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Considering a Kumon Franchise For 2023? Franchise Cost and Profits Explained

Written by: Patrick Findaro
Last Updated: January 18, 2023
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This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.

This article is based on its 2021 FDD

The franchisee will operate an after-school center that provides math and reading programs using the Kumon Method of learning (“Kumon Center”). Children are given the opportunity to attend Kumon Centers twice each week throughout the year for approximately 2030 minutes per subject and complete daily assignments at home on non-Center days.

Contents

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Let's talk about Kumon Center Franchise

In 1954, Toru Kumon developed the Kumon Method in Japan. Mr. Kumon was a Japanese high school math teacher and created a supplemental math program for his son, who was struggling with second grade math. Mr. Kumon’s method was so successful that his son reached calculus by the sixth grade. This then turned into an international business and currently Mr. Tanabe was appointed President and has been a member of Kumon’s Board of Directors in October 2013.

As of December 31, 2019, approximately 4,200,000 students were studying the Kumon Method in approximately 25,000 after-school Centers in 58 countries. In North America, there were approximately 405,000 students studying it. We operated 21 company-owned Kumon Centers, and there were 1,547 franchised Kumon Centers.

Initial Franchise Fee for Kumon Centers

$1,000

Franchise Cost:

The total investment ranges from $74,428 – $156,590

Additional Cost Breakdown:

  • Training Agreement Deposit Fee: $500
  • Expenses while training: $5,150 – $8,880
  • Initial Franchise Fee: $1,000
  • Initial Purchase of Materials: $1,000
  • Architect Design: $0 – $10,000
  • Leasehold Improvements: $31,500 – $60,000
  • Security Deposit: $0 – $15,000
  • Rent: $2,500 – $5,000
  • Furniture, Equipment, Primary Sign & Supplies: $3,400 – $12,000
  • Notebook Computer: $400 – $2,000
  • Professional Fees: $1,000 – $3,000
  • Liability Insurance: $480
  • Business License, Name Registration: $100 – $200
  • Lead Management Telephone System: $480 – $600
  • Recommended Reading List: $2,550
  • Payroll Cost for Assistants (3 months): $7,350 – $8,820
  • New Center Marketing: $4,000 – $8,000
  • Additional Funds: $13,500 – $18,000

kumon center

Ongoing Franchise Costs and Fees:

 Royalty Structures:

$15 x the # of new students

$34 x the # of full paying students

$19.13 x the # of partially paying students

Sales Figures:

There were 1,547 franchised Kumon Centers across North America. While it does not disclose actual revenues made by new centers, they offer statistics for new Kumon Centers.

Year Franchised Center OpenedTotal Counts of Centers as of December 31, 2019Average/Median Number of Enrollments After 12 Reporting Months For Centers Openend in Year IndicatedCount (%) of Centers with Enrollments Equal To or Above the Average After 12 Reporting Months For Centers Opened in Year IndicatedAverage/Median Number of Enrollments Afeter 12 Reporting Months For Bottom 25% of Performing Centers by Year Opened (Count of Centers in thi Category)Average/Median Number of Enrollments After 12 Reporing Months For Top 25% of Performing Centers by Year Opened (Count of Centers in this Category)
20183581/7714 (40%)47 (8) / 49 (8)124 (9) / 122 (9)
20173987/8619 (49%)43 (10) / 45 (10)135 (9) / 125 (9)
20163197/9214 (45%)53 (7) / 52 (7)151 (7) / 133 (7)

Key Highlights from Sales Figures:

As seen in the third column, there is an average of 81 students enrolling after 12 months. We are unable to deduce the revenue from just the number of students enrolled because the pricing varies depending on a couple of factors such as the amount of subjects a student takes and whether they are enrolled with a partial payment or full payment plan.

Kumon North America, INC Income Statement:

 

Kumon North America, INC. And Subsidiaries (A Wholly-Owned Subsidiary of Kumon Institute of Education Co. Ltd.) Consolidated Statements of Income For the Years Ended December 31, 2019, 2018 and 2017

Revenues201920182017
Franchise fees and royalties$143,051,079$137,880,384$130,436,664
Sales of publications and supplies$2,633,814$2,583,860$2,499,964
Tuition and related fees – company-owned centers$6,472,750$8,180,090$9,058,418
Other revenue$2,230,799$1,782,175$2,125,940
Totaal revenues$154,388,442$150,426,509$144,120,986
Cost and operating expenses:   
Cost of revenues$30,382,808$31,792,069$31,526,700
Selling, general and administrative expenses$87,289,278$83,683,484$79,599,177
Income from operations:$117,672,086$115,475,553$111,125,877
Other income (loss)$36,716,356$34,950,956$32,995,109
Interest income net of interes expense of $269, $9,547 and $13,209, respectively$940,606$749,152$369,978
Other income (loss), net$1,011,934$(84,635)$614,993
Other income, net$1,952,540$664,517$984,971
come before provision for income taxes$38,668,896$35,615,473$33,980,080
Provision for income taxes$11,112,200$8,661,852$19,623,829
NET INCOME$27,556,696$26,953,621$14,356,251

Income Statement Key Insights:

The franchisor Kumon North America Inc has very solid financials and is seen in their net income of over $27.5 million for the year ending in 2019. This is small increase from 2018, but from 2017 to 2018 they saw almost 100% growth in net income.

sell-your-business-online kumon center

Competitions for Kumon Centers:

There will be competition from educational services offered on the Internet, tutoring institutes, tutoring centers, learning centers, test-prep centers, cram schools, individual tutors, self-tutoring programs, and other Centers. Some franchises that Kumon competes with are Club Z!, Mathnasium, and Tutoring Club.

Conclusion:

The Kumon Franchise offers a great opportunity to start a fulfilling business and join a well-respected company that has proven results year after year.

While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in the education industry.

Analysis Provided by: Brooks Gammill Vetted Biz Intern

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