s abilities; 2) The rate of progress should be determined by the student, not the teacher; and 3) The material should be organized into a naturally coherent, logical progression.

Doesn’t sound like rocket science, does it? But it works nonetheless.

Section II – Estimated Costs

• Please click here for detailed estimates of Kumon franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis