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

• Section I – Background information on the Huntington Learning Center franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Huntington Learning Center franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Huntington Learning Center franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Huntington Learning Center outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Huntington Learning Center’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, highest, and lowest gross revenue; percent of sales by service (learning center service; test prep service; subject tutoring service; academic evaluation fees, registration fees, and miscellaneous receipts); average conversion rate (academic evaluation conversion, enrollment conversion); average enroll rate (learning centers and prep centers that used coaching or virtual conferencing); average hourly tuition (learning center tuition, test prep tuition); and average length of stay (learning center LOS, test prep LOS) for the 250 franchised Huntington Learning Centers open all of 2020 under the same franchisee (“Open Franchise Centers”)

• 2020 average rent and square footage, and average call center and coaching services fees at the Open Franchise Centers

• 2020 average salaries (teacher pay as a percent of revenue, assistant director base salary, center director base salary) at the Open Corporate Centers

• certain expense items listed on the end-of-year profit and loss statements that Huntington Learning Center franchisees submit to the franchisor

Section I – Background Information

14 Things You Need to Know About the Huntington Learning Center Franchise

Partners with Fortune 500 Companies to Offer Education Support to Employees’ Families

1.  In early October 2020, Huntington Learning Center announced that it would be partnering with Fortune 500 companies nationwide to provide in-person and virtual academic programs, including the recently launched study hall, tutoring and test prep programs, homework help, and academic performance coach program, to their employees’ families. This expanded business-to-business offering will allow companies to tap into Huntington’s proven learning methods and provide much-needed support to their employees, many of whom are struggling to manage a full-time workload with family obligations.

2.  Anne Huntington, president of Huntington Learning Center, said, “Huntington Learning Center is a family-founded, family-run, and family-focused company. Since the onset of the pandemic, we’ve heard from thousands of parents that they need more resources, and we, like the Fortune 500 companies we’re partnering with, are rising to the occasion to help meet that demand. With approximately 300 locations across the nation, we’re uniquely positioned to be able to offer educational support to corporate employees and their families in many major metro and suburban markets across the country. Bridging the work and school gap for parents is just another layer of the foundation we continue to build in order to provide families and students access to the best resources possible.”

3.  The business-to-business offerings are an expansion on previous initiatives launched by Huntington at a localized level prior to the pandemic. The new nationwide contracts are scaling Huntington’s ability to support its franchisees and support even more families across the country.

4.  Results from the company’s Back-to-School report affirm that Huntington’s 43-year track record of proven success continues to propel student achievement. The report concluded that the average test scores of students engaged with Huntington test prep courses increased by 229 SAT and 5.4 ACT points, leading to an average of $71,000 in scholarship offers awarded to Huntington graduates. Additionally, Huntington reported 2+ grade levels of growth in reading and math within three months.

5.  Programs are available for students grades K-12. Huntington Learning Center provides skill-building programs, subject-specific tutoring, test prep for the SAT, ACT, and state and standardized tests, Homework Help, HutingtonHelps LIVE, Academic Performance Coach, and Huntington Advantage programs, as well as free weekly webinars.

Appoints New Chief Financial Officer

6.  In late July 2021, Huntington Learning Center announced the appointment of Bob Scopinich as its new chief financial officer, with the retirement of Jim Emmerson, who served as the company’s chief financial officer for 24 years. In this role, Scopinich will be tasked with building on Huntington Learning Center’s 44-year track record and strong foundation helping students and franchisees succeed.

7.  Anne Huntington Sharma, president of Huntington Learning Center, said, “I am thrilled to welcome Bob Scopinich to the team. His unique experience working in the franchise industry, and specifically the franchise education space, qualifies him as the right fit to succeed Jim. The company is currently going through meaningful transformations on all fronts and I am confident that Bob will add value, innovation and leadership to get results.”

8.  Scopinich joins Huntington after serving as the Goddard Systems, Inc.’s chief financial officer for 18 years. During his tenure at Goddard, Scopinich was involved in all aspects of the business, with a particular emphasis on financial performance, information technology, unit growth, and human resources. During his tenure, Goddard grew from 110 franchised locations to over 550 locations while improving margins. Franchisee financial performance and multi-unit ownership also increased significantly during this time.

9.  Scopinich added, “This is an exciting new chapter for me. I look forward to making a positive impact and fulfilling Huntington’s mission and vision. As a leader, I strive to create high-performing teams that seamlessly integrate their work across all stakeholders, from corporate staff to franchisees and vendors. I have always been results-driven, and Huntington is the industry leader. I believe this will be an exciting and successful journey for us.”

10.  As CFO, Scopinich leads multiple departments including finance, accounting and HR, and franchise development, in addition to being an integral member of the executive team. Scopinich holds a Bachelor of Science degree in Accounting from Penn State University in University Park, Pennsylvania.

Company History

11.  Huntington Learning Center was founded in 1977 by Eileen and Dr. Ray Huntington in Oradell, New Jersey. Eileen Huntington worked as a middle school and high school teacher at the time and saw firsthand that many students entered secondary school without the basic skills they needed to succeed. Ray Huntington was working as a senior business analyst for a Fortune 100 company and had been a college-level instructor in math and statistics and shared his wife’s vision to help students succeed. At the time, there wasn’t a tutoring industry and the Huntingtons wanted to fill this niche.

12.  The Huntingtons’ hunch turned out to be correct – there was a high demand for the kind of supplemental education services they were providing. They soon left their full-time jobs to pursue their new enterprise full time. As demand for their services grew, the Huntingtons opened additional locations in the area. In 1985, the Huntingtons began franchising Huntington Learning Center and the company grew quickly. By the end of the 1990s, there were over 200 Huntington Learning Centers in operation.

13.  Although it seemed like Huntington Learning Center was thriving, in 2000, the company defaulted on payments to some of its creditors who filed a court petition seeking involuntary Chapter 7 bankruptcy. However, Huntington fought the petition and repaid the creditors. The company subsequently slowed its growth and sold some of its company-owned centers. Today, the Huntingtons continue to own and operate Huntington Learning Center.

Entrepreneur’s Franchise 500

14.  Huntington Learning Center ranked No. 60 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Huntington Learning Center franchise costs, based on Item 7 of the company’s 2021 FDD.

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

• Please click here for detailed information on Huntington Learning Center’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  250
• Outlets at the End of the Year:  262
• Net Change:  +12

2019

• Outlets at the Start of the Year:  262
• Outlets at the End of the Year:  286
• Net Change:  +24

2020

• Outlets at the Start of the Year:  286
• Outlets at the End of the Year:  286
• Net Change:  0

Company-Owned

2018

• Outlets at the Start of the Year:  35
• Outlets at the End of the Year:  34
• Net Change:  -1

2019

• Outlets at the Start of the Year:  34
• Outlets at the End of the Year:  16
• Net Change:  -18

2020

• Outlets at the Start of the Year:  16
• Outlets at the End of the Year:  14
• Net Change:  -2

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• There were 250 franchised Huntington Learning Centers open under the same franchisee throughout 2020 (the “Open Franchise Centers”).

Part 1 – 2020 Gross Revenue of the 250 Franchised Huntington Learning Centers Open All of 2020 Under the Same Franchisee (“Open Franchise Centers”)

• Average Gross Revenue:  $363,155
• Number Greater Than Average:  99
• Percent Greater Than Average:  40%
• Lowest Gross Revenue:  $69,811
• Highest Gross Revenue:  $2,284,323
• Median Gross Revenue:  $312,273

Part 2 – 2020 Percent of Sales to Gross Revenue by Service for the Open Franchise Centers

Learning Center

• Average Ratio of This Service’s Sales to Total Sales:  56%
• Number Greater Than Average:  129
• Percent Greater Than Average:  52%
• Median Ratio of This Service’s Sales to Total Sales:  57%

Test Prep

• Average Ratio of This Service’s Sales to Total Sales:  31%
• Number Greater Than Average:  125
• Percent Greater Than Average:  50%
• Median Ratio of This Service’s Sales to Total Sales:  31%

Subject Tutoring

• Average Ratio of This Service’s Sales to Total Sales:  8%
• Number Greater Than Average:  95
• Percent Greater Than Average:  38%
• Median Ratio of This Service’s Sales to Total Sales:  7%

Other

• Average Ratio of This Service’s Sales to Total Sales:  4%
• Number Greater Than Average:  134
• Percent Greater Than Average:  54%
• Median Ratio of This Service’s Sales to Total Sales:  5%

• Other sales consist of Academic Evaluation fees, registration fees, and miscellaneous.

Part 3 – 2020 Academic Evaluation Rate by Service at the Open Franchise Centers

• “AE Rate” is the ratio of the number of Academic Evaluations (AE) to the number of inquiries.

Learning Center

• Average AE Rate:  58%
• Number Greater Than Average:  125
• Percent Greater Than Average:  50%
• Median AE Rate:  58%

Test Prep

• Average AE Rate:  60%
• Number Greater Than Average:  139
• Percent Greater Than Average:  56%
• Median AE Rate:  63%

Part 4 – 2020 Enroll Rates by Service at the Open Franchise Centers

• “Enroll Rate” is the ratio of the number of enrollments to the number of AEs.

Learning Center

• Average Enroll Rate:  61%
• Number Greater Than Average:  129
• Percent Greater Than Average:  52%
• Median Enroll Rate:  62%

Test Prep

• Average Enroll Rate:  56%
• Number Greater Than Average:  136
• Percent Greater Than Average:  54%
• Median Enroll Rate:  58%

Part 6 – 2020 Learning Center Enroll Rates for Huntington Learning Centers That Used Coaching or Virtual Conferencing

• During 2020, 180 Huntington Learning Centers used Coaching and 66 Huntington Learning Centers used Virtual Conferencing.

Coaching

• Average Enroll Rate:  72%
• Number Greater Than Average:  101
• Percent Greater Than Average:  56%
• Median Enroll Rate:  75%

Virtual Conferencing

• Average Enroll Rate:  81%
• Number Greater Than Average:  36
• Percent Greater Than Average:  55%
• Median Enroll Rate:  83%

Part 7 – 2020 Test Prep Enroll Rates for Huntington Learning Centers That Used Coaching or Virtual Conferencing

• During 2020, 159 Huntington Learning Centers used Coaching and 47 Huntington Learning Centers used Virtual Conferencing.

Coaching

• Average Enroll Rate:  80%
• Number Greater Than Average:  85
• Percent Greater Than Average:  53%
• Median Enroll Rate:  83%

Virtual Conferencing

• Average Enroll Rate:  84%
• Number Greater Than Average:  34
• Percent Greater Than Average:  72%
• Median Enroll Rate:  100%

Part 8 – 2020 Hourly Tuition by Service at the Open Franchise Centers

Learning Center

• Average Hourly Tuition:  $53
• Number Greater Than Average:  113
• Percent Greater Than Average:  45%
• Median Hourly Tuition:  $53

Test Prep

• Average Hourly Tuition:  $73
• Number Greater Than Average:  132
• Percent Greater Than Average:  53%
• Median Hourly Tuition:  $73

Part 9 – 2020 Length of Stay by Service at the Open Franchise Centers

• “Length of Stay” or “LOS” is the number of hours a student uses before ceasing instruction.

Learning Center

• Average LOS:  89
• Number Greater Than Average:  115
• Percent Greater Than Average:  46%
• Median LOS:  87

Test Prep

• Average LOS:  45
• Number Greater Than Average:  112
• Percent Greater Than Average:  45%
• Median LOS:  43

Part 10 – Average Monthly Fees Paid for Call Center, Coaching Services, and Virtual Conferencing Services in 2020

• During 2020, 244 franchised Huntington Learning Centers used the Call Center, 203 used Coaching Services, and 111 used Virtual Conferencing.

Call Center

• Average Fee:  $781
• Number Greater Than Average:  121
• Percent Greater Than Average:  50%
• Median Fee:  $774

Coaching Services

• Average Fee:  $271
• Number Greater Than Average:  68
• Percent Greater Than Average:  34%
• Median Fee:  $205

Virtual Conferencing Services

• Average Fee:  $480
• Number Greater Than Average:  40
• Percent Greater Than Average:  36%
• Median Fee:  $300

Part 11 – Premises Monthly Rent and Square Footage at the 14 New Franchised Huntington Learning Centers That Opened During 2020

• During 2020, franchisees signed or negotiated leases for 14 new franchised Huntington Learning Centers in the following states: DC, FL, GA, IL, NJ, NY, TN, TX, VA, WA.

• Rent is the first year’s base rent and common area maintenance charges. Generally, rent increases in subsequent years due to negotiated rent increases and increases in common area maintenance charges.

Rent

• Average Rent:  $4,110
• Number Greater Than Average:  5
• Percent Greater Than Average:  36%
• Median Rent:  $3,664

Square Footage

• Average Square Footage:  1,588
• Number Greater Than Average:  6
• Percent Greater Than Average:  43%
• Median Square Footage:  1,485

Part 12 – 2020 Salaries at the 19 Company-Owned Centers Open All or Part of 2020

• This table presents information about 2020 salaries (excluding bonus, taxes, and benefits) for those employed by these centers.

• In 2020, Company-Owned Centers employed 791 teachers, 28 Center Directors, and 21 Assistant Directors.

Teacher Pay as a Percent of Revenue

• Average:  20.7%
• Number Greater Than Average:  277
• Percent Greater Than Average:  58%
• Median:  20.7%

Assistant Director Base Salary

• Average:  $34,135
• Number Greater Than Average:  11
• Percent Greater Than Average:  52%
• Median:  $34,007

Center Director Base Salary

• Average:  $59,104
• Number Greater Than Average:  15
• Percent Greater Than Average:  54%
• Median:  $59,868

• The franchisor calculated the number greater than average and percent greater than average based on the number of centers in which teachers worked. The franchisor calculated these statistics for Assistant Directors and Center Directors based on the number of individuals who worked at these centers.

• In addition to salaries, Huntington Learning Corporation pays bonuses to its Assistant Directors and Center Directors.

• Teacher pay as a percent of revenue and teacher, Assistant Director, and Center Director salaries may differ substantially at franchised Huntington Learning Centers.

Part 13 – Expense Items on the End-of-Year P&L Statement

• The following table presents certain expense items listed on the end-of-year profit and loss statement franchisees submit to the franchisor. Your profit and loss statement may contain additional or different items.

• Gross payroll – franchisee
• Gross payroll – Teacher Supervisor, Program Administrator
• Gross payroll – part-time teachers
• Gross payroll – any other part-time staff
• Payroll taxes (Employer FICA, FUTA, etc.)
• Employee benefits
• Advertising (TV, radio, direct mail, print, internet, etc.)
• Payment to Advertising Cooperative Association
• Building (rent, utilities, janitor, maintenance, etc.)
• Repairs and maintenance
• Utilities (gas, water, electric)
• Call Center Fees
• Coaching Services Fees
• Training and Technology Fee
• Supplies
• Professional fees (accounting, legal, etc.)
• Telephone and internet service provider
• Accounting and payroll expenses
• Travel and entertainment
• Royalty
• Advertising Fee
• Insurance (property, liability, health, workers’ compensation, etc.)
• Depreciation and amortization
• Debt service
• Training (travel, food, lodging, etc.) and convention
• Taxes, other than payroll
• Other expenses

• “Principal Fixed Expenses” are rent, advertising, and full-time payroll. In addition, the franchisor includes Call Center fees, Virtual Conferencing fees, Coaching fees, and Training and Technology fees as such expenses, since it can readily identify them. Fixed expenses are the expenses you can forecast with some confidence, because they do not change significantly from month to month.

• “Principal Variable Expenses” are teacher pay, royalty, and Huntington Ad Fund payments. Variable expenses are expenses that vary depending on a number of factors, including revenue.

• “Principal Expense” is the sum of Principal Fixed Expenses and Principal Variable Expenses. You may have other or different principal fixed or principal variable expenses, especially during your start-up period.

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