In this FDD Talk post, you’ll learn the following:
- Section I – Background information on The Learning Experience franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for The Learning Experience franchise, based on Item 7 of the company’s 2021 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for The Learning Experience franchise, based on Items 5 and 6 of the company’s 2021 FDD
- Section IV – Number of franchised and company-owned The Learning Experience 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 The Learning Experience’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- 2018, 2019, and 2020 average and median gross sales for the franchised and company-owned (separately stated) Learning Experience centers that were open for more than 48 months as of December 31 of the applicable year (“Mature Centers”)
- 2018, 2019, and 2020 average and median gross sales for the franchised and company-owned (separately stated) Learning Experience centers that were open 24-47 months as of December 31 of the applicable year (“Intermediate Centers”)
- 2020 average revenue, royalties, gross profit, salaries and benefits, school supplies, advertising, utilities and repairs, admin expenses, miscellaneous expense, total expenses, and EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent) for the 8 company-owned Mature Centers that corporate owned the entire year in 2020
Section I – Background Information
19 Things You Need to Know About The Learning Experience Franchise
Moves Forward with Albuquerque-Area Expansion
1. In late March 2021, The Learning Experience announced plans to expand into the Albuquerque, New Mexico metro area. The brand said it would open its first of three early education franchises to the area at 1510 Unser Blvd. SE in Rio Rancho. It will add a franchise on Paseo Del Norte in late 2021 and Coors Boulevard and St. Joseph Drive in the spring of next year.
2. Franchise locations are chosen by The Learning Experience’s real estate team, which considers areas with an influx of young families and a growing need for local options and access to high-quality childcare and early education. The centers serve children aged from six weeks up to six years. The expected initial investment for franchisees of The Learning Experience ranges from $525,000 up to $2.63 million as of last May.
3. The Learning Experience offers programs so children can learn, play, and grow and develop their cognitive, social, literacy, and motor skills and more. Each location will be a new 10,000-square-foot building with up to 5,000 square feet for an outdoor playground and have 30 staff members and teachers. Nationally, The Learning Experience expects to open 100 new locations by the end of 2022, joining the current 275 centers across the country.
4. According to Stephanie Retherford, regional vice president of The Learning Experience, “We do all of the groundwork and set up franchisees for success as an independent franchise business owner. Our real estate team pinpoints the best location and works with developers to build, equip, and set up the center. And we provide world-class training and ongoing operational support for franchisees to successfully run their business while making a positive difference in the lives of children and families in their community.”
Franchisee’s Passion Fuels Growth
5. In late April 2021, Franchise Times did an article on Grace Huxtable-Mount, a franchisee of The Learning Experience. Huxtable-Mount’s journey to becoming a franchisee of The Learning Experience jumps all over the place, from being born in the Bahamas to teaching children of U.S. military personnel in Japan. But at the heart of it all lies her passion for working with kids and families.
6. Born into a “huge Jamaican family,” with her number of cousins reaching the double digits, Huxtable-Mount was raised in a small town in central Florida by her aunt and uncle, who didn’t have the chance to complete their education. Huxtable-Mount grew up hearing that “education is the key to success in this country,” and if she ever got off track, her family quickly reminded her. “The expectation was there that I needed to do better than what they were able to do,” she said.
7. When she eventually started teaching – a decision her family “was not excited about” because it didn’t earn a high salary – she said she never envisioned becoming an entrepreneur. But, she continued, “I realized that I have to do something I’m passionate about and can connect with. Helping children and teaching them to learn how to read, and helping other teachers are things I was passionate about.”
8. A tutoring business was next, which Huxtable-Mount launched with her husband. She wrote the curriculum and taught while her husband helped with marketing and technology. Huxtable-Mount said, “It was a lot of work, and definitely worth it, but I decided for our next venture, I didn’t want to start something from scratch. I thought having the systems in place already would be helpful, and I wanted to be a part of a bigger team so it’s not all just on me to create everything, and I did a lot of research on childcare franchises.”
9. After narrowing it down to her top three brands and visiting their headquarters, Huxtable-Mount chose The Learning Experience, a Florida-based brand with more than 260 units. She opened her first franchise in 2009, in Jacksonville.
10. “When I met the Weissman family, I just felt an instant connection,” Huxtable-Mount said of the founders. “Of all the childcare franchises, they understood that the quality of education and a child’s interactions and experiences with us were just as important as the business, and I just loved that balance.” She was also drawn to the brand’s proprietary curriculum, which was fun, colorful, and involved learning through play – a novel teaching method at the time which many other brands didn’t offer, she said, making The Learning Experience a leader in the space.
11. Another bend in Huxtable-Mount’s path came in 2012, after she earned her doctorate in educational leadership from the University of Florida and took a celebratory trip to Europe to visit friends. There she discovered the opportunity to teach for the U.S. military in different countries. One of the benefits of The Learning Experience, Huxtable-Mount added, is having the option to run her business semi-absentee once she got her team in place – which allowed her to teach at a middle school in Okinawa, Japan.
12. “I can’t believe I did all of that. It was a 13-hour time difference, so I would get up early and stay up late to check in with our center’s managers back in Jacksonville before I went to my teaching position,” Huxtable-Mount said. “I still managed the business and came back on school holidays. It was an amazing experience; I was definitely pushing myself to the limits there. I also become pregnant with my second child and my son was born in Japan.”
13. She’s since grown her Learning Experience portfolio to five locations and said her biggest challenge has been balancing her empathy for struggling parents with valuing her program for what it’s worth.
14. On a final note, Huxtable-Mount said, “You have to have heart and care about your customers and what they need, and adjust with the times in order to survive any crisis. I grew very rapidly, and it took me awhile to get pricing right, but eventually I did, because I realized we have an excellent program…maintaining trust with families and building up teachers gave me the ability to charge what I needed to charge, because ultimately this is a business, and you need to operate it in a way it will continue to grow and thrive.”
15. The Learning Experience traces its history to 1980 when Michael Weissman opened his first childcare center in Florida. Weissman’s son, Richard Weissman, later joined the company. The Weissman family had a passion for childhood education and developed a program that combines child care and early childhood pre-kindergarten education for children between the ages of six weeks and six years. The curriculum includes yoga, foreign languages, philanthropy, sign language, basic math, English language skills, and science.
16. The Learning Experience continued to grow over the next few years, and in 1987, the brand acquired Tutor Time, a childcare company with over 200 centers in 25 states and four countries.
17. In the late 1990s, the Weissmans decided to retire from running The Learning Experience and Tutor Time. Just a few years later, in 2002, the Weissmans decided to return to The Learning Experience and bought back the brand. After re-acquiring The Learning Experience, the Weissmans grew the brand through franchising.
18. In 2014, the Weissmans sold a majority interest in the company to Norwest Venture Partners. A few years later, in 2018, The Learning Experience was acquired by Golden Gate Capital, a leading private equity investment firm. Although the Weissmans no longer own the majority interest, Richard Weissman continues to run the company, following his father’s retirement in 2014. Today, there are The Learning Experience locations across the United States.
Entrepreneur’s Franchise 500
19. The Learning Experience ranked No. 87 on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Detailed estimates of The Learning Experience franchise costs, based on Item 7 of the company’s 2021 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Detailed information on The Learning Experience’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
- Outlets at the Start of the Year: 164
- Outlets at the End of the Year: 190
- Net Change: +26
- Outlets at the Start of the Year: 190
- Outlets at the End of the Year: 209
- Net Change: +19
- Outlets at the Start of the Year: 209
- Outlets at the End of the Year: 239
- Net Change: +30
- Outlets at the Start of the Year: 22
- Outlets at the End of the Year: 23
- Net Change: +1
- Outlets at the Start of the Year: 23
- Outlets at the End of the Year: 25
- Net Change: +2
- Outlets at the Start of the Year: 25
- Outlets at the End of the Year: 24
- Net Change: -1
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
Part 1 – Average Gross Sales for Certain Franchised and Company-Owned Centers for January 1, 2018 to December 31, 2020
- The following tables directly below set forth the historical average annual revenue during the fiscal period between January 1, 2018 and December 31, 2020 for centers that had been open for at least 24 months as of the fiscal end date in 2018, 2019, and 2020.
- As of December 31, 2018, there were 190 centers in the United States, 157 of which had been open for at least 24 months. As of December 31, 2019, there were 209 centers in the United States, 173 of which had been open for at least 24 months. As of December 31, 2020, there were 239 centers in the United States, 197 of which had been open for at least 24 months.
- The tables below include franchised and company-owned centers.
- The information below is divided into subsets by center type: Centers that were open for more than 48 months (“Mature Centers”) and Centers that were open for 24-47 months (“Intermediate Centers”), as follows:
A. Mature Centers
Mature Franchised Centers
- Number of Centers: 112
- Average Gross Sales: $1,489,563
- Number and Percentage of Centers That Exceeded the Average: 50 (44.6%)
- Median Gross Sales: $1,425,353
- Number of Centers: 130
- Average Gross Sales: $1,573,137
- Number and Percentage of Centers That Exceeded the Average: 60 (46.2%)
- Median Gross Sales: $1,515,423
- Number of Centers: 138
- Average Gross Sales: $1,066,053
- Number and Percentage of Centers That Exceeded the Average: 67 (48.6%)
- Median Gross Sales: $1,058,861
Mature Company-Owned Centers
- Number of Centers: 5
- Average Gross Sales: $1,767,417
- Number and Percentage of Centers That Exceeded the Average: 2 (40.0%)
- Median Gross Sales: $1,548,850
- Number of Centers: 7
- Average Gross Sales: $1,682,839
- Number and Percentage of Centers That Exceeded the Average: 2 (28.6%)
- Median Gross Sales: $1,577,777
- Number of Centers: 8
- Average Gross Sales: $1,200,310
- Number and Percentage of Centers That Exceeded the Average: 4 (50.0%)
- Median Gross Sales: $1,209,029
B. Intermediate Centers
Intermediate Franchised Centers
- Number of Centers: 37
- Average Gross Sales: $1,375,330
- Number and Percentage of Centers That Exceeded the Average: 15 (40.5%)
- Median Gross Sales: $1,308,783
- Number of Centers: 33
- Average Gross Sales: $1,288,262
- Number and Percentage of Centers That Exceeded the Average: 15 (45.5%)
- Median Gross Sales: $1,244,621
- Number of Centers: 42
- Average Gross Sales: $840,316
- Number and Percentage of Centers That Exceeded the Average: 18 (42.9%)
- Median Gross Sales: $782,302
Intermediate Company-Owned Centers
- Number of Centers: 3
- Average Gross Sales: $1,368,144
- Number and Percentage of Centers That Exceeded the Average: 1 (33.3%)
- Median Gross Sales: $1,161,821
- Number of Centers: 3
- Average Gross Sales: $2,380,331
- Number and Percentage of Centers That Exceeded the Average: 1 (33.3%)
- Median Gross Sales: $1,946,248
- Number of Centers: 9
- Average Gross Sales: $917,998
- Number and Percentage of Centers That Exceeded the Average: 4 (44.4%)
- Median Gross Sales: $847,944
Part 2 – Average Annual Gross Sales, Selected Expenses, and EBITDAR for Mature Company-Owned Centers for January 1, 2020 to December 31, 2020
- The table below reflects the average annual gross sales, selected expenses, and EBITDAR (which means “earnings before interest, taxes, depreciation, amortization, and gross rent”) for the 8 Mature Company-Owned Centers that corporate owned the entire year in 2020. All numbers are reported in thousands.
Revenue: $1,218 (100.0%)
Less: Royalties: $107 (8.8%)
Gross Profit: $1,111 (91.2%)
- Salaries and Benefits: $620 (50.9%)
- School Supplies: $63 (5.2%)
- Advertising: $22 (1.8%)
- Utilities and Repairs: $102 (8.4%)
- Admin Expenses: $41 (3.4%)
- Miscellaneous Expense: $26 (2.1%)
- Total Expenses: $874 (71.8%)
EBITDAR: $237 (19.5%)
- “Gross Sales” includes cash and credit sales for goods and services provided, but does not include sales or use taxes.
- The Gross Sales information is reported to the franchisor by each Franchised Center for royalty reporting. The franchisor has not audited the Gross Sales reports and it has not verified (i) the accuracy of the information or (ii) whether such information was prepared in accordance with generally accepted accounting principles. The franchisor does not believe that any Center overstated Gross Sales nor does it believe that any Mature Company-Owned Center understated the selected expenses.
- In Part 2, the franchisor has not included any cost and expense data related to any Franchised Centers because it does not have the ability to poll such data through its point of sale system and its franchisee reports are not handled in a consistent manner.
- This means the earnings claims figures for Franchised Centers do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit.
- You should conduct an independent investigation of the costs and expenses you will incur in operating your Center. Franchisees or former franchisees listed in the Disclosure Document may be one source of this information.
- The franchisor has no reason to believe that comparable expense categories and EBITDAR of Mature Franchised Centers materially differ from those presented for Mature Company-Owned Centers. Company-Owned Centers may be able to take advantage of economies of scale not available to franchisees.
- The information in Part 2 is based on the actual results for the Mature Company-Owned Centers, as maintained in the franchisor’s corporate accounting records. The franchisor uses generally-accepted accounting principles in maintaining its records. The franchisor has not audited, confirmed, or verified this information.
- You will incur expenses that are not identified in Part 2. For example, base rent, CAM charges, property taxes and lease administration fees, interest, income taxes, depreciation, and amortization are not deducted in arriving at EBITDAR.
- Part 2 reflects a deduction for royalties in the amount of 7% of Gross Sales, as well as the LEAP Interactive Fee, Software Fee, and Lease Administration Fee; however, Company-Owned Centers do not pay a royalty fee but do contribute to the Brand Awareness Fund at the same rate as franchisees; namely, 1% of Gross Sales.
- The Mature Company-Owned Centers spent between 1% and 5% on marketing and advertising.
- The information in Part 1 does not include centers that closed during the reporting year. In Part 1, the “center type” is as of December 31, 2020. For example, if a center was converted from a Company-Owned Center to a Franchised Center during the reporting period, but prior to December 31, 2020, the center is categorized as a Franchised Center in Part 1.