Detailed Information on Mathnasium’s Initial Franchise Fee, Royalty Fee + 17 Other Fees (Items 5 and 6, 2022 FDD)

1.  Initial Franchise Fee:  $26,500 to $49,000

• The initial franchise fee is $49,000 for your first franchise. You must pay the entire fee when you sign the Franchise Agreement. This fee is fully earned by Mathnasium once paid and is not refundable except as described below.

• If Mathnasium elects to withdraw its approval of you as a franchisee during or at the conclusion of the initial training program, 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.

• The initial franchise fee is used (in addition to other purposes) to pay for the costs of the initial training program, up to 6 hotel room nights during the initial training program, the apprenticeship training program, and the first 6 months of your base royalty (first Mathnasium center only).

• For training programs, you must pay all other expenses, including travel and lodging, not otherwise stated as covered.

• Before the initial franchise fee and Franchise Agreement are submitted, franchisees are required to submit to a background check which includes a criminal/civil record search and may include a credit check. Mathnasium will not countersign a Franchise Agreement until it has received results of the search and check.

• If Mathnasium determines that you are unsuitable to run a Mathnasium center as a result of background check and credit check results, it reserves the right to not accept you as a franchisee and to terminate any agreements between it and you and return to you any initial franchise fee paid.

• If you are purchasing an additional franchise or if you are employed as a Center Director at a Mathnasium center and meet certain eligibility requirements described in the Manuals, you will pay a discounted initial franchise fee of $26,500.

• Mathnasium may also finance $15,000 of the initial franchise fee if you are purchasing an additional franchise or are employed as a Center Director and meet Mathnasium’s eligibility requirements when you purchase your first franchise. If it does, you will pay $11,500 when you sign the Franchise Agreement and the balance of $15,000 you will pay through a promissory note to Mathnasium with simple interest at the rate of 10% per year (or the maximum rate permitted by law) with a term of 20 months.

• Mathnasium is a participant in the International Franchise Association VetFran Program. If you are a qualifying veteran honorably discharged from the U.S. Armed Forces (Navy, Marines, Army, Air Force, Coast Guard, and National Guard) or if you are an active duty member of the U.S. Armed Forces on the effective date of the Franchise Agreement, the initial franchise fee for your first Mathnasium center will be reduced by 25%.

• The initial franchise fee will be reduced by 25% if you are currently employed as a teacher, or have been employed as a teacher (whether or not credentialed) within the last five years; if you are currently employed as or have been employed as an administrator of an educational institution within the last five years; or if you graduated with a bachelor’s, master’s, or doctorate degree in education within the last 10 years.

• If you choose to pay the initial franchise fee by credit card, you must also pay Mathnasium all credit card processing fees it incurs. Currently, the charge is between 2.5% and 3.5% of the transaction amount.

• The range of actual initial franchise fees charged in Mathnasium’s last fiscal year ending December 31, 2020 was from $0 to $49,000, the higher amount being the amount charged for initial fees for the first unit.

• Mathnasium reserves the right to change the initial franchise fee or discounts given at anytime before you purchase a franchise.

2.  Monthly Royalty:  initially, 10% of your monthly Gross Receipts from all sources as a result of operating your center, plus a base royalty fee of $500 per month (payable on the first Mathnasium center only). Beginning in the 24th month of operation of the center, the base royalty fee plus the greater of (i) the 10% monthly royalty or (ii) $1,500.

• Due Date:  Monthly on the 20th day of the following month.

• If applicable, payment of the base royalty fee begins on the 20th day of the first full month after the Franchise Agreement is signed. Payment of the base royalty and monthly royalty begins the first month each Mathnasium center opens. The minimum royalty comes into effect and is payable beginning in the 24th month after your center opens only in lieu of the monthly royalty if it is greater than 10% of the center’s monthly Gross Receipts.

• Mathnasium presently provides a royalty rebate for its top performers of 2% on royalties paid on monthly gross receipts. For a franchisee to qualify for this rebate, all Mathnasium centers owned by that franchisee must be operating under current Franchise Agreements. For a franchisee to qualify for the rebate for a given month, the franchisee’s total combined monthly revenues must rank in the top 50% of all such combined revenues for all U.S based Mathnasium franchisees (in addition to being in full compliance with Mathnasium’s operating systems).

• Mathnasium also presently provides a royalty fee rebate during the first six months after an existing franchisee acquires an existing Mathnasium center from the previous owner of 100% of the monthly royalty fee, with a cap of $1,500 per month ($9,000 maximum).

• Royalty rebate policies are reviewed annually and Mathnasium may change or terminate them at any time.

• “Gross Receipts” are defined as the total of all receipts (all money or things of value received) derived from all sources in connection with the operation of the Center, including, without limitation, student tuition, registration and testing fees, sales of learning materials, hourly per student private tutoring, and any other products or services provided in connection with the operation of the center or which are promoted or sold under or using the Marks, and without deducting your costs or expenses, salaries, overrides, or bonuses payable to your employees or independent tutors.

• “Gross Receipts” shall exclude only sales tax receipts that you must by law collect from customers and that you pay to the government, customer refunds actually paid, and coupons or promotional discounts approved by Mathansium.

3.  Monthly Marketing Fee:  $250, plus 2% of your monthly Gross Receipts from all sources as a result of operating your center

• Due Date:  Monthly on the 20th day of the following month.

• The marketing fee for franchise operators who became Mathnasium franchisees on or prior to March 4, 2013 is 2% of monthly gross receipts.

4.  Technology License Fee:  currently $110 per month per Mathnasium center, subject to increase

• Due Date:  Currently, payable monthly on the 20th day of the following month.

• For each Mathnasium center, currently payable on the 20th day of the next month after the month in which you execute the Franchise Agreement.

• You must use Mathnasium’s centralized computer system for business management at your center. Mathnasium has invested in and currently uses a proprietary technology system built on a platform it developed.

• Mathnasium also pays storage costs for the data produced by franchisees’ operations of their software.

• As of the date of the current disclosure document, the technology fee charged by Mathnasium to franchisees to cover these costs is $110 per Mathnasium center per month.

• The technology fee currently covers the cost of your use of Mathnasium’s proprietary technology system (currently called “Radius”) and storage requirements for your first Mathnasium center, but may be used by Mathnasium to cover any technology-related costs. Additional Mathnasium centers require payment of 1 additional monthly technology fee each.

• Mathansium reserves the right to change the centralized computer system at any time and to use the technology fees paid by you to cover any technology-related costs.

• 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 center.

5.  Additional Technology Fee:  currently $45 per month per Mathnasium center, subject to increase

• Due Date:  Currently, payable monthly on the 20th day of the following month.

• 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.

6.  Annual Convention Fee:  currently $250 per franchisee

• Due Date:  Payable annually, generally in May.

• This fee is charged to partially defray Mathnasium’s costs of holding an Annual Convention. The fee is charged per franchisee and covers attendance for one person only. Additional attendees will be charged an additional fee of $250 per person.

• Attendance is required. Even if you are unable to attend a particular annual convention, the annual convention fee charged to you that year is not refundable.

7.  Administrative Fee for Late Payment:  $100 every 2 weeks until payment is made

• Due Date:  Beginning on the 1st day after payment is due and every 2 weeks thereafter.

• Payable if you are 1 day late on payments due to Mathnasium.

8.  Administrative Fee for Late Submission of Reports:  $100 every 2 weeks until reports submitted

• Due Date:  Beginning on the 1st day after the report is due and every 2 weeks thereafter.

• Payable if you are 1 day late in submitting reports.

9.  Non-Compliance:  $300 per month for each non-complying incident

• Due Date:  30 days following receipt of written notice.

• Applies if you fail to make changes requested in a written notice.

10.  Returned Payment Service Charge:  $60 per returned payment by bank for insufficient funds

• Due Date:  When requested by Mathnasium.

• Charge covers Mathnasium’s processing costs.

11.  Shipping Costs:  actual cost of shipping only

• Due Date:  When incurred.

12.  Payments for “Chargeable Items” Purchased from Mathnasium:  prices determined by Mathnasium

• Due Date:  As stated on invoice.

• Mathnasium may offer supplemental teaching materials or promotional items for your use or sale which you may, at your option, purchase. These are called “Chargeable Items.”

13.  Transfer Fee:  $7,000

• Due Date:  On approval of transfer.

• Payable if you transfer your franchise.

14.  Training Fee:  $3,000

• Due Date:  Before training begins.

• This fee is only paid by a transferee who is purchasing an existing and operating Mathnasium center.

• This fee is nonrefundable and covers the initial training program for up to 2 people.

• Transferees who purchase an existing and operating Mathnasium center are required to pay Mathnasium a nonrefundable training fee of $3,000 prior to attending training.

• This fee covers the costs of the initial training program for up to two people, but does not cover the costs of your hotel rooms or any other incidental costs you may incur in connection with attending the initial training and apprenticeship program.

15.  Renewal Fee:  $7,000

• You will not be required to pay a renewal fee if, during the calendar year preceding renewal, the Gross Receipts of your Center were in the top 30% of all individual Mathnasium centers in the United States that have been open for 24 months or more.

16.  Initial Training Program Tuition for Additional Trainees:  $750 per person

• Due Date:  Before training begins.

• Payable if more than 2 individuals will attend the initial training program.

17.  Additional Marketing Assessment:  pro rata amount to cover special advertising program

• Due Date:  When incurred.

• Determined by a majority vote of all franchised Mathnasium centers (one vote per Mathnasium center).

18.  Local or Regional Cooperative Advertising:  as determined by cooperative. All money spent on cooperative advertising will be a credit against the local advertising requirement.

• Due Date:  Determined by cooperative.

• Mathnasium may designate cooperatives of 2 or more Mathnasium centers. Company-owned or affiliate-owned Mathnasium centers will participate in cooperatives and will have one vote per Mathnasium center.

19.  Reimbursement of Taxes:  actual amount of taxes assessed against Mathnasium due to your operation of your center

• Due Date:  Upon demand.

• Payable if your state imposes such a tax on Mathnasium.