In this FDD Talk 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 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a LearningRx franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned LearningRx outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of LearningRx’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• total revenue charged, total revenue collected, total expenses, net operating income (based on collections), and average revenue (case size) charged per student for the LearningRx affiliate-owned Center located in Colorado Springs, Colorado for the period of December 1, 2017 through November 30, 2018

• total local marketing expense, marketing development & research fund contribution, royalty payment to franchisor, bank and credit card fees, facilities, insurance, payroll (administrative), payroll (trainers), miscellaneous, outside services, supplies, travel and entertainment, and total expenses for reporting period for the LearningRx affiliate-owned Center located in Colorado Springs, Colorado for the period of December 1, 2017 through November 30, 2018

• revenue charged per program offering (ComprehendRx, Einstein, LiftOff, MathRx, ReadRx, ThinkRx, miscellaneous, assessment) as a percentage of total revenue charged for the LearningRx affiliate-owned Center located in Colorado Springs, Colorado for the period of December 1, 2017 through November 30, 2018

• average, median, high, and low gross receipts; average case size; average customer satisfaction survey (on a scale of 10); and average consultation-to-student conversion rate for the top 25%, mid-upper 25%, mid-lower 25%, and bottom 25% (by gross receipts) of the franchised LearningRx centers open during the full fiscal year December 1, 2017 through November 30, 2018

• average and median gross receipts for the top 50% and bottom 50% (by gross receipts) of the franchised LearningRx centers open during the full fiscal year December 1, 2017 through November 30, 2018

• average and median case size for core programs (October 1, 2017 to September 30, 2018)

Section I – Background Information

12 Things You Need to Know About the LearningRx Franchise

Celebrates 15 Years of Franchising with Lower Franchise Fees and Initial Investment

1.  In late September 2018, LearningRx announced that it was lowering its franchise fees and initial investment as part of its celebration to mark a major milestone: 15 years of franchising. The announcement comes on the heels of the personal brain training franchise being named No. 1 in Franchise Times’ education category for first-time franchisees. LearningRx was chosen for its unit volumes, return on investment, and online polling of Franchise Times readers.

2.  The company was also listed under Entrepreneur’s 10 Hottest Franchise Business Categories for 2018, named a top choice for Education Franchise by Franchise Rankings, and named a Top 100 Franchise by Franchise Gator.

3.  Tanya Mitchell, chief recruitment officer for LearningRx, said, “After 15 years of franchising, we’re proud to be at the forefront of a new and rapidly growing industry. The brain fitness industry is expected to surpass $6 billion in revenue by 2020, and our unique one-on-one brain training programs and continued research on cognitive skills training and neuroplasticity helps separate us from tutoring and ‘brain games.’”

Wins STAR Award for Website Best Practices at 2018 Franchise Leadership and Development Conference

4.  LearningRx won a STAR (Speaking To and Responding) Award at the 2018 Franchise Leadership and Development Conference (FLDC) in Atlanta. The STAR Awards represent the best in franchise recruitment, and winners were determined by mystery shoppers who contacted franchise brands to evaluate their performance in telephone follow-up, website response, franchisee satisfaction, and social media. The best performers were recognized with STAR Awards at a banquet on the final night of the 2018 FLDC.

5.  LearningRx tied with Smoothie King for Website Best Practices. According to a press release, LearningRx now has much more information to share with franchisee candidates, including randomized control trials that LearningRx has been involved with, along with testimonials from clients highlighting their own improvements through the programs they’ve taken.

6.  According to Tanya Mitchell, chief research and development officer for LearningRx, “We self-evaluate every year, and we’re opening ourselves up to growing after being on hold while we did the research needed for brain training. The published research makes it easier for us to talk with our franchisees, a lot of whom feel a calling.”

7.  LearningRx’s website now features many more videos from customers telling their stories of how the training has worked for them. Often, says Mitchell, people say, “I need to see it.”

Company History

8.  LearningRx was founded in 2002 by Ken Gibson in Colorado Springs, Colorado. The company traces its history back to the 1980s when Gibson worked as a specialist in visual processing in children. Gibson’s efforts serving children led him to commit to discovering what was necessary to help them consistently become better learners. Over the next few years, Gibson gathered clinical data and experience from his own practice, as well as a number of preschools, learning centers, and private schools he founded.

9.  In 1985, Gibson and his brother – Keith Gibson, Ph.D., a clinical psychologist – hosted a symposium on learning in Appleton, Wisconsin. Gleanings from the many educators, doctors, and professionals that participated in the symposium created the impetus that led directly to the development of the LearningRx cognitive training system. This system effectively uncovers underlying learning weaknesses and cognitive deficiencies. The weaknesses are strengthened through intense, one-on-one training.

10.  Gibson immediately started franchising the LearningRx concept and within a year, there were over 27 locations opened in the United States.

11.  As of 2016, following a lawsuit from the Federal Trade Commission (FTC), LearningRx now says its games are “designed by scientists to challenge core cognitive abilities.” Prior to this, according to the FTC, LearningRx had “deceptively claim[ed] their programs were clinically proven to permanently improve serious health conditions like ADHD (attention deficit hyperactivity disorder), autism, dementia, Alzheimer’s disease, strokes, and concussions.” LearningRx settled with the FTC by agreeing not to make the disputed assertions unless they had “competent and reliable scientific evidence,” which was defined as randomized controlled trials done by competent scientists.

Entrepreneur’s Franchise 500

12.  LearningRx did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of LearningRx franchise costs, based on Item 7 of the company’s 2019 FDD.

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

• Please click here for detailed information on LearningRx’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  78
• Outlets at the End of the Year:  75
• Net Change:  -3

2017

• Outlets at the Start of the Year:  75
• Outlets at the End of the Year:  70
• Net Change:  -5

2018

• Outlets at the Start of the Year:  70
• Outlets at the End of the Year:  63
• Net Change:  -7

Company-Owned

2016

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2017

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2018

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

Part 1 – Financial Performance Information for Affiliate-Owned LearningRx Center in Colorado Springs, Colorado for the Period of December 1, 2017 to November 30, 2018

• The financial performance figures in Part 1 represent historical information for the LearningRx affiliate-owned Center located in Colorado Springs, Colorado for the period of December 1, 2017 through November 30, 2018. This location has been operating since 2003.

A.  Revenue, Expenses, Income, and Profit for the Period of December 1, 2017 to November 30, 2018