Mathnasium Franchise: Average Sales ($311K) vs. Cost ($112K-$149K)

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

Section I – Estimated initial investment (franchise costs) for a Mathnasium franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Mathnasium franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Mathnasium outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the Mathnasium franchise opportunity

Section V – Presentation and analysis of Mathnasium’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022, 2021, and 2020 average, median, high, and low gross receipts for the franchised Mathnasium centers that were open and operated by the same franchisee for 12 months or longer as of December 31, 2022, 2021, and 2020, respectively, broken down by quartiles

• 2022 average, median, high, and low accrual basis revenue; average instructor payroll expenses, royalties, marketing expenses, office supplies and furniture expenses, professional fees, other expenses, rent, utilities and maintenance expenses, and operating profit achieved by 846 franchised Mathnasium Centers, all of which have been open and operated by the same franchisee for at least 12 months as of December 31, 2022

• 2022 average, median, high, and low gross receipts per center for the franchised Mathnasium Centers that were open and operated by the same franchisee for 36 months or longer as of December 31, 2022, broken down by the number of Mathnasium Centers that each franchisee owned and operated as of December 31, 2022 (1 center, 2 centers, 3-5 centers, 6+ centers)

Section VI – Key ratios, comparables, computations, and analyses for the Mathnasium franchise opportunity (exclusive content for Platinum subscribers)

Section I – Mathnasium Franchise Costs

• Mathnasium franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $49,000 for your first franchise; $26,500 if you are buying an additional franchise
• Expenses While Training:  $2,500 to $3,000
• Base Royalty Fee:  $0 to $3,000
• Technology Fee:  $141 to $846
• Rent (1st and last month’s rent):  $6,000 to $14,000
• Paint, Carpet, and Tenant Improvements:  $5,500 to $13,500
• Furniture, Signs, Equipment, and Supplies:  $10,000 to $17,000
• Insurance:  $1,200 to $1,500
• Business License and Registration:  $250 to $1,000
• Professional Services (legal and/or accounting):  $1,300 to $2,000
• Phone and Utilities:  $500 to $1,000
• Video Surveillance and Related Equipment:  $500 to $2,500
• Pre-Open Advertising:  $4,000
• Additional Funds for 4 Months:  $32,000 to $40,000
• Total Estimated Mathnasium Franchise Costs (1st center):  $112,891 to $149,346
• Total Estimated Mathnasium Franchise Costs (subsequent center):  $90,891 to $129,846

Section II – Mathnasium’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Mathnasium’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  $49,000 for your first franchise; $26,500 if you are buying an additional franchise
• Monthly Royalty:  initially, 10% of your monthly Gross Receipts from all sources as a result of operating your Center. Beginning in the 24th month of operation of the Center, the greater of (i) the 10% monthly royalty or (ii) $1,500
• Base Royalty:  $500 per month
• Monthly Marketing Fee:  $250 plus 2% of your monthly Gross Receipts
• Digital and Local Marketing Fee:  a minimum of $1,000 per month

Section III – Number of Franchised and Company-Owned Mathnasium Outlets

Franchised

2020

• Outlets at the Start of the Year:  935
• Outlets at the End of the Year:  927
• Net Change:  -8

2021

• Outlets at the Start of the Year:  927
• Outlets at the End of the Year:  948
• Net Change:  +21

2022

• Outlets at the Start of the Year:  948
• Outlets at the End of the Year:  952
• Net Change:  +4

Company-Owned

2020

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  7
• Net Change:  0

2021

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  3
• Net Change:  -4

2022

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

Section IV – News Updates on the Mathnasium Franchise

• Mathnasium Named “Top Franchise in Math Tutoring” in Entrepreneur Magazine’s Franchise 500

• Why Mathnasium Franchises Score an A-Plus

• Mathnasium Franchisee Looks to Grow from 39 to 80 Locations

• Mathnasium Adds New Leaders to Drive Growth

• Mathnasium Ranked No. 80 on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Mathnasium Franchise (Item 19, 2023 FDD)

Part 1 – 2020-2022 Gross Receipts

• Part 1 sets forth a historic financial performance representation for the period from (i) January 1, 2022 through December 31, 2022; (ii) January 1, 2021 through December 31, 2021; and (iii) January 1, 2020 through December 31, 2020. It includes average and median annual Gross Receipts of Mathnasium’s existing Mathnasium Centers that were open and operated by the same franchisee for 12 months or longer as of December 31, 2022, 2021, and 2020, respectively, broken down by quartiles.

• In this Item 19, “Gross Receipts” means the monthly Gross Receipts from all sources in the operation of a Mathnasium Center, including student tuition, registration and testing fees, sales of learning materials, hourly per student private tutoring, and any other approved services. “Gross Receipts” excludes sales tax receipts that franchisees must collect from customers and that are paid to the government, customer refunds actually paid, and coupons and approved promotional discounts.

2022

• Number of Mathnasium Centers Operating at Calendar Year End:  952
• Number of Mathnasium Centers Included in Subset:  855
• Average Gross Receipts:  $311,473
• Median Gross Receipts:  $273,274
• Number of Mathnasium Centers Meeting or Exceeding Average:  339 / 39.6%
• Range of Gross Receipts (High to Low):  $1,250,397 – $22,604
• Growth of Average Gross Receipts from Prior Year Average Gross Receipts:  13.8%

• Average of Top 25%:  $546,418
• Median Gross Receipts:  $489,725
• Number of Mathnasium Centers Meeting or Exceeding Average:  77 / 36%
• Range of Gross Receipts (High to Low):  $1,250,397 – $388,030

• Average of Mid-Upper 25%:  $325,766
• Median Gross Receipts:  $325,281
• Number of Mathnasium Centers Meeting or Exceeding Average:  102 / 48%
• Range of Gross Receipts (High to Low):  $387,811 – $273,868

• Average of Mid-Lower 25%:  $230,759
• Median Gross Receipts:  $227,097
• Number of Mathnasium Centers Meeting or Exceeding Average:  100 / 47%
• Range of Gross Receipts (High to Low):  $273,274 – $192,131

• Average of Bottom 25%:  $143,015
• Median Gross Receipts:  $151,439
• Number of Mathnasium Centers Meeting or Exceeding Average:  128 / 60%
• Range of Gross Receipts (High to Low):  $191,828 – $22,604

2021

• Number of Mathnasium Centers Operating at Calendar Year End:  948
• Number of Mathnasium Centers Included in Subset:  853
• Average Gross Receipts:  $271,794
• Median Gross Receipts:  $235,834
• Number of Mathnasium Centers Meeting or Exceeding Average:  337 / 39.5%
• Range of Gross Receipts (High to Low):  $1,061,821 – $44,238
• Growth of Average Gross Receipts from Prior Year Average Gross Receipts:  20.7%

• Average of Top 25%:  $479,545
• Median Gross Receipts:  $432,569
• Number of Mathnasium Centers Meeting or Exceeding Average:  83 / 39%
• Range of Gross Receipts (High to Low):  $1,061,821 – $340,718

• Average of Mid-Upper 25%:  $281,942
• Median Gross Receipts:  $278,581
• Number of Mathnasium Centers Meeting or Exceeding Average:  97 / 45%
• Range of Gross Receipts (High to Low):  $340,551 – $236,313

• Average of Mid-Lower 25%:  $203,065
• Median Gross Receipts:  $201,815
• Number of Mathnasium Centers Meeting or Exceeding Average:  104 / 49%
• Range of Gross Receipts (High to Low):  $235,834 – $167,441

• Average of Bottom 25%:  $123,322
• Median Gross Receipts:  $126,108
• Number of Mathnasium Centers Meeting or Exceeding Average:  118 / 55%
• Range of Gross Receipts (High to Low):  $167,267 – $44,238

2020

• Number of Mathnasium Centers Operating at Calendar Year End:  927
• Number of Mathnasium Centers Included in Subset:  836
• Average Gross Receipts:  $225,261
• Median Gross Receipts:  $188,752
• Number of Mathnasium Centers Meeting or Exceeding Average:  312 / 37.3%
• Range of Gross Receipts (High to Low):  $1,085,199 – $35,764
• Growth of Average Gross Receipts from Prior Year Average Gross Receipts: (19.6%)

• Average of Top 25%:  $411,616
• Median Gross Receipts:  $368,759
• Number of Mathnasium Centers Meeting or Exceeding Average:  71 / 34%
• Range of Gross Receipts (High to Low):  $1,085,199 – $282,560

• Average of Mid-Upper 25%:  $228,292
• Median Gross Receipts:  $224,435
• Number of Mathnasium Centers Meeting or Exceeding Average:  93 / 44%
• Range of Gross Receipts (High to Low):  $282,504 – $188,862

• Average of Mid-Lower 25%:  $160,266
• Median Gross Receipts:  $158,890
• Number of Mathnasium Centers Meeting or Exceeding Average:  99 / 47%
• Range of Gross Receipts (High to Low):  $188,642 – $135,426

• Average of Bottom 25%:  $100,870
• Median Gross Receipts:  $107,307
• Number of Mathnasium Centers Meeting or Exceeding Average:  120 / 57%
• Range of Gross Receipts (High to Low):  $135,401 – $35,764

Part 2 – 2022 Reported P&L Expenses

• Part 2 sets forth average accrual basis revenue, median accrual basis revenue, the range of accrual basis revenue, average instructor payroll expenses, average royalties, average marketing expenses, average office supplies and furniture expenses, average professional fees, average other expenses, average rent, utilities and maintenance expenses, and average operating profit achieved by 846 franchised Mathnasium Centers for January 1, 2022 through December 31, 2022 (the “Measurement Period”), all of which have been open and operated by the same franchisee for at least 12 months as of December 31, 2022 (the “Covered Centers”).

• The Covered Centers provided Mathnasium with complete 2022 P&Ls prior to the issuance date of the 2023 disclosure document. 9 franchised Mathnasium Centers that were open and operated by the same franchisee for at least 12 months as of December 31, 2022 were excluded on the basis that they did not provide Mathnasium with complete 2022 P&Ls before the issuance date of the 2023 disclosure document.

Average Reported Accrual Basis Revenue:  $320,086 (100.0%)

• Median Accrual Basis Revenue:  $279,029
• Range of Accrual Basis Revenue (High to Low):  $1,250,539 – $11,554

Average Reported Expenses

• Instructor Payroll:  $64,225 (20.1%)
• Royalties:  $36,405 (11.4%)
• Marketing:  $18,369 (5.7%)
• Office Supplies and Furniture:  $7,175 (2.2%)
• Professional Fees:  $2,760 (0.9%)
• Other:  $46,710 (14.6%)
• Rent, Utilities and Maintenance:  $52,735 (16.5%)

Average Operating Profit:  $91,706 (28.7%)

• Revenue information reported on franchisees’ P&L statements differs from the reported Gross Receipts in that the P&L does not include any accounting adjustments made by franchisees in reporting Gross Receipts for the purpose of calculating royalty payments.

• “Accrual Basis Revenue” is defined as revenue that is recognized at the time it is earned, regardless of when payment is received.

• “Instructor Payroll” is defined as the cost of hourly employees and independent contractors who offer instruction to enrolled students and excludes owner salary or draw and management salaries, bonus payments, and benefits.

• “Royalties” are defined as base royalty fees, monthly royalty fees, technology fees, and marketing fees paid to Mathnasium.

• “Marketing” is defined as the cost of local Mathnasium Center marketing efforts.

• “Office Supplies and Furniture” is defined as the cost of furniture (e.g., chairs, tables, etc.), office supplies, and computer equipment (e.g., papers, pencils, laptops, electronic tablets, etc.) used in normal business operations.

• “Professional Fees” are defined as fees paid to third-party service providers, such as attorneys, accountants, and other consultants who provide professional business advice and guidance.

• “Other Expenses” are defined as the sum of other operational costs required to operate the Mathnasium Center, including business licenses, permits, training expenses, travel and entertainment, and any miscellaneous business expenses not captured in the other defined categories.

• “Rent, Utilities and Maintenance” are defined as all costs related to the leased operating space, repairs and maintenance, telephone, internet, utilities, and other occupancy expenses.

• “Operating Profit” is defined as the Average Accrual Basis Revenue, minus the sum of the above reported average expenses. The percentage presented above was determined by dividing the average Operating Profit by the Average Accrual Basis Revenue.

Part 3 – 2022 Gross Receipts by Number of Mathnasium Centers Owned and Operated by Franchisee

• Part 3 sets forth a historic financial performance representation for the period from January 1, 2022 through December 31, 2022. It includes average and median annual Gross Receipts of Mathnasium’s existing Mathnasium Centers that were open and operated by the same Franchisee for 36 months or longer as of December 31, 2022, broken down by the number of Mathnasium Centers that each Franchisee owned and operated as of December 31, 2022.

• The chart below shows the Average Gross Receipts per included Mathnasium Center, broken down by the number of Mathnasium Centers that each Franchisee owned and operated as of December 31, 2022.

1 Center

• Number of Mathnasium Centers Included:  327
• Number of Franchisees Included:  327
• Average Gross Receipts per Mathnasium Center:  $298,090
• Number of Centers Met/Exceeded Average:  139
• Percentage of Centers Met/Exceeded Average:  42.5%

• Median Gross Receipts per Mathnasium Center:  $266,945
• Highest Gross Receipts per Mathnasium Center:  $885,359
• Lowest Gross Receipts per Mathnasium Center:  $31,662

2 Centers

• Number of Mathnasium Centers Included:  136
• Number of Franchisees Included:  68
• Average Gross Receipts per Mathnasium Center:  $302,570
• Number of Centers Met/Exceeded Average:  47
• Percentage of Centers Met/Exceeded Average:  34.6%

• Median Gross Receipts per Mathnasium Center:  $261,646
• Highest Gross Receipts per Mathnasium Center:  $891,292
• Lowest Gross Receipts per Mathnasium Center:  $65,715

3-5 Centers

• Number of Mathnasium Centers Included:  116
• Number of Franchisees Included:  34
• Average Gross Receipts per Mathnasium Center:  $385,200
• Number of Centers Met/Exceeded Average:  43
• Percentage of Centers Met/Exceeded Average:  37.1%

• Median Gross Receipts per Mathnasium Center:  $339,481
• Highest Gross Receipts per Mathnasium Center:  $1,233,737
• Lowest Gross Receipts per Mathnasium Center:  $88,368

6+ Centers

• Number of Mathnasium Centers Included:  117
• Number of Franchisees Included:  11
• Average Gross Receipts per Mathnasium Center:  $391,788
• Number of Centers Met/Exceeded Average:  52
• Percentage of Centers Met/Exceeded Average:  44.4%

• Median Gross Receipts per Mathnasium Center:  $365,271
• Highest Gross Receipts per Mathnasium Center:  $1,250,397
• Lowest Gross Receipts per Mathnasium Center:  $109,840

• “Franchisee” is defined, collectively, as: (a) an individual or entity to whom Mathnasium or its affiliate has granted a Mathnasium franchise pursuant to a Mathnasium franchise agreement; and (b) any and all other entities owned by or affiliated with such individual or entity that are also parties to Mathnasium franchise agreements with Mathnasium or its affiliate.

• The above results were calculated by Mathnasium based on reports furnished to it by its franchisees. It is important to note that neither the submitting franchisees nor Mathnasium audited this information.

• Some Mathnasium Centers have earned this amount. Your individual results may differ. There is no assurance you will earn as much.

Section VI – Mathnasium Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️