Huntington Learning Center: $522K Average Sales vs. $154K-$264K Franchise Cost

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

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

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

Section III – Number of franchised and company-owned Huntington Learning Center 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 Huntington Learning Center franchise opportunity

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

• 2022 average, highest, and lowest gross revenue; average and median ratio of sales to gross revenue (learning center, test prep, subject tutoring, other); average and median conversion rate (academic evaluation rates, learning center enroll rates, exam prep enroll rates); average and median hourly tuition (learning center, test prep); average length of stay (learning center, test prep); and average and median call center and coaching & virtual conferencing monthly fees paid for the 257 franchised Huntington Learning Centers open during 2021 or before (“Open Franchise Centers”)

• 2022 average and median rent and square footage at the 8 new franchised Huntington Learning Centers that opened during 2021 or 2022

• 2022 average salaries (teacher pay as a percent of revenue, assistant director base salary, center director/manager base salary) at the 19 company-owned Huntington Learning Centers open all or part of 2022

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

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

Section I – Huntington Learning Center Franchise Costs

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

• Initial Franchise Fee:  $36,000
• Online Initial Training:  $0 to $200
• Curricula and Testing Materials:  $18,957
• Furniture, Computers:  $39,305 to $44,105
• Start-Up Supplies:  $3,700 to $5,700
• Advertising:  $19,295
• Training and Technology Initial Fee:  $6,000
• Architect:  $0 to $3,200
• Security and Utility Deposits; License Fees:  $500 to $3,000
• Real Estate and Improvements:  $0 to $77,000
• Exterior Sign:  $500 to $7,500
• Interior Graphics:  $2,175 to $5,875
• Professional Fees:  $500 to $3,000
• Insurance:  $1,625 to $6,500
• Additional Funds – 3 Months:  $25,506 to $27,696
• Total Estimated Huntington Learning Center Franchise Costs:  $154,063 to $264,028

Section II – Huntington Learning Center’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

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

• Initial Franchise Fee:  $36,000
• Royalty:  9.5% of Gross Revenue; $2,000 per month minimum
• Huntington Advertising Fund:  2% of Huntington Services Revenue and eTutoring Revenue; $500 per month minimum
• Contract Services Advertising Fund:  2% of Contract Services Revenue
• Advertising:  minimum of $57,000 per year
• CoOp:  fees average about $2,000 per month; some impose no fee

Section III – Number of Franchised and Company-Owned Huntington Learning Center Outlets

Franchised

2020

• Outlets at the Start of the Year:  285
• Outlets at the End of the Year:  282
• Net Change:  -3

2021

• Outlets at the Start of the Year:  282
• Outlets at the End of the Year:  277
• Net Change:  -5

2022

• Outlets at the Start of the Year:  277
• Outlets at the End of the Year:  276
• Net Change:  -1

Company-Owned

2020

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

2021

• Outlets at the Start of the Year:  14
• Outlets at the End of the Year:  13
• Net Change:  -1

2022

• Outlets at the Start of the Year:  13
• Outlets at the End of the Year:  10
• Net Change:  -3

Section IV – News Updates on the Huntington Learning Center Franchise

• Huntington Learning Center Earns Top Spot on 2024 Entrepreneur Franchise 500 List and Announces Round of Strategic Promotions

• This Minnesotan Owns 5 Huntington Learning Centers

• Need for Publicly Funded Learning Programs Remains as American Rescue Plan Dollars Diminish

• Huntington Learning Center Reports Record-Breaking Q1 Revenue, Demonstrates Impressive Growth

• Huntington Learning Center Study Finds That 50 Hours of Instruction Can Combat the Effects of Learning Loss Students Experienced From the COVID-19 Pandemic

• Huntington Learning Center Ranked No. 113 on Entrepreneur’s 2024 Franchise 500 List

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

Part 1 – 2022 Gross Revenue of Huntington Learning Center Businesses Opened During 2021 or Before

• Number of Centers Open the Entire Year:  257
• Average Gross Revenue:  $522,068
• Number and Percent Greater Than Average:  107 / 42%
• Lowest Gross Revenue:  $59,244
• Highest Gross Revenue:  $2,692,251
• Median Gross Revenues:  $449,598

Part 2 – 2022 Gross Revenue by Quartile of the 257 2022 Open Franchise Centers

Bottom 25%

• Number of Franchised Centers in This Quartile:  64
• Average Gross Revenue:  $220,415
• Number and Percent Greater Than Average:  37 / 58%
• Lowest Gross Revenue:  $59,244
• Highest Gross Revenue:  $294,027
• Median Gross Revenues:  $231,963

Mid-Lower 25%

• Number of Franchised Centers in This Quartile:  64
• Average Gross Revenue:  $370,164
• Number and Percent Greater Than Average:  31 / 48%
• Lowest Gross Revenue:  $299,093
• Highest Gross Revenue:  $444,443
• Median Gross Revenues:  $367,602

Mid-Upper 25%

• Number of Franchised Centers in This Quartile:  64
• Average Gross Revenue:  $546,801
• Number and Percent Greater Than Average:  30 / 47%
• Lowest Gross Revenue:  $449,598
• Highest Gross Revenue:  $638,639
• Median Gross Revenues:  $542,549

Top 25%

• Number of Franchised Centers in This Quartile:  65
• Average Gross Revenue:  $944,296
• Number and Percent Greater Than Average:  23 / 35%
• Lowest Gross Revenue:  $643,810
• Highest Gross Revenue:  $2,692,251
• Median Gross Revenues:  $849,383

All

• Number of Franchised Centers:  257
• Average Gross Revenue:  $522,068
• Number and Percent Greater Than Average:  107 / 42%
• Lowest Gross Revenue:  $59,244
• Highest Gross Revenue:  $2,692,251
• Median Gross Revenues:  $449,598

Part 3 – Sales by Service of the 257 2022 Open Franchise Centers

Learning Center

• Average Ratio of Sales to Gross Revenue:  62%
• Number and Percent Greater Than Average:  110 / 47%
• Median Ratio of Sales to Gross Revenue:  61%

Test Prep

• Average Ratio of Sales to Gross Revenue:  24%
• Number and Percent Greater Than Average:  112 / 48%
• Median Ratio of Sales to Gross Revenue:  23%

Subject Tutoring

• Average Ratio of Sales to Gross Revenue:  7%
• Number and Percent Greater Than Average:  83 / 36%
• Median Ratio of Sales to Gross Revenue:  6%

Other

• Average Ratio of Sales to Gross Revenue:  7%
• Number and Percent Greater Than Average:  122 / 53%
• Median Ratio of Sales to Gross Revenue:  7%

Part 4 – Academic Evaluation Rates of the 257 2022 Open Franchise Centers

• The AE Rate is the ratio of the number of Academic Evaluations (AEs) to the number of inquiries.

Learning Center

• Average AE Rate:  59%
• Number and Percent Greater Than Average:  126 / 49%
• Median AE Rate:  59%

Test Prep

• Average AE Rate:  62%
• Number and Percent Greater Than Average:  145 / 56%
• Median AE Rate:  64%

Part 5 – Learning Center Enroll Rates at the 2022 Open Franchise Center

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

System

• Number of Participating Centers:  257
• Average Enroll Rate:  63%
• Number and Percent Greater Than Average:  135 / 53%
• Median Enroll Rate:  63%

Using Coaching

• Number of Participating Centers:  116
• Average Enroll Rate:  71%
• Number and Percent Greater Than Average:  61 / 53%
• Median Enroll Rate:  72%

Using Virtual Conferencing

• Number of Participating Centers:  133
• Average Enroll Rate:  69%
• Number and Percent Greater Than Average:  48 / 36%
• Median Enroll Rate:  70%

Part 6 – Exam Prep Enroll Rates at the 2022 Open Franchise Centers

System

• Number of Participating Centers:  257
• Average Enroll Rate:  58%
• Number and Percent Greater Than Average:  146 / 57%
• Median Enroll Rate:  62%

Using Coaching

• Number of Participating Centers:  99
• Average Enroll Rate:  77%
• Number and Percent Greater Than Average:  58 / 59%
• Median Enroll Rate:  82%

Using Virtual Conferencing

• Number of Participating Centers:  91
• Average Enroll Rate:  78%
• Number and Percent Greater Than Average:  52 / 57%
• Median Enroll Rate:  80%

Part 7 – Hourly Tuition by Service at the 2022 Open Franchise Centers

Learning Center

• Average Hourly Tuition:  $58
• Number and Percent Greater Than Average:  109 / 47%
• Median Hourly Tuition:  $58

Test Prep

• Average Hourly Tuition:  $79
• Number and Percent Greater Than Average:  106 / 46%
• Median Hourly Tuition:  $79

Part 8 – Length of Stay of the 2022 Open Franchise Centers

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

Learning Center

• Average LOS:  87
• Number and Percent Greater Than Average:  113 / 49%
• Median LOS:  86

Test Prep

• Average LOS:  42
• Number and Percent Greater Than Average:  87 / 38%
• Median LOS:  40

Part 9 – Average Monthly Fees Paid by Franchised Centers Using Call Center Services, Coaching Services, and Virtual Conferencing Services in 2022

Call Center

• Number of Participating Franchised Centers:  186
• Average Fee Per Month:  $1,138
• Number and Percent Greater Than Average:  56 / 30%
• Median Fee Per Month:  $971

Coaching & Virtual Conferencing Services

• Number of Participating Franchised Centers:  175
• Average Fee Per Month:  $673
• Number and Percent Greater Than Average:  61 / 35%
• Median Fee Per Month:  $416

Part 10 – Premises Rent and Square Footage at New Franchised Centers

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

• These Huntington Learning Centers are located in AZ, CT, FL, GA, NC, SC, and TX.

Rent

• Average Rent:  $4,147
• Number and Percent Greater Than Average:  4 / 50%
• Median Rent:  $3,861

Square Footage

• Average Square Footage:  1,928
• Number and Percent Greater Than Average:  3 / 38%
• Median Square Footage:  1,579

Part 11 – Salaries at the 19 Company-Owned Centers Open All or Part of 2022

• This table presents information about salaries (excluding bonus, taxes, and benefits) for the 692 teachers, 37 Center Directors/Center Managers, and 10 Assistant Directors who Company-Owned Centers employed in 2022.

Teacher Pay as a Percent of Revenue

• Average:  21.5%
• Number and Percent Greater Than Average:  261 / 55%
• Median:  12.2%

Assistant Director Base Salary

• Average:  $44,769
• Number and Percent Greater Than Average:  6 / 67%
• Median:  $44,990

Center Director/Manager Base Salary

• Average:  $62,123
• Number and Percent Greater Than Average:  6 / 30%
• Median:  $60,015

• 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/Center Managers.

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

• Based on the figures in this section, Gross Margin is $159,466, which is Gross Revenue of $522,068 less Principal Expenses of $362,602. Gross Margin Percent, the ratio of Gross Margin to Gross Revenue, is 31%.

Part 12 – Expense Items on the End-of-Year P&L Statement That Franchisees Must Submit to Huntington

• 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 CoOp
• Building (rent, utilities, janitor, maintenance, etc.)
• Repairs and maintenance
• Utilities (gas, water, electric)
• Call Center Fees
• Conferences Services Fees
• Supplies
• Professional fees (accounting, legal, etc.)
• Telephone and internet service provider
• Accounting and payroll expenses
• Travel and entertainment
• Royalty
• Huntington Advertising Fund Fee
• Contract Services Advertising Fund 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, full-time payroll, Call Center fees, Coaching and Virtual Conferencing fees, and Training and Technology fees. You may consider other expenses to be Principal Fixed Expenses. Fixed expenses are the expenses you can forecast with some confidence, because they typically do not change significantly from month to month.

• “Principal Variable Expenses” are teacher pay, royalty, and Huntington Advertising Fund payments. Variable expenses are expenses that vary depending on many 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.

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