For all potential owners of the business in the educational industry, we have revealed all data about the Kumon franchise initial investment cost. Also, we will reveal how much is Kumon franchise owner’s salary per year and the overall profit potential of this franchising business.
Key Takeaways:
- With more than 26,000 franchised locations, Kumon represents the biggest school brand in the world.
- Launching the new Kumon Center franchise in the U.S cost between $67,428 and $145,640.
- The student membership for these centers is between $120-$150 per subject, and the franchise owner must pay $19.13 of the franchisor royalty fee from this sum.
- The average-earning Kumon franchise makes between $172,800 and $216,000 in gross sales with a 30% profit margin.
- An average earning Kumon franchise owner makes between $51,840 and $64,800 of salary per year.
- These franchises deliver fast ROI; the owner will break even all initial investment costs after three years.
What Is Kumon
Kumon is an after-school math and reading brand that executes its learning program through centers operating in 59 countries in more than 26,000 worldwide locations.
In 1954, Japanese high school math teacher Toru Kumon developed the Kumon Method of Learning to help his son, who struggled with second-grade math. His method was so successful, and his son, by the sixth grade, has one of the bests calculus results in his class!
Children learning by this program curriculum can attend School Centers twice per week for approximately 20-30 minutes per subject with daily assignments that they do at home on non-Center days.
Currently, approximately 3,710,000 students are studying the Kumon Method; of those, approximately 371,000 students are attending this program in the U.S.
There are 20 math and 27 reading levels covering material ranging from pre-school to high school level, and every year more and more kids are attending this program which says a lot about its efficiency.
At present, Kumon as a brand offers one of the best school franchisees available on the market. In 1983 they started expanding by franchising thru the U.S.; currently, more than 1600 of these learning centers are operating across the whole of the USA.
How Much Does The Kumon Franchise Cost
The total investment cost to launch the Kumon Center franchise is between $67,428 and $145,640, including the Initial Fee of $3,000 and all other necessary expenses before opening day.
The highest cost of this investment will be expenses related to the leasehold improvements of the real estate where the Center will operate its business.
It is necessary to invest between $30,000 and $60,000 in building improvements, so investors must count that almost 50% of the initial investment cost will be related to this outlay.
Table of Kumon Franchise initial costs:
- Training Agreement Deposit Fee: $1,000
- Initial Licensing Fee: $1,000
- Initial Material for Work: $1,000
- Architect Design Fee: $0 – $10,000
- Leasehold Improvements: $30,000 – $60,000
- Security Deposits: $0 – $15,000 – As required by a landlord
- Rent: $1,000 – $4,000
- Furniture, Equipment, Signs, Supplies: $5,000 – $15,000
- Notebook Computer: $500 – $2,000
- Accountant, Lawyer Fees: $1,000 – $3,000
- Insurance Fee: $4.80 multiplied by the number of Math students per year
- Business Licenses: $100 – $200
- Kumon Management Tel. System: $480 – $600
- Recommended Reading Test: $2,600
- Criminal Background Check Fee: $18 – $60
- Assistants’ Payroll Costs: $9,750 – $11,700 – First 3 months
- Additional Funds: $13,500 – $18,000 – Working Capital for first 3 months
- ESTIMATED TOTAL INVESTMENT COST: $67,428 – $145,640
In some cases, this franchise may be considered a “school” under applicable zoning codes. Classification of the Center as a “school” may entail requirements such as separate bathrooms for boys and girls, water fountains, and accommodations for disabled persons, which can add more costs related to leasehold improvements!
Options To Fund Kumon Franchise Initial Investment Cost
This company doesn’t offer a direct financing option to its franchisees. So the investors who can’t finance all investment costs from their liquid assets will need to search for third-party funding sources.
What Are The Kumon Franchise Fees
One-time fees
Initial Licensing Fee
The Kumon Initial Fee consists of a Training Agreement Deposit Fee of $1,000, an Initial Licensing Fee of $1,000, and $1,000, which the investor pays the franchisor for the initial material work package.
When we add all these fees, an investor can expect to pay $3,000 for all initial fees!
New Center Marketing Fee
All new franchise locations within the first six months after the Center is open are obligated to spend $4,000 to promote, market, and advertise new franchises locally!
However, it is a one-time cost because this franchisor doesn’t require their franchisees to contribute monthly to the National Advertising Fee, which some of the other franchising system practice.
Ongoing Kumon Fees
Royalty Fee
The franchise owner pays franchisor royalties that are between $34 and $38.25 per every full-payment student enrolled or between $17 and $19.13 per every part-payment student enrolled.
- Full-payment students are the ones that attend both Math and Reading classes.
- Part-payment students are the ones that follow only Math or only Reading lessons.
Children in the U.S. who attend only one subject pay approximately $130, and one who takes both classes pays roughly $260 per month of membership.
So Kumon franchise owners can expect that they will need to pay for franchisor royalties between 26% to 30% per month from all gross sales that are generated thru students’ membership fees!
Initial Enrollment Royalty Fee
Every franchise location, for each reporting month, must redirect to the franchisor bank account $15 from the $50 initial membership fee that all newly enrolled students pay.
Students pay this fee only at the beginning, which means that franchisee will need to pay the franchisor only once per every student for costs related to the initial enrolment royalty fee.
Rent Fee
The Kumon franchise owner can expect that they will need to pay between $1,000 and $4,000 per month to the landlord for costs related to leasing real estate for work.
These learning franchise centers operate in retail facilities such as a storefront, shopping centers, or malls.
The franchisor doesn’t accept franchise locations whose space is less than 1,000 square feet. Leasing fees depend on state and territory, so investors must estimate this fee according to the cost of leasing for their geographical region!
How Much Is Kumon Franchise Profit
Average Gross Revenue Per Location Per Year
Average-earning Kumon franchises generate gross sales between $172,800 and $216,000 per year from their students’ monthly membership fees.
Expected Kumon gross sales by year after opening franchise:
- In the first year, the Kumon franchise owner can expect to make between $109,440 and $136,800 in gross sales.
- After the first year, the average earning franchisee can expect to make between $164,160 and $205,200 in gross sales.
- On average, the owners who have operated the business for 3+ years make between $243,360 and $304,200 in gross sales per year.
Kumon Franchise Profit Margin
Kumon franchise owners can expect a net profit margin of at least 30% of all gross sales that this learning center makes per year.
The net profit margin is calculated with the assumption that the owner of this business will work by himself as an instructor, so the calculation is not included the payroll costs of employees!
These franchises’ highest operating costs are 26% to 30% of Royalty Fee and rent fees that will cost approximately 15% of gross sales.
So it is an objective estimation that the owner can achieve 30% of the net profit margin after paying utility bills, taxes, and other miscellaneous expenses.
How Much is Kumon Franchise Owner Salary
An average earning Kumon franchise owner makes between $51,840 and $64,800 of salary per year.
How much does a Kumon franchise make will depend primarily on how much student membership fee per specific location per month is charged!
The investors must know that the first year of business will be the most difficult in terms of profit. It takes time to build a wide range of students that regularly pay membership fees, so the results of “Mature” locations are much better than new ones.
Estimated Kumon franchise owner salary by years after opening:
- In the first year, the Kumon franchise owner can expect to make between $32,832 and $41,040 in salary.
- In the second year, the average earning franchisee can expect to make between $49,248 and $61,560 in salary.
- On average, the owners who operate this business for 3+ years make between $73,008 and $91,260 in salary per year.
As you can see from above, the first year is the most difficult; after 3+ years, it is expected that the business will establish its position in the market, so an owner’s salary will be more than double that in the first year!
How We Estimate Kumon Franchise Owner Salary Per Year
We make an estimation about Kumon franchise owner salary and gross revenue per year by combining all data that this franchisor has revealed in their Franchise Disclosure Document, Item 29!
Summary of financial representation from Kumon FDD(2022) Item 19!
First-year after opening statistic:
- On average, centers opened in 2020 have sold 76 memberships in the first year of business. The bottom 25%, on average, sold 31, and the Top 25% sold 135 memberships.
The second year after opening statistic:
- Centers opened in 2019 have, in 2021, on average, 114 sold memberships per location. The bottom 25%, on average, sold 49, and the Top 25% sold 198 memberships.
The third+ year after opening statistic:
- In 2021 the “Mature” (opened 3+years) locations made, on average, 169 memberships sold per location. The bottom 25%, on average, sold 77, and the Top 25% sold 291 memberships.
We estimate gross revenue by adding the average sold membership per month per child per subject + the membership fee that these franchises usually charge!
According to Math Mum, Kumon costs between $120-$150 per month per child per subject. So we used data from real mums with children who are students of these franchised learning centers.
Is it Profitable to Own Kumon Franchise?
The Kumon franchise falls in the group of the most profitable franchises because the franchise owner can expect ROI after 2 to 3 years after starting.
These are not the most successful franchises in terms of their gross sales per year. However, profit margins that are 30+% make this franchise a very profitable business venture in the long run.
Few franchising systems can say that their ROI (Return Of Investment) time is faster than Kumon franchises deliver. Also and salary that this franchise provides is higher than is average franchise owner’s salary.
However, before launching this business, potential franchise applicants must be aware that this is not a passive income investment!
The good thing is that, at first, you don’t need to hire employees; franchise owners can also be instructors. As the number of students enrolled at your Center increases, you can start to employ assistants to sell more memberships and thus make more profit.
Who Owns Kumon Trademarks
Kumon Institute of Education Co., Ltd is the owner of this brand Trademark in the U.S. Kumon North America, INC., a Delaware Corporation, is a business entity that offers franchising opportunities for interested U.S. investors.
Minoru Tanabe is the CEO of this company, and they currently have six regional Kumon headquarters worldwide; their locations are in Japan, North America, South America, Europe/Africa, China, and Asia/Oceania.
Requirements to Own Kumon Franchise
Capital Requirement
The franchise applicant must have a Net Worth of $150,000 in order franchisor to approve their application.
Proficiency Test Requirement
The franchise owner must pass math and reading proficiency tests during the initial training period. These tests are no joke; the investors will need to show a wide range of knowledge if they want to be approved as new owners.
As a franchise applicant, you must demonstrate adequate proficiency in mathematics and reading to be considered for the next step of the qualification process.
Background Check Requirement
Franchise applicants need to take fingerprints on Form F.D.- 258 and send it to the FBI in order to conduct a criminal background check.
The franchise applicant must have a clean criminal record to be approved!
Also, an FBI criminal background check is required to renew the franchise agreement or to open a second Center.
Owner’s Participation Requirement
Every franchise owner must devote full-time to the operation of their Kumon Center and instruct the students personally. The only exception is if extraordinary circumstances occur, and the franchisee is prevented from running the business personally.
Franchisees also must obtain a franchisor’s prior written approval if they are employed in any other job or have any other business interest that might prevent them from devoting full-time to the Kumon franchise.
If this franchise is launched under a corporation or a limited liability company, the personal obligation and full-time devotion requirements apply only to the chosen Corporation Instructor.
This requirement doesn’t mean that it is not a possibility to hire assistants and instructors. However, they all must be appropriately trained to be employees of this business.
Kumon Franchisee Training
The Kumon franchisee’s Instructor Development Program consists of two semesters. After the franchisee pass one Semester, it is possible to start a business under the so-called “Temporary License Period.”
Approximately four months are needed to complete the first Semester of the Instructor Development Program.
Second Semester last min. Three months after the Center’s opening
and it consists of two courses. The franchisee will have online training, the study of Kumon Worksheets, and curriculum training.
How Much Is Kumon Franchise Agreement Duration
The length of the Kumon franchise agreement is five years; if the franchisee has met all franchisor requirements for renewal, it is possible to renew it for an additional five years.
Is it Possible to Terminate Kumon Franchise Agreement
The franchisee can terminate the Kumon franchisee agreement at any time by giving the franchisor at least 180 days’ advance written notice.
Suppose the franchisee owner doesn’t provide to the franchisor the required notice. In that case, it must pay liquidated damages equal to three times of average monthly royalty in the three months immediately before the last day of operating the Learning Center.
After termination of the franchise agreement, the former owner or its spouse can’t, without Kumon’s prior written consent, own, operate, be employed by, provide financing or other assistance or facilities to, or have any interest in, any Competing Business that is operating within 20 miles of the Center or within 20 miles of any other franchised or company-owned Kumon center.
Are All Kumon Learning Centers Franchises
In the U.S., there are currently 31 company-owned Kumon Centers, and there are more than 1,600 centers that franchisees own, meaning that 98% of the Kumons are franchises.
Summary
This company provides a franchise opportunity available to a small group of investors since initial training is very demanding. This can be an ideal business opportunity for current or former teaching staff to become their own bosses.