FDD Talk 2017: What You Need to Know About the Kumon Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk 2017 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 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Kumon franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Kumon’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• average enrollment numbers, after 12 months of operation, for the top 25%, bottom 25%, and all Kumon Centers that opened in 2015 and 2014, respectively

• average enrollment numbers, after 24 months of operation, for the top 25%, bottom 25%, and all Kumon Centers that opened in 2014

• average enrollment numbers for the top 25%, bottom 25%, and all Kumon Centers that have been open for 3 years or more (“Mature Centers”), as of December 31, 2016

Section I – Background Information

14 Things You Need to Know About the Kumon North America Franchise

Holds First Ever Student Conference

1.  At the end of July, 25 high-achieving Kumon students from the United States and Canada were selected to attend the first-ever student conference at the Disney Coronado Springs Resort in Orlando Florida. These 25 students were selected from over 3,200 applicants who are currently studying at least three years above their grade level at their respective Kumon Centers.

2.  During the conference, students had the chance to learn from each other through a variety of group discussions, team building activities, and critical thinking sessions. They also received the unique opportunity to hear from students who have successfully completed the Kumon Program.

3.  Dominique Ciccarelli, Ed. M., education expert for Kumon North America, said, “The purpose of the conference was to inspire and challenge students to follow their dreams, and what better place to do that than where ‘dreams come true’.”

Expanding Into New Regions

4.  Kumon North America continues to grow its presence throughout Canada and the United States. Nearly every month so far in 2017, the company has announced new centers opening in new and existing markets. The most recent announcement, from early September, said that Kumon will continue its expansion in the Bay Area, with the opening of its third learning center in Santa Clara, California.

5.  There are currently 106 Kumon Math and Reading Centers in the Bay Area, including 33 in Santa Clara County. The company says that Santa Clara County is an ideal location for its continued expansion as the county is a part of Silicon Valley, which is home to many of the world’s largest high-tech corporations.

6.  Larry Lambert, Vice President of Franchise Recruitment at Kumon North America, said, “Innovation is such a prevalent part of Silicon Valley and because of that we see a great deal of importance placed on education opportunities in the area. We are committed to delivering the highest quality of education that parents of Santa Clara are accustomed to providing for their children.”

7.  The new Santa Clara location is a part of Kumon’s plan to open 100 new centers in the U.S. by the end of 2017. Other new locations will be opening in El Paso, Texas; Fort Mill, South Carolina; Huntington Beach, California; Vero Beach, Florida; as well as several other cities.

Ranked Number One in Its Industry for the 17th Consecutive Year by Entrepreneur Magazine

8.  In May, Entrepreneur Magazine recognized the Kumon North America franchise system as the “Best of the Best” in the tutoring category. Kumon has ranked number one in its industry category in Entrepreneur’s Franchise 500 for the past 17 years.

9.  Kumon North America is noted as having the second largest enrollment of students, outside of Kumon’s home country Japan, having recently surpassed its 400,000 subject enrollment milestone at 2,200 learning centers in Canada and the United States.

10.  Larry Lambert, Vice President of Franchise Recruitment at Kumon North America, said, “As parents continue to prioritize educational opportunities outside of the classroom in order to compete in today’s competitive environment, Kumon has remained the leader in the education franchise industry.”

Company History

11.  The Kumon Method was first developed in 1954 by Toru Kumon, a Japanese math teacher, in order to help his son Takeshi, who was not doing well on his math tests. Toru began making math worksheets for his son and believed in fostering a self-learning mindset in children, which is the basic principle behind the Kumon Method.

12.  With his father’s help, Takeshi did better in school and his friends and peers took notice; other parents began asking Toru to help their children with his methods. In 1958, the Kumon Institute of Education was established in Osaka, Japan and during its first year, the school had about 300 students.

13.  The first franchised Kumon location opened in Tokyo, Japan in 1962. Since then, Kumon has grown exponentially and there are now over 25,000 learning centers around the world.

Entrepreneur’s Franchise 500

14.  Kumon has appeared on Entrepreneur’s annual Franchise 500 list every year in the last decade. The company’s highest rank was No. 11 in 2017, while its lowest rank was No. 40 in 2016. Kumon also ranked on Entrepreneur’s 2017 Top Global Franchises list at No. 6.

Section II – Estimated Costs

• Please click here for detailed estimates of Kumon franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Kumon’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

• Enrollments are subject-students that are reported to Kumon by franchisees. For example, one student may enroll in Math and Reading subjects. This student would count as two enrolled subject-students. You charge tuition, and correspondingly pay a royalty to Kumon, for each subject-student.

Part 1 – Average Number of Enrollments After 12 Reporting Months

• The following chart represents information on the enrollments for Kumon Centers after 12 months of operation.

Year Center Opened:  2015 (centers opened during the fiscal year 2015 and still open as of December 31, 2016, excluding Centers that have been transferred to a new franchisee)