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Kumon Franchise Cost & Fees

Date of Incorporation: 1958
Franchising Since: 1958
U.S. Headquarters: Teaneck, New Jersey
Country of Origin: Japan

Business Description: Kumon North America, Inc., is a wholly owned subsidiary of Kumon Institute of Education Company, Ltd., a Japanese corporation. The Kumon Method is a mastery-based system in which excellence is determined through speed and accuracy. The Kumon Math and Reading curriculum worksheets are the essence of the Kumon Method. There are 22 math levels and 24 reading levels covering material ranging from pre-school to college level.

Franchise Offer: The franchisee will operate an after-school center that provides math and reading programs using the Kumon Method of learning. Children are given the opportunity to attend Kumon Centers twice each week throughout the year for approximately 20-30 minutes per subject and complete daily assignments at home on non-Center days.

Financial Assistance: The franchisor does not offer direct or indirect financing nor do they guarantee any promissory note, lease or other obligation the franchisee may make to others.

Training and Assistance: The franchisor will provide the Instructor Development Program. The program consists of two semesters with four courses in the first semester and two courses in the second semester. The franchisor currently estimates that it will take approximately four to five months to complete the first semester. The franchisee must complete the first semester of the Program to Kumon’s satisfaction in order to be offered a franchise. If the franchisee successfully completes the first semester of the Program and is awarded a franchise, he or she must attend the second semester of the Program. The second semester requires travel to Kumon University in Teaneck, New Jersey following the opening of the Center. After completion of the Temporary License Period, the franchisee must complete Ongoing Training, which continues for the term of the franchise. Kumon has the right to require the franchisee to attend supplemental training courses during the Program if determined he or she needs them.

Territory: The franchisee will not receive an exclusive territory within the Kumon franchise organization for the operation of the center(s). He or she may face competition from other franchisees, from centers owned by the franchisor, or from other channels of distribution or competitive brands controlled by the franchisor.

Term of Agreement and Renewal: The length of the initial term is five years. If the franchisee is in good standing and has met the requirements for renewal, he or she can renew the franchise agreement for additional five-year terms.

Obligations and Restrictions: If the franchisee is an individual, he or she must instruct the students personally. He or she must be at the center during all student sessions except in extraordinary circumstances of a personal nature. He or she must devote full-time to the operation of the Kumon franchise throughout the franchise relationship. The franchisee may offer only the Kumon Math and Reading programs, and only in accordance with the Kumon method, using only Kumon materials as the instruction manual and other instructional materials in the center. The franchisor must pre-approve the use of any additional services, programs and/or products developed for the center.

Estimated Number of Units: 25,385

Investment Tables:
Initial Investment
Name of Fee Low High
Training Agreement Deposit Fee $500 $500
Expenses While Start-up Training (Instructor Development Program) $4,410 $6,820
Initial Franchise Fee $1,000 less, the $500 Deposit Fee if franchisee is obtaining their first Kumon Center.
Initial Purchase of Materials $1,000 $1,000
Architect Design $0 $9,500
Leasehold Improvements $30,000 $65,000
Security Deposit, If Required $0 $4,500
Rent $1,500 $4,500
Furniture, Equipment, Primary Sign & Supplies $0 $5,500
Notebook Computer at Kumon Center $600 $1,500
Professional Fees $1,000 $3,000
Liability Insurance $445 $445
Business License, Name Registration $100 $200
Business Phone Line and Internet Access $200 $400
Recommended Reading List $2,550 $2,550
Fingerprinting, Criminal Background Check $18 $60
Payroll Cost for Assistants (3 Months) $3,750 $4,125
New Center Marketing $4,000 $6,000
Additional Funds (3 Months) $13,500 $18,000
Estimated Total $64,073 $134,100
Other Fees
Type of Fee Amount
Royalty

Initial Enrollment Royalty Fee: For each reporting month, $15 times the number of newly enrolled students.

Monthly Royalty During Temporary License Period (TLP): $36 times the number of full-payment students enrolled, and $18 times the number of partially exempt and/or prorated tuition students for each Subject-Franchise.

Monthly Royalty after Completing the TLP: $32 times the number of full-paying students enrolled, and $16 times the number of partially exempt and/or prorated tuition students for each Subject-Franchise.

The franchisee must allow Kumon to make monthly electronic debits to account equal to the amount owed.

Administrative Fee for Late Payment 1.5% on the overdue amount each month or $75, whichever is higher.
Late Report Fee for Late Submission of Student Reports, Applications, and Tests $200 per month for the first month the franchisee is late; $500 for the second month the franchisee is late; $1,000 the third month the franchisee is late with increments of $1,000 per month thereafter.
Insufficient Funds $25 per EFT attempt that has insufficient funds to cover the amount owed.
Insurance $4.32 per Math student per year.
Indemnification Amount incurred by Kumon.
Shipping Costs for Materials Charged on per-order basis.
Relocation Fee $1,000
Payments for "Chargeable Items" Purchased from Kumon As stated on invoice.
Liquidated Damages— Termination by Franchisee Without Adequate Written Notice Three times the average monthly royalty in the three months immediately prior to franchisee’s last day of operating the Center.
Temporary Transfer to Kumon 10% of then current amount of Kumon's recommended tuition multiplied by the number of students enrolled at the Center for so long as Kumon has assumed operation of the Center(s).
Advertising Contribution At least the minimun amount set forth in the Operations Manual.

The above information has been taken from the FDD of Kumon. Year of FDD: 2015

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