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FDD Talk 2016: The LearningRx Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on April 22, 2016

in Child-Related Franchises, Education Franchise, FDD Talk 2017: Children's Franchises, Franchise Earnings

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LearningRx Photo from greystoneconstruction

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the LearningRx franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a LearningRx franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of LearningRx’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • fiscal year 2015 average revenue charged, case size, satisfaction rating (out of 10), and percentage of consultation to students for all 76 LearningRx franchisee-owned Centers open during the full fiscal year October 1, 2014 through September 30, 2015
  • fiscal year 2015 average advertising expenses, bank and credit card fees, facilities costs, insurance, miscellaneous expenses, royalty fee, supplies, taxes (non-payroll), travel and entertainment expenses, and percentage available for salaries and profits for all 76 LearningRx franchisee-owned Centers open during the full fiscal year October 1, 2014 through September 30, 2015

Section I – Background Information

LearningRx’s Advantage Is Its Personal Training

While websites and video games offer digital brain training exercises, LearningRx takes brain training to a higher level that provides demonstrable results.

LearningRx brain training differs from digital brain training games because, the company points out, LearningRx features a personal trainer who can customize training sessions and encourage clients to push past comfort levels; challenge clients to see and reach for their potential; and help clients become more confident by encouraging them to take on challenges and celebrate their milestones.

Family Connection

Ken Gibson, the company’s founder and CEO, started LearningRx in 2001 and opened the first location in 2002 in Colorado Springs, Colorado. In 2003, the company started franchising and added 27 locations. LearningRx currently has more than 80 locations, all within the United States, and is still headquartered in Colorado Springs.

LearningRx’s approach to teaching is based on Gibson’s research in visual processing and his brother Keith Gibson’s work as a clinical psychologist. The two worked in separate careers for 17 years before pairing up for LearningRx.

Children, Teens Are Typical Clients

Clients are typically children and teens who have difficulty reading, focusing, and solving puzzles, and usually struggle in school. They are paired with instructors who take them through cognitive exercises designed to re-stimulate the brain and strengthen brain reasoning and other learning capacities, with the goal to overcome dyslexia and other learning disabilities.

People without these difficulties also may seek to improve skills such as reading, attention, and others.

Adults as well as children and teenagers may seek personal brain training to address problem areas or hone skills.

Not Just for Kids, Says Former NFL Player Utecht

One adult client is former NFL player Ben Utecht, who began working with LearningRx in 2015, attending sessions five days a week. Utecht, a Minnesota native who played for the University of Minnesota, went on to win a Super Bowl with the Indianapolis Colts, and later played for the Cincinnati Bengals, suffered at least five concussions and has struggled with memory loss.

Also a singer, he recorded a song, “You Will Always Be My Girls,” in 2014 for his wife and daughters in case he ever forgets them.

Now, Utecht trains with LearningRx rather than an athletic trainer, working on his brain training on a daily basis.

LearningRx Programs

Let’s take a look at LearningRx’s brain training programs:

  • ThinkRx, the core program, focuses on core cognitive skills.
  • ReadRx works with skills that are important to reading.
  • ComprehendRx, the next level, targets the skills needed to comprehend written material.
  • MathRx trains the cognitive skills associated with numerical fluency, math concepts, problem-solving and performing calculations.
  • Einstein combines ThinkRx, ReadRx and MathRx.
  • StudyRx, which focuses on strengthening study skills, is part of a pilot program that will expand to the entire LearningRx system.
  • Brain Booster programs have two formats: one for adults who do 12-, 18- or 24-session segments at their convenience, and another for clients who are looking for additional personal training after completion of another program.
  • BrainSkills is a digital brain training program meant to supplement the core training or to use as a maintenance tool after completion of another program.

Studies Show Gains

LearningRx points to numerous reports and studies as evidence that its brain training works. In preliminary results from pre-test and post-test scores of more than 18,000 students from 2008 to 2015, significant gains were shown in cognitive and academic skills.

The average student gained 14 IQ points, and the range of gains was 3.2 years to 5.0 years in cognitive skills, 2.0 years to 6.3 years in reading skills and 2.2 years to 3.5 years in math skills.

The company states that its client satisfaction rating is 9.6 on a 10-point scale.

LearningRx on Franchise 500 List

LearningRx was No. 315 in Entrepreneur’s 2016 Franchise 500 list, down from the 268 spot in 2015. It has experienced a one-year loss of 10 units (12.2 percent) and a three-year loss of six units (7.3 percent). The company hit a low of 478 in 2011 on the Franchise 500 but quickly climbed back to 272 in 2012 and has stayed around that mark since.

Section II – Estimated Costs

  • Please click here for detailed estimates of LearningRx franchise costs, based on Item 7 of the company’s 2016 FDD.

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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