KUMON Franchise Owner Complains of Overexpansion
November 23, 2009
According to the Kumon franchise website, Kumon is “an after-school math and reading program that employs a unique learning method designed to help each child develop the skills needed to perform to his or her full potential.”
With an international network of independently owned and operated franchises, Kumon claims it the largest and most established program of its kind in the world. States the website: “Kumon has nearly 250,000 students enrolled at more than 1,500 individually owned and operated Math & Reading Centers in U.S. and Canada alone.”
One would think that having brand dominance of the supplemental education market would be a benefit for Kumon franchise owners… unless continued expansion results in cannibalization of sales between competing franchisees. We received an email from “concerned owner” who worries that, among other things, Kumon is overexpanding at the expense of existing owners.
Concerned Owner writes:
Many Kumon franchise owners are concerned about recent expansion of Kumon in seemingly saturated areas. The corporation is using generic criteria to evaluate potential market areas, namely family income and a specific number of children in K-8. The generic criteria is not adjusted based on disposable income, cost of living, and who actually contributes to average family income. The exclusion of important market data has led the corporation to overestimate their market potential and an unjustified expansion plan.
Kumon corporate also does not have a good understanding of their customer. Kumon offer a good value but they do not know the segment of customer that respond to the value. Instead, they are trying a shot gun approach to increase brand awareness. They are trying to sell expansion as an investment in brand awareness but awareness is no substitute to a targeted message to the customer segment that responds to a companies value prop. Again, this lack of market knowledge and poorly thought out increase in brand awareness leads to over expansion.
In more saturated areas, such as the tri-state NY, NJ, CT area, the corporation is just trying to open up centers in close proximity to some of their largest centers. The corporation does not seem to care that an owner can lose 20 to 30% of their revenue because the corporation hopes to net an additional 5 to 10% growth between the 2 centers. Kumon corporate does not put in capital for the center, that responsibility is on the franchisee. Because the franchisee puts up the capital, Kumon does not share in the risk of the current and new owner. For the current owner, its a loss because they are losing on their top line. For the new owner, they will not get an adequate payback on their investment (build out, furniture, advertisement, etc). Kumon corporate does not care because they can get an extra 5 to 10% without risking anything.
The poor market data, cavalier attitude towards existing/potential franchisee owners, and no risk sharing between franchiser and franchisee leads me to believe that a Kumon franchise may no longer be a wise investment.
Most franchisors have an expansion strategy based on market saturation. Their goal is to dominate viable markets with the greatest possible presence in order to create strong brand recognition, to squeeze out competitors and to maximize systemwide revenue. Overexpansion can result in franchise encroachment, perhaps the greatest source of franchise litigation and unhappy franchisees.
What do you think? Is Kumon Math & Reading franchise doing what it needs to do to create a strong system, or is it overexpanding to the detriment of its franchise owners?
ARE YOU FAMILIAR WITH THE KUMON FRANCHISE? WHAT DO YOU THINK? SHARE A COMMENT BELOW.
Prospective Franchisees, beware of the trap. Kumon Franchise agreement is one sided and they can install another center one block away from you. This is what’s happening right now in NJ. A large number of prospective franchisees are scheduled for training in January . Ask the Kumon Franchisor for the 2009 and 2010 expasion list. You will see clusters of Centers planned within 2-3 miles radius. Ask them all the centers around your target location or ask a current francise owner near by you for the details.
It takes years to recover the money you spend for the build outs and furnitures. Also look into the fact that how many centers have been closed with in a year. If Kumon opens another center close to you, you have to compete with other centers for the available students. You may have to cut your fees to attract students to your center. Do you also know that the Kumon royalty fee is over 30%?
This Japanese Franchisor does not understand the American culture and they are trying to copy the Japanese expansion model here.
The concerns expressed here come out of a very challenging and high-stress situation which we as the International Association of Kumon Franchisees are doing our utmost to address.
We are in constant negotiations with the high-level employees of Kumon North America on many topics to do with our franchise, and, while we know it will be a long process to address all the issues, we are encouraged that considerable progress is being made in real consultation on many fronts.
The great strength of franchisees in New Jersey is that they are working together in very constructive ways on things like profitability studies to analyse how to improve their businesses, marketing studies to grow their centres better and other initiatives to address their situation.
They have the highest representation of association membership (over 80%) and have demonstrated in a recent meeting with the CEO of Kumon North America a very admirable professionalism and creativity in moving the Kumon Vision forward.
I am proud to support these franchisees and others throughout North America in their efforts to use their considerable skills and areas of expertise to develop and maintain their Kumon franchises and to have a positive impact on the Kumon North American system as a whole.
Best wishes,
Nicole,
President, International Association of Kumon Franchisees.
We need real action from “top managment”. More often than not, they ignore concerns of owners and push on with their own agenda.
Kumon is pushing expansion because they want to build brand awarness. However, how much money does Kumon invest if their brand awarness strategy is based on center expansion. Very little. The capital cost is on the new franchise owner. Existing franchise owners that may have locations in nearby locations will loose out because these new centers poach their customers. This strategy only favors the corporation and not the franchisee.
[...] an earlier post about the Kumon franchise complaints, Concerned Owner complained that Kumon’s reliance on incomplete demographic data has led the [...]
John: All that you say is true! There has been a movement in franchising in the past ten years to move away from granting protected territories to franchisees because, as you say, the capital cost is on the franchise owner, and the franchisor profits from the gross sales of the franchisees, even when the franchisee is operating in the red. It is the franchisor who owns a business of his own, and franchisees, under law, are merely resources (assets) to be used by the franchise systems.
Two franchises operating or teetering at break-even are better than one franchise operating at a profit for the franchisor. Breakeven franchisees are indentured for the long terms of the contract because of liquidated damages clauses contained deep in the small print of the franchise agreement. The franchise agreement is generally a malicious legal trap for franchisees who buy in good faith from franchisors who do not always act in good faith.
Unfortunately, “churning” and “encroaching” are protected under the FTC Rule and State Statutes as long as the terms of the contract spell out that the franchisor is not granting a protected territory, etc.. and as long as the franchisor discloses in compliance with the law and secures the signature of the new franchisee on the unbargained and take-it-or-leave it franchise agreement.
http://thegreatfranchisingrobbery.blogspot.com
Do some research Carol, and read section 3.3 of the franchise agreement where is states there is no exclusive territory (plain and simple). People complaining about it now obviously don’t understand what they agreed to (although it’s pretty well laid out in the agreement).
It’s a contract. Language is spelled out. I’m sure if someone had a interest rate on their business loan at 8%, they wouldn’t want their lender changing it unilaterally to 10%. Same thing with this contract. They’ve agreed to the terms (in this case no exclusive territory), and they have to live with it (unless the zor will negotiate, which they aren’t required to do).
Yes JD! Decent and honest persons do sign these unbargained unilateral contracts because they wouldn’t believe that franchisors would be so indecent and dishonest as to sell them a franchise that will cost them hundreds of thousands of dollars, and then premeditate destructive encroachment in the terms of the contract because they are protected from this kind of fraud under cover of regulation and the malicious contract!
They wouldn’t believe that their government pimps for the franchisors and the other special interests who benefit from the cheap labor and the cheap venture capital of franchisees!
Happy Thanksgiving, JD. I am grateful that I live in a country where I can freely critizize my government and call them out when they engage in lies and disgraceful behaviour.
Who do you work for?
http://thegreatfranchisingrobbery.blogspot.com/
You are so naive. I actually imagine that your family was similar to the type of ownership that Sean wrote about earlier in reviewing someone’s Twitter feed. It’s always someone else’s fault.
The contract is plain as day. No exclusive territory. If it says that, people are aware of it and shouldn’t be shocked if it happens (and should think worse case scenario when signing the agreement). If you don’t like the terms, you walk away. Plain and simple. The government has nothing to do with this. There is no denying that there is no exclusive territory. Get it through your head. These people signed a bad contract that they weren’t forced to sign.
How’s that blog of yours doing? You’ve written one entry in three months (maybe because you can only talk about one thing).
As I’ve said before, I haven’t worked in franchising in over 4 years, but I find it funny how people complain about things that are spelled out pretty easily in the franchise agreement.
JD… this serves as a warning for other people thinking about getting into the franchise… thank you for pointing the exact section people should be wary of.
You are really angry… Why so? Do you work for Kumon Corporate?
JD, you are right, everything is very clear in the Franchise Agreement, no territory and so on. This is what our association franchise lawyer says whenever people talk about challenging Kumon legally. That is not an option. because Kumon is perfectly within its rights. People need to read that FA very carefully, that just makes good business sense.
When I talk to other Kumon centre owners, I see that people just had no idea how extensive expansion could be. People tend to come into Kumon with all kinds of assumptions, really loving the program which is fantastic and unique in the world, and not getting how difficult it can be to deal with the issues that have been raised as well as others.
It is Thanksgiving there, I understand (I live in Canada so ours was last month). Believe it or not, we do have things to be grateful for as franchisees in Kumon, in addition to the things I mentioned in my first post.
Our franchisee association is included in the disclosure document of the Franchise Agreement, and this is because of a relatively new change in franchise law in the US, so we have been in for the past two years and new franchisees who read their document carefully can find us right away and get on track.
I am grateful that I have the opportunity to meet with colleagues across North America, in fact via the internet we also can keep in close touch with our sister associations in the UK, Australia, Japan, and Mexico. Through these discussions, I glean a fuller picture of Kumon worldwide. I see a very passionate and caring group of franchisees who understand the power of Kumon to change the lives of children for the better.
In my talks with employees of Kumon North America, I also am encouraged with how many of them want to see positive change. Our new CEO, Hideki Kusuzawa, is someone who is deeply concerned about the need for a better system, and is actively looking for ways to make it so.
We may not always agree as franchisees with the company about the ways and means to move toward a better Kumon North America. But as long as we remain in constructive and respectful dialogue, we can work together towards our common goals, of which we have many.
Best wishes,
Nicole,
President, International Association of Kumon Franchisees, North America
Kumon’s actions in the not so recent past do not reflect section 3.3. Kumon once worked with new and current franchisees to identify a location that minimized cannibalization. The “veteran” instructors, that have owned centers for a few years have experienced Kumon’s arbitration on new locations.
Kumon is no longer arbitrating locations. This is a new behavior on the part of Kumon corporate. At one point, there was a general rule of a 5 mile radius. Now, there are no rules. Kumon set an expectation that they will work with current and future franchisees to identify an appropriate location. Kumon may have the right to put a location where ever they want, but their behavior in the past set an expectation that Kumon will not simply place a location in close proximity to an existing location.
On a side note to Jane: You may have not been there when the new CEO, Hideki Kusuzawa, asked a veteran instructor “What are you complaining about?” when the instructor said he lost 20% of his students to a new center that opened up in close proximity. The new CEO is more concerned about the number of centers than, using the new CEO’s term, micro issues. The CEO is a direct reflection on how the rest of Kumon management works and behaves.
Jane, I don’t find Mr. Kusuzawa’s comment to the instructor objectionable in the least.
The instructor was drawing business from a vacant territory that he did not have the rights to. The instructor should be thankful for the 20% bonus he got by having a headstart in a fresh new market. He should be thankful that it was a franchisee and not a competitor that opened nearby. Now he can combine resources and do joint advertising with the new center.
I think the franchisees complaining don’t get the fact that as markets mature they have to adapt. They can’t just get the lowhanging fruit that was available when they were alone in the market. They’ve got to dig in and fight for every bit of business in their local area. Yes, the franchisor’s going to pack them in tight as possible because that’s how the chain becomes dominant. You’re just going to have to work harder.
To guest: put up your money and see how you feel. If you actually own a center, wait till one pops up in your backyard.
BG: I don’t mean to be unsympathetic, but businesses don’t operate on how you feel. You signed a franchise agreement that clearly states you have no protected territory. That’s the deal you made. Odds are you didn’t hire an experienced franchise attorney or advisor to review the document prior to signing it. Perhaps you didn’t even read it (many don’t). Now you know better.
Franchisees think the world should operate on what they think is right – from their viewpoints, preconceived notions and assumptions. They think 100+ pages of legal agreement is just a formality but it’s not… it’s the deal.
Most franchisors, of course, do not try to dispel those misconceptions until after the ink’s dry and the check’s cleared. Their websites and brochures are all touchy feely we’re all in this together. But the truth is that they are focused on the big picture and that doesn’t always jive with your individual self interest.
Sorry but that’s the reality of it.
Oh.. So when the main channel to the customer is not happy, they should just sit quiet and take it. Sorry Guest, we are going to get a lot louder now.
Your right, we should not operate on how we feel. We operate to make money. When money goes away action must be taken. We have a contract but we can warn other potential franchisees. That is the purpose of the complaints.
Again, you must not own a center… sounds like you are rep for Kumon corporate. That’s the reality of it.
BG is right! At least franchisees, because of Internet Sites like this, can warn prospective franchisees and current franchisees can talk with each other and share their performance statistics that will act as a warning to new buyers.
JD says the government has nothing to do with the process but, of course, you can’t buy a franchise in the US unless the franchisor discloses to you under the provisions of the FTC Rule, The FDD from government and the Contract is a seductive package that implies that the franchisor is legitimate and selling something of value to the public.
Prospective franchisees, who buy in good faith, mistakenly believe that the franchisor can’t profit unless they profit and don’t understand the franchisor’s goals of encroachment and saturation in which so often many franchisees are sacrificed, Prospective franchisees don’t get true disclosure of the real risk factors from the franchisor before they put their signature to the contract because of the ineffective FTC Rule that intentionally protects and subsidizes the franchisor.
JD is an accountant who defends the status quo of franchising and the law and who apparently enjoys reading the sad stories from those who lose everything. It apparently makes him feel better when he can chastise these people for not reading and understanding the take-it-or-leave it contracts. Always easier to blame the victims and not to fault the constructive fraud of the “package” from hell.
http://thegreatfranchisingrobbery.blogspot.com/
guest, I think it would be helpful were you to identify yourself. Do you represent the official position of FRDD on this matter? If so, I think I need to go back to Kusu to discuss this approach with him.
Nicole
Guest ,
It took years to harvest those lowhanging fruits. I am sure you were not there to help harvest those fruits. This land is vast and lowhanging fruits are every where. Why to focus on the small land a franchisee leased from the community to cultivate and grow these fruits. Come on! don’t hide under FA clause and do what is right.
If one worked hard to buid the business, he/she should be the one to reap the benefits. Concetration of several franchisees in one small area all will result in a fight for these lowhanging fruits. What you care? You get your 30%.
Few years ago Kumon elevated the large centers to a high achiever status and invited them to lavish retreats in Mexico and other exotic places. It was good that a center grow big then. Now it is bad. One could not relocate his center to a new location down the road then as doing so would hurt another center. This was the policy then. Now it is opposite. Kumon did not communicate this policy change to franchisee. Yes, FA is one sided and the future franchisees should be aware of it. This discussion will continue unless there is changes in the thinking of Kumon higher management.
Kelly.
Official or not, the position of “guest” is what owners are dealing with and future owners will deal with.
I don’t represent any official position and am not a Kumon insider.
BG said “Official or not, the position of “guest” is what owners are dealing with and future owners will deal with.”
BG is correct. I’m just stating the reality of the situation. You’re business owners now. No one is going to change their practices simply because you think they should and because you thought the deal was different than it is.
I’m not saying you shouldn’t fight to change things you should. Franchisors are strategic, while franchisees are emotional. Why is it in their best interest to change their practices? If you can’t show them that, from their best interest, they won’t change simply because you think it’s the right thing to do.
Carol is completely offbase. Just because the SEC approves a stock doesn’t mean that it’s a good or even fair deal and you won’t lose your money if you buy it. The FA is in black & white. The problem franchisees don’t even bother to read Franchising for Dummies before they make the biggest investment of their lives.
Kelly wrote: “Concetration of several franchisees in one small area all will result in a fight for these lowhanging fruits. What you care? You get your 30%.”
Why does the franchisor care if the franchisees have to compete among themselves? After all, they made the conscious decision to not grant territories. Won’t the best centers that provide the best results get the business they deserve? Won’t having more centers in a given area drive out and keep out competitors? Won’t 5 centers in a given area generate more revenue for the franchisor than only 3 centers?
Won’t the franchisees be able to co-op their advertising dollars and split the costs of local and regional advertising campaigns?
Maybe this franchisor really knows what its doing and it’s the franchisees who need to change their thinking.
Guest, you say, you are not representing an official position and not a Kumon insider.
Yet you seem to know so very much about the background to a remark made at private meeting between the company and a specific group of franchisees.
“The instructor was drawing business from a vacant territory that he did not have the rights to. The instructor should be thankful for the 20% bonus he got by having a headstart in a fresh new market. He should be thankful that it was a franchisee and not a competitor that opened nearby. Now he can combine resources and do joint advertising with the new center.”
How do you know all this if you are not a Kumon insider?
To speak so freely about people’s private affairs in a public forum and not disclose your identity seems very questionable to me, in terms of business ethics. If you were the franchisee in question, how would you feel if some anonymous person did this to you?
Nicole
Nicole:
I have been involved with franchising for a long time. This may be a new topic for you but, believe me, the same private conversation that you think is specific to Kumon has been replayed since dinosaurs roamed the Earth.
It’s pretty simple, really. Franchisors, in general, want to open as many locations as possible. They want to pack as many franchises into an area as they can. They want to saturate each market and leave no money on the table.
Franchisees think they should have the whole state to themselves and see any other locations anywhere near them as a threat. They understandably care only for their own self-interest and have no interest in the big picture.
So I know the arguments that ensue… that’s all. If this resembled a real conversation, it was inadvertent but not surprising.
So let me share a view that will assure you I’m no corporate shill: I think you should fight for the changes you think are fair even if you don’t have them in the contract. Legally you have no leverage but you can make it very difficult for them to sell new franchises if you are not silent about your objections on the Internet. The conversation here is a good start, but you, Concerned Owner and the others need to argue with facts and reason.
I don’t think a Kumon insider would make that point.
Guest,
You sounds like a lawyer. mmm Who could that be? It is a good advice from the guest who stated ” Legally you have no leverage but you can make it very difficult for them to sell new franchises if you are not silent about your objections on the Internet. The conversation here is a good start, but you, Concerned Owner and the others need to argue with facts and reason”.
There are plans in place to make the facts and reasons known to the public by twittering, facebooking and going to other news media should this problem presists and the KNA ignores and fails to address the concerns of the Franchisees who are really affected by the KNA expansion plan.
Kelly.
Guest says “Carol” is completely off base” and goes on to say “just because the SEC approves a stock it doesn’t mean that it’s a good or even a fair deal and you won’t lose your money when you buy it.”
He doesn’t, however, tell you that under SEC Rules, the SELLERS, who will profit, have to disclose MATERIAL facts to the BUYERS or be subject to private lawsuits for fraud and misrepresentation. Under the FTC Rule, there is NO private right of action for fraud because there is no fraud if the franchisor is compliant with the disclosure rules —-and even when the franchisor isn’t compliant, this isn’t fraud and is just a violation of an Administrative Rule that can’t be used in a state action for common-law fraud. Catch 22.
Under the FTC pre-sale disclosure rule, it appears that the FTC has deemed that the historical financial performance statistics of the UNITS that comprise the system (concerning profitability and failure-success of founding franchisees) Do not have to be disclosed by the franchisor, the seller, to new buyers of the franchise. A franchise purchase is treated uniquely under FTC Rule in that the franchisor can use franchisees, past and present, as references upon which to perform due diligence in order to, himself, evade disclosure of material information about unit performance to the new buyers.
Apparently, this FTC regulatory policy was the response to the grim statistics surrounding small business failures. Obviously, they knew that if 50% of franchisees would fail at sometime in the first five years, and this got around, or was reflected in the offering ciruculars, the FDD’s, this would sure slow franchising in the economy.
About the rest, Guest is right. You, Kelly, are on the right track. At least, the franchisees, themselves, can, with immunity, discuss their own performance statistics with each other and look for solutions because of the Internet, and if the performance of the franchise is not good, this will mean that the franchisor will lose new buyers and might want to cooperate with solutions that might help the franchisees. This is a new movement in franchising that is frightening the franchisors when it reduces new sales.
Guest says “legally, you have no leverage” and I agree. This was the intent of franchise regulation that would protect the 50% who would survive past five years in the service of the franchisor from the 50% who would not survive for five years.
http://thegreatfranchisingrobbery.blogspot.com/
Guest, Kelly and Carol -
Re guest’s comment:
“Legally you have no leverage but you can make it very difficult for them to sell new franchises if you are not silent about your objections on the Internet. The conversation here is a good start, but you, Concerned Owner and the others need to argue with facts and reason.”
It is kind of you to provide advice.
In IAKF, we have the benefit of counsel from Andrew Selden of Briggs and Morgan, and with his 40 years’ experience in franchising, we have all that we need to continue our constructive engagement with the company, thanks very much.
In fact, even just this week we have met on a number of occasions with different levels of management on many key issues, and are very satisfied with the quality of our dialogue.
Nicole
Nicole:
No need to be smug. I made the “advice” statement to correct your mistaken belief that someone at your meeting was posting as “guest.” and to save you the embarrassment of incorrect accusations. You were also mistaken that I am attorney. I’m sure the esteemed Mr. Selden would confirm no lawyer would be posting private discussions anonymously on the net.
You say “we have all that we need to continue our constructive engagement with the company… and are very satisfied with the quality of our dialogue.” Maybe your satisfaction is why the franchisees feel compelled to go public.
BG wrote: “The IAKF needs to actually use their “power”. Right now it just seems like an arm of Kumon corporate.”
Re-read my posts, guest. I did not make accusations, merely asked questions.
I did not say you were an attorney. Perhaps you are confusing me with another poster here.
It would appear you are making provocative statements in an attempt to elicit an emotional response from me.
Any Kumon franchisee who wishes to discuss how the IAKF could better represent her or him is always welcome to contact us and discuss it with us. We would be delighted to listen to their input.
Nicole
This is a serious issue and it is good that Kumon has a franchisee association that is in dialogue with corporate. Hopefully they will have a real effect and Kumon will not go down the road that Curves has. If you want to see the end result of overexpansion read the Curves posts on this blog. You can use the company search in the top right. especially read all the comments on Robert Lay’s story:
http://www.unhappyfranchisee.com/curves-robert-lays-story/
Curves sold as many as they could even in tiny markets. Their franchisees fail and they charge them fees for closing then resell their territories. Hopefully Kumon won’t come to that.
Dear victim,
That is a very scary cautionary tale. I once considered buying a Curves franchise, thank goodness I didn’t. Thank you for sharing that with us.
Nicole
Hello, My name is David Joseph and I own a minority share in a center located in NJ. I’m putting up this post to make my views plain and clear to everyone. My statements here are mine and mine alone. I’m concerned about Kumon’s strategy. I’m not concerned about issues involving associations, products, services, or contracts. I also don’t care about rants and insults that are now popping up on this page.
I’m concerned about Kumon’s strategy because I’m seeing encroachment and cannibalization…
Ed. Note: David Joseph’s comment has been upgraded to a full post. Please read it here:
KUMON: NJ Franchise Owner Shares Concerns
Also read the message from franchisee association president Nicole Smith:
KUMON: Franchisee Association Pushes for Change
To submit rebuttals or guest posts, please email us at unhappyFranchisee[at]gmail.com
Thank you, David for this excellent post. I hope that KNA marketing team comes to understand the potential of Twitter and Facebook for brand awareness.
Nicole
[...] educational franchise owner David Joseph originally posted the following as a comment on the post KUMON Franchise Owner Complains of Overexpansion. We’ve moved it here because of length, the quality of the content and the importance of [...]
EXKUMON INSTRUCTOR SPEAKS
In response to the unhappy instructor who started this conversation. I feel for the plight of many passionate and dedicated Kumon instructors who worked hard to grow their business from ground zero. Here are my comments and let me spell it clearly to all instructors and prospective instructors in plain language. It is very obvious to me that the goal of the Kumon franchisor is to earn more profit (as all businesses are profit driven) at the expense of the poor instructors under the guise of promoting brand awareness. In short, it is GREED.
Kumon Company does not share the franchisees’ vision to grow their center anymore as it now prefers small centers in every corner. Their first move is to break the big centers apart by putting a center in close proximity to these successful centers. This is a win (Kumon) –Lose (franchisee) strategy. Which is true for most franchises but here is the truth:
1.) If you are an instructor with about 200 subjects and have no plans of growing your business (small scale) you may stop reading now because you are not affected by the over expansion issue. You can worry later or stop working to grow your business because as soon as you grow, Kumon may open a new center next block. Your growth is the only market indicator whether to expand or not for Kumon.
2.) If you are an instructor with over 200 subjects and look towards growing your business or a prospective instructor who dream of growing your business (as all businessman dream), you may carefully weigh on these issues before you sign any franchise agreement with Kumon.
The reality is that it is not easy to get 200 subjects initially it may take 2 years or more specially if you are in a place where market is already saturated and if your goal is only 200 subjects, in a commercial space, you should have a spouse who is gainfully employed because you will barely be able to pay your bills. In short, you are just surviving or barely getting by depending on how you run the business. Kumon instructors are aware of the stress and hard work associated with this business and that is why only those who are very passionate thrive and succeed to grow in this business. These are the very instructors that Kumon is trying to break apart.
What the current Kumon management does not realize is that the success of these instructors comes from the passion and dedication to the Kumon Method that they share with its founder Toru Kumon. I have great respect and admiration to its founder, (I wonder what the founder will think if he was here today), however, Kumon has become a big business venture that some Kumon managers have forgotten its roots and humble beginning or they have forgotten that their franchisees are business people and NOT THEIR EMPLOYEES.
With Kumon’s current expansion strategy, I think it is better off them to just GET OUT OF THE FRANCHISING BUSINESS and hire instructors instead because their strategy right now is just like hiring instructors (“franchisees”) as employees who are willing to put up the a capital for their business and it’s up to them to survive in this saturated market. It is a brilliant strategy that will only benefit them but not their franchisees. In this strategy, the franchisor can capitalize on potential franchisees’ money and resources to cover the cost of build out, other fees and headaches associated with establishing a new business like legal fees, township zoning fees, and other professional fees if you need to apply for variance (planners, engineers, architect etc which are very expensive fees). On top of these fees are the lost rental fees if you want to reserve a good commercial space. Advertising and marketing fees that are shouldered mainly by the prospective franchisee and the return to the company is brand awareness which means more business for them but not for the franchisee. PLEASE, IN THIS ECONOMY, LET US NOT TAKE ADVANTAGE OF THE PEOPLES HARD EARNED MONEY.
I don’t see how a franchisee association can address this issue with Kumon management but instructors can expect for the worst and hope for the best. Their best hope is if Kumon will CHANGE THE MANAGEMENT and with the change, may bring a more viable solution to this problem, A WIN –WIN SOLUTION for franchisees and franchisor not just the franchisor. I think if Kumon has to do something to resolve this issue, they should do it NOW. STOP THE CURRENT EXPANSION PLAN AND SET A REASONABLE DISTANCE BETWEEN CENTERS SO EVERY INSTRUCTOR WILL BE ABLE TO GROW AND BE HAPPY. Right now you have just crushed the businesses of those labored for so long, walk the talk to help Kumon grow in this country.
I don’t want to cause panic to all the successful instructors who are affected and crushed by this overexpansion strategy and prospective franchisees but to caution you of the potential damage a franchisor can do to your business. Another grim reality is that you may not even be able to sell your business because no one wants to buy a business that doesn’t have the potential to grow.
I want to end this conversation with this note.
To all passionate and dedicated educators around the world: There is a vast and huge market around the globe for better education and teaching method especially in the US due to its deteriorating quality of education. As Kumon instructors, you are better positioned to design a new and alternate method that will directly address the ailing education system so I challenge you all to come up with a more comprehensive and less tedious method or program that will directly address and help children around the world BETTER THAN KUMON.
Wonder why I left Kumon? Because I am a business person and I don’t want to be treated like an employee. I love the Kumon method but I hate the franchise business. I know about the overexpansion problem because I still have friends who are Kumon instructors and their depressive plight.
Anu,
I agree 100% with you. Kelly
Thanks to all instructors, and the insiders for speaking your mind. It gives me the inspiration to take this matter to the next level. Lets expand this conversation to other online forums, groups and networking sites. Lets make people know how mean Kumon corp is. I have made a personal decision to spend an hour everyday trying to post and address this matter on other sites like Yahoo groups/ MSN groups/ AOL/ Google groups/ BBB and many many others. If Kumon still doesnt want to solve this issue, our next step should be to go to the media ( Print and Television). This is just a begining.
Bottomline: Encroachment is not healthy for the Franchisor nor Franchisee.
Anu, Kelly and John:
Anu, I know a number of former colleagues who have left Kumon and are running their own businesses.
While I sympathise with their feelings and had hoped they would be successful, in fact the longer they are away from Kumon, the more poorly they tend to do with their new businesses.
As franchisees, we often underestimate the power of the brand to bring in new customers. My friends who are running different programs have seen their numbers gradually decline over time if they were starting with a student base from Kumon (some were able to avoid the non-compete due to having signed an earlier franchise agreement or not having signed at all). If they started from scratch, they struggled from day one to get a foothold. The tutoring market is extremely competitive – without a large company behind you for branding and marketing, it is very, very hard to make a go of it.
I would never consider starting a competing franchise. Kumon is the best program for after-school enrichment in Math and English in the world, because it does not take a tutoring approach but develops self-learning skills.
Yes, Kumon has its challenges. As a daily practice, long-term approach that is about mastery and developing a solid foundation before going on to advanced study, it is not for the faint-hearted. It demands commitment and hard work on the part of parents and students. But you know what they say, no pain, no gain.
On a personal note, I have been in commercial space since having only about 60 students, since 2001. Still, I have been able to be financially independent since 2003 and have not needed income from my ex-husband to raise my three children and pay house expenses, etc, and this started before I had 200 students. For the past couple of years I have had 250 students or so.
I am not saying that it is easy, and I know different areas have higher expenses that Montreal where my centre is, but it is a question of charging the right tuition and being pro-active about managing one’s expenses.
Kumon has a process for discussion expansion plans with franchisees which works quite well in many areas. What we have to work on are those areas which are trying to over-expand, primarily the US East and California at the moment, and further to strengthen the dialogue process in other areas.
Best wishes,
Nicole,
President, IAKF
Nicole, I think you are one of the small scale business person I am talking about so you are not be affected by over expansion issue. There are a lot of instructors who want to keep their center small and I think, those are the areas where Kumon should focus into growing and put more centers around in order to grow that area not the areas already saturated. I wonder how you will feel if Kumon put center one minute drive from your center.
Most people in business want to maximize their potential to grow and thats what most successful center do thats why they continue to grow. I am not saying that with 200 subjects you cannot earn but it will depend on your cost and how you manage your center. Maybe rent and labor are cheap in your area. How long have aninstructor been in business and how much have they grown maybe a good question to ask to measure success but it doesnt matter anymore because Kumon is not interested with big number anymore.
Anu, I wonder why you came to that conclusion? You are right that I am not at the moment personally affected by over-expansion, since Kumon Canada knows very well that there is no possibility of putting in any centres in my area. I have confirmed this in recent discussions with the branch and with the head of Kumon Canada.
But that is at least in part because of the hard work I have done in our branch along with my local colleagues establishing a dialogue with Kumon Canada about Montreal expansion.
My rent and staffing costs are actually quite substantial, Anu. But it is up to me to charge what I need to charge to balance that out. Thankfully we have the freedom to do that in Canada and the US. That isn’t the case anywhere else in the Kumon world.
It is not that KNA always puts more centres around centres that are growing well. Yes, I have seen that happen before, and it is certainly happening in the US East and California. However, since the expansion plan is so agressive in those areas, it is just as likely to happen around centres that are small. In short, it is happening everywhere in those areas.
I also question your assumption that KNA is not interested in big centres. Ideally, to KNA, every centre would be over 300 students, right? Much more in royalty dollars. True, trying to put in too many centres will not help with that. But this is why dialogue with KNA is so important.
I don’t know how long you have been no longer a franchisee with Kumon. However, I ask you to consider how the fact that that you have given up on the franchise and no longer have first hand knowledge of what is going on, only hearing through your friends who are very upset, may skew your perspective of the overall picture.
Nicole
RE: Kumon peeps on Twitter
@unhappyz – This website’s twitter ID
@djpaboro – David Joseph’s Twitter ID
@leftydknyc – Kumon NA VP Franchising
List of Kumon employees, franchisees, etc. Twitter IDs:
http://twitter.com/UnhappyZ/kumon-franchise/members
To be added to the list, follow @unhappyz here or leave your ID in a comment:
http://twitter.com/UnhappyZ
@IAKFpresident – Nicole Smith’s twitter ID
Nicole, your former colleagues who are not doing good witn their businesses has nothing to do their disassociation with Kumon. I have a successful import/export business. I will not argue about the benefits of Kumon but many peple can argue with you because I still believe in the Kumon method. I still recommend this program to other peole.
I was in Japan and south east few months ago and I heard that there is another learning program gaining popularity in Japan, I think that is the reason Kumon is aggressively pursuing this strategy. Even in US, a lot learning centers are also popping up in every corner. Kumon instructors are not just competing with another Kumon center but also other programs.
As i have stated in my previous post, the solution to the problem is just to put a reasonable distance between centers. How about a 8 to 10 minute drive radius if miles is the problem so we can end this conversation here but 1-2 minute radius is rediculous.
I hope instructors will join force with you. I salute you for your effort to resolve this with your management. Good luck.
Anu, to clarify, I well understand my former colleagues not doing well in their new businesses is not related to Kumon. I was merely responded to your statement :
“To all passionate and dedicated educators around the world: There is a vast and huge market around the globe for better education and teaching method especially in the US due to its deteriorating quality of education. As Kumon instructors, you are better positioned to design a new and alternate method that will directly address the ailing education system so I challenge you all to come up with a more comprehensive and less tedious method or program that will directly address and help children around the world BETTER THAN KUMON.”
My point was that many people have tried to do exactly this on their own. Arguably the only ones who have been really successful, and these were not ex franchisees but people who succeeded in getting a really close look at the program before starting their own, is Enopi.
I am delighted to hear you still believe in the Kumon method.
Perhaps the competition is one of the reasons Kumon is so aggressively trying to grow in NA. But it is not the main driver. You cite greed, Anu, as being the main driver. However, the reality is that Kumon Japan is facing harsh economic realities and as a consequence they are demanding more of their main producing countries, of which Canada and the US are very important ones.
So what we need to do as IAKF is work with the company on sustainable, non-cannibalising growth strategies. And that is precisely what we are doing. I agree that territory is a key issue and one we must address. It is not as simple as a distance radius, since population density means that the distance that makes sense in Manhattan would be crazy for Arizona, for example. So we need to work on what constitutes an adequate student base for people to grow their centres over 300 students and how to support people in actually getting to those numbers.
People are joining forces with us, Anu, more and more all the time. The local chapters are proving to be the best strategy for accelerated growth of the association as well as local support for franchisees and a base of operations for local initiatives.
I appreciate your kind words and support, and wish you all the best in your own business.
Best regards,
Nicole
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To All Independently Owned & Operated Kumon Centers
50% discount for all Custom Kumon Window / Glass Door Graphics and Signs
(75% To Only Those affected by Kumon’s Over Expansion in NYC).
Signs2000 Corp. provided and installed most of the Signs and Graphics to all the recent newly developed Kumon owned centers in NYC :
Chelsea, 320 West 23rd Street
Midtown West, 747 10th Avenue
Gramercy Park, 381 2nd Avenue
West Village, 80 Carmine Street
Chinatown, 123 Baxter Street
Upper East Side, 1582 First Avenue,
Battery Park City, 2 South End Avenue,
Upper West Side,700 Columbus Avenue
Harlem Central, 2235 Frederickl Douglas Blvd.,
We no longer provide service to Kumon North America. However, we will gladly service only independently owned and operated Kumon Centers at incredibly lower prices. These specially reduced rates are not for Kumon North America.
Shabbir Khalfan
Signs2000 Corp
signs2k@gmail.com
Potential Fall Out from Franchisee Encroachment http://djpaboro.wordpress.com/
Excellent blog, DJ, thanks so much. I hope that KNA thinks carefully about what you have said. We know that they are following your blogs and tweets, let`s just hope this doesn`t get lost in the shuffle because they are on holiday.
Happy holidays to all,
Nicole
Instructors don’t worry, I use to work for a center in the NJ area, and there is a lawsuit coming.
What do you all think of the recent layoffs of longtime Kumon employees right after the millions spent on the new corporate offices?
Mary, I was very sad to learn of the firings at the end of October of about eight very good people in Material Development and Instruction departments (some chose to leave around the same time, I believe for other reasons). .My understanding is that it was a cost-cutting measure, and that those who couldn’t or wouldn’t move to New Jersey to take part in the new training facility, Kumon University (KU), were fired.
It has been hard on morale for associates to see their peers fired like that.
I hear what you are saying about cost-cutting in the face of the major expenditures on KU and find myself at a loss to reconcile the company’s stated priorities of people potential first with such initiatives. These are the sorts of questions I ask Kusu when we meet.
Regards,
Nicole
More than 8 people were fired. Quite a few of them worked at corporate headquarters already so the fact that they wouldn’t move to NJ wasn’t a factor. I know of one veteran employee who devoted 17 years to Kumon. I was told that each dept. had to let someone go but I know that some depts. never did. When you go there you’ll see how lavish the offices are, with paintings, sculptures, a private staircase between floors.
Ah, the firings at corporate itself, yes, that would have been quite a separate issue that the relocation. I have not gotten information on those.
Speaking of lavish, I was quite taken aback when I saw the new corporate office of Kumon Canada how much money had been spent for posh-looking washrooms, among other things. Our franchise dollars at work, as they say.
Regards,
Nicole
Nicole: I missed out on your post wherein you indicate that Andrew Selden is your attorney.
I believe it was Andy Selden who indicated in an interview with Blue Mau Mau that it was “silly” that the FTC Rule and UFOC’s mandated 22 items of disclosure but didn’t mandate the most important item of disclosure for franchisees — that is, the “earnings claim.”
Hopefully, Mr. Selden will be successful in attacking the “stacked deck” and your franchisor will see the light.
Franchisors do live very lavishly on the profits of the sales produced by those on the bottom of the pyramid who do the work and take the risk. This is the goal of this business model. Franchising is not an “industry” but rather just an exploitive way of doing business that is used across many industries since the licensing of intangibles has become “big business” and “brand” mentality rules the world.
Read: Buying a Franchise! The Great Franchise Hoax! A Business of Your Own?” in a Google Search.
http://thegreatfranchisingrobbery.com
Carol, Andy has been successful in helping many franchisee associations go from a place of very limited influence to one where they are sitting down at the table with the company negotiating for the good of the whole system.
It is our hope that he will help us achieve the same, as we know that in order for Kumon to thrive in the 21st century, it must adapt the way its company is run to be more flexible and open to the input of its franchisees.
Regards,
Nicole
Any new word from IKFA on progress regarding talks of over-expansion with KNA?
I recently attended my first seminar for prospective Kumon Franchisees and one of my main concerns is the cannibalization of individual business. I’m in Brooklyn, New York and, as Nicole stated, have a greater population density than most areas in the country. So, I think there’s plenty of business to go around. However, I am concerned that KNA will simply re-draw their “Green Dot” map (which I feel is probably a bit too tight as it stands) at any given point in time to cluster sites together. I have not had a chance to read the full FDD yet (I’ve only focused on Items 19 and 20), so I don’t know yet if there’s been a contractual change regarding KNA’s right to expand freely and without input from Franchisees.
From what I’ve seen of the Method, I like what Kumon is offering. However, I want to be in this long-term. I don’t like what I’ve heard of Kumon Management’s relatively recent changes in strategy, so it would be very useful to know what, if any, changes have come about since the last post in January.
Also, if any of you are in the New York City area and can recommend a good franchise attorney/consultant, I’d appreciate it.
Brooklyn Prospect: Paul Steinberg is a NY franchisee attorney – and is (or was) a Subway franchisee himself.
Paul Steinberg Law Office 14 E 4th St, New York 10012 (212) 529-5400
Email: PaulSteinberg@nysbar.com
Brooklyn Prospect,
I have two recommendations for franchise lawyers for you – contact us at info@kumonfranchisee.com
In answer to your question about KNA’s expansion policies and how they may change in the future, but it would seem at the moment that KNA intends to continue to expand in ways and places that it believes will maximize its enrollments in the short term, building on brand awareness in existing markets rather than opening up new markets.
Those are risks inherent in owning and developing a Kumon franchise, but IAKF is doing what it can to steer development policies and practices to mitigate impact upon established Centers.
In the long term, we believe that any franchisee’s best way to protect his or her Kumon business is to join and to support IAKF, because each member enhances IAKF’s leverage to influence KNA policies and practices.
Please let us know if you have any further questions,
Nicole
I received requests to explain why we decided to sell our Kumon center. There were several factors that led to our decision to sell but ultimately we decided to pursue an opportunity that gave us the best chance to meet our personal and professional goals.
We took ownership of our center in December, 2005. Shortly after we took over the center, we saw the potential for further growth and found ourselves thinking about moving to a larger space. The estimated cost to build out a larger space was $40,000 while remodeling the current space was approximately $10,000. We weighed the pros and cons and opted to move to a larger space because we saw long term potential with our business. After receiving approval from Kumon franchising, we opened our new larger space in November 2006. The space was zoned commercial office, had good visibility, and was in close proximity to several shopping plazas. Kumon was so delighted by our new space that a member of the franchising team suggested that we sign a 10 year lease to reduce our rent. We instead chose to sign a 5 year lease to be in better alignment with Kumon’s 5 year franchise agreement. Enrollment grew 80% in the new space over a period of 2.5 years. Business was good and we generated a nice profit. The $40,000 investment paid back very quickly.
In February 2009, we received notification that Kumon’s 2010 franchise agreement (FA) will require centers to be located in space zoned for commercial retail; with the caveat that Kumon can grant exceptions. In addition, Kumon corporate had the right to change a center’s hours of operation if Kumon corporate deemed it beneficial for the community. We were concerned about the language and asked how the new language will impact our business. The head of franchising explained that it was not Kumon’s “intent” for our center to be impacted by the language in the 2010 FA. Unfortunately, a business can not make long term decisions based on the “intent” of Kumon’s franchising department. We knew, based on the experience of other owners, that it was not easy to find a new location. We also knew from other owners that Kumon corporate did not help identify new locations or help address zoning issues. We did not like facing the possibility of having to spend more money on moving to a new location. Just 2 years earlier, we spent $40,000 on building out a new larger space. We also did not like Kumon corporate having the power to dictate hours of operation. After all, we are owners, not Kumon employees. The changes to the 2010 FA really made us consider selling the business.
Another issue that factored into our decision to sell was Kumon’s changing furniture requirements. In early 2009, the regional leaders visited our center and declared that we did not have approved Junior Kumon furniture. However, we purchased the Junior Kumon Kit from Kumon in 2005. It turns out that the furniture to which the regional leaders were referring was the same table we already had but with a different laminate top and chairs that were black instead of blue. Although this may seem like a minor issue, we felt this was another example of Kumon changes that may lead to additional costs to an owner. At this point we began seriously wondering how many Kumon changes were in store and the costs we could incur because of those changes.
We then started hearing about new franchise locations being placed in close proximity to existing successful centers; some new locations were less then 2 miles away. We thought that Kumon was changing their market penetration targets and was trying to implement a saturation strategy. There were already 5 Kumon centers within a 5 mile radius of our center according to Kumon.com. We were concerned about the possibility that another center could be placed within 2 miles of our center. It turned out Kumon corporate had plans to aggressively expand the number of centers in North America and in some areas, increased target market penetration rates.
At this point, we thought selling the center was our best option. Within 2 years of expanding our center, Kumon changed zoning requirements, furniture standards, and market penetration targets. We also felt that Kumon corporate did not respect the amount of money current owners already invested in their business. If Kumon did respect the amount of money invested by owners, subsidies and assistance would have been offered to owners that are impacted by Kumon changes. We thought our best move was to cash out.
Selling the center was a whole other ordeal, mainly because of Kumon franchising. We know we are not the only ones disappointed with the franchising department because we’ve been contacted by other franchisees (existing and potential) that are having issues with Kumon franchising in the NJ/PA area. I will not get into details, but let’s just say the leadership, professionalism, and skill sets in Kumon franchising is lacking. I’m sure there are some people within franchising that have the requisite skills, unfortunately we did not have the pleasure of dealing with those people during our sale. I may share details on our experience at another time. We have already sent a detailed account of our experience to leadership functions within Kumon corporate. I encourage the people that contacted me to share your experiences with the franchise department with Kumon leadership.
My intent in writing this post was to explain why we decided to sell our center, not to dissuade people from buying a Kumon franchise. We did not believe that putting more money into this business was wise for us. We were concerned about a corporate organization that did not seem to value the investment made by Kumon owners. We also thought we could find opportunities that were better investments in terms of time and money. Once we opened ourselves up to selling the center, a better opportunity did present itself. In the end, we decided to pursue the better opportunity and sell our center. We could not be happier about our decision.
Please feel free to continue to contact me if you have Kumon questions, need a different perspective, or just need to vent.
Wishing everyone the best of luck,
David Joseph
[...] we reported in the post KUMON Franchise Owner Complains of Overexpansion, some franchise owners of Kumon North America are increasingly disturbed by what they see as [...]
David, I can’t thank you enough for all the hard work you have put into sharing your experiences with Kumon franchisees. I am delighted that you have found an exciting new business venture and wish you all the best,
Nicole
My wife and I have been looking into a Kumon Franchise to fulfill her dream of teaching. I appreciate your post that better inform and educate us. I believe we will think harder about the Kumon Franchise.
I deal with marketing and sales everyday and understand the benefits of brand awareness. I don’t believe saturating the market is a “positive” for brand awareness. As centers open and close due to ailing profits from a saturated market, consumers will look at the brand as a troubled company and it will begin an undesirable effect. Just some food for thought!
Jonathan, food for thought indeed. There are many reasons why closing centres would be bad for the brand, so it just makes good sense to minimise such for everyone’s sake.
Thanks,
Nicole
Thanks Dave for your post. I can see how this franchisor does not respect the franchisees. KNA doesn’t consider a franchisee as an equal business partner. It simply treat you as an KNA employee. Many of the Kumon Franchisees who are in the business for some years are really unhappy about the new management. The franchisees do not have any voice. The IAKF is following the failed path of PAKCO. The same innefective management, and a attorney who works for a fee. Free advice as good as no advice. We need someone who is ready to fight, go to the senators and congressmen/congresswomen and get some help for the injustice and bad business practice KNA is following in its franchise business.
KNA’s winning in its strategy of having the Franchisee invest his/her money and time in the oversaturated markets. KNA doesn’t any money or time in setting up a Kumon Center as Dave was mentioning in his post. They protect some influential instructors with protected territories and being a IAKF official may be a good way to protect your territory or being a member of president’s advisory team. KNA has lost my trust.
There should be changes in the new management team and then may be there is a chance that the moral of the farnchisee’s will be restored.
Kelly
I am sending an email as a parent, I just took my son in to Kumon tonight and found out that Kumon has no longer allowed his Kumon teacher to continue her program because she is not in a “strip mall” We live in a comunity that does not live around “strip malls” but lives around perserving our culture and heairatage!!!! And some CEO of the company sent his workers to observe her work, they did not like the fact that she made Kumon an amazing experience for both the students and the parents!!!! The company didnt like the fact of her location and that parents were involved with thier childs contuning education!!!! That is just wrong!!!! Did the CEO forget about the impact that Kumon does for that childs education???? Or are they more concerned about thier paycheck?????
karyn:
where is the franchise that you are talking about located?
I recently applied for a franchise opportuinty with Kumon. What type of questions they ask if I get a phone interview??
Any help will be higly appreciated.
A new instructor get an advise from branch staff:
“KNA can kill you in any way if they don’t like you.”
kelley, thank you for your good message here. I agree with you. New jersey Iakf doing nothing for small franchisee only protecting big franchisee. IAKF only giving T-shirt to small franchisee. Company keep expanding and big influential instructor in edison also starting own power learning tutor centers near Edison but company not doing nothing. Company protecting big instructor and iakf also helping company. All small franchisee getting no help from iakf. kelley can you give us information about new association Packo? thank you
I have been watching the comments on this site with great interest the last few months. I am a relatively new Kumon Franchisee in NJ. Let me say up front I love my job. I think the Kumon Method and Curriculum are both top notch, I have watched numerous children, including my own, blossom with this program.
That being said, I was thrown into a whirlwind of “green dots” (expansion areas) shortly after I purchased the center in 2009. If I knew then what I know now I would have not purchased the center. I say this not because it is not immensely fulfilling work, but because I have had insight into the business challenges due to the current environment. So I realized long ago I have three options: get out, complain and do nothing or speak up constructively and work hard to counter the balance of power so franchisees are heard. I have seen through prior experience in two university settings how a small group of dedicated, educated, passionate people can move organizations to do the right thing.
I decided to work hard with IAKF and to enlist my colleagues so we can work towards a better business plan that will benefit Kumon and Kumon Franchisees. We have made progress but it is a long-term fix to a very serious problem. Just like we tell our parents Kumon is a long-term program with benefits that will last a lifetime.
I am privileged to be a part of the NJ/PA IAKF Chapter. We have fantastic instructors who have a wide range of student numbers, from fewer than 100 to well over 1000 students
What our regional group has accomplished in less than a year:
*alignment of instructors who represent over 80% of the student population in our area
*quarterly meetings focusing on improving the business aspect of running a Kumon Center
*sharing of best practices amongst members
*regional profitability study
*a dialogue with regional management on many important topics including:
A viable approach to expansion
Marketing support
Growth strategy
Advertising opportunities
Branch staffing concerns
We are delighted to be the host area for IAKF’s full day annual conference, which will take place on Thursday, July 15, at the Hilton Newark Airport Hotel. The conference is designed to inspire and support attendees in the success of their businesses and we will be hearing from a number of KNA’s top franchisees.
The chapter meetings are open to all IAKF members, monthly meetings will resume in September. All input is always welcome, feel free to contact me directly.
Thank you to all the posters above. I was considering a Kumon franchise — but after reading the above — not anymore. I appreciate Nicole trying to defend Kumon, and indicating a change coming. But, the frank and honest comments by the people on the ground have been exceptionally insightful. I wish you all well in either a lawsuit or changing the strategy of Kumon. Too bad — seems like the product itself is really good.
More mass firings at Kumon. Many people with 20 years or more
[...] KUMON Franchise Owner Complains of Overexpansion [...]
KUMON Announces Aggressive Northeast Franchise Push
http://www.unhappyfranchisee.com/kumon-announces-aggressive-northeast-franchise-push/
Comments, reactions invited.
This company is destined for FAILURE. My 17 year old daughter was hired a week ago. She is a straight honors student who was thrilled at her first job. They hired about five high school students at the same time and then a week later, after having them work their shifts….fired them. No explanation, no exit interview…just fired. She was devastated. They think that they can treat these great high acheivers like “trash”, they are horrible. Three of the “fired” employees were standing outside waiting for their rides.
My daughter takes extreme pride in her academic successes. She is on National Honor Society, etc. On top of that she felt so passionate about getting the job. Then without notice, fired. No training was provided during the four days she worked. She took city buses to get there, walked a mile in order not to be late. She was so honored to get a job there. She was literally “thrown” into the job. She never received any instruction other than that of other “17″ year olds that were also new. The owner/director said that “after all, it is a probation period”. Is this truly how the company is supposed to be run? Is this the reputation you want?
I went inside and requested that the owner/director have the decency to at least explain to my daughter, why she was being let go. They had never requested w4′s or I-9′s, so I am also considering suing over unfair and illegal labor practices. This company is bound to be going downhill soon. I refuse to let this matter go, as this is just plain wrong.
This Kumon franchise and those like it trying to obtain “cheap” labor without a thought about what they are doing, needs to stop. This office is located on Eubank & Academy, Albuquerque, NM. Today’s Date: October 18, 2010.
I am writing in response to the posting by “E Jackson” on October 19, 2010 regarding Ms. Jackson’s daughter. Shortly into her probationary period we determined the job was not a good match for her. I will not discuss confidential employment specifics about her in this public forum. Like all of my staff members, she was invited to join my staff because of her strong school performance, honors classes, National Honor Society, etc. However, not every person, even the most intelligent, is well-suited for every job, at every point in their life. She and one other employee were let go on the same day after it became apparent that the jobs weren’t a good match. I briefly explained my reasoning to her. A formal exit interview wasn’t appropriate given the very short-term (four-day) employment relationship.
Ms. Jackson’s daughter was trained and observed by my experienced staff members and me throughout her probationary period. Letting her go was in no way intended to be a reflection on her intelligence or capabilities. I know that she is smart, will continue to do well in school and will find rewarding work.
The inferences in Ms. Jackson’s posting about employment practices, and the stability at Kumon, are inaccurate. There have not been wholesale employee firings taking place at my Center. Many student employees typically stay with us until/unless there are conflicts between school/activities/work schedules or they move on to college or other jobs. Further, we work very hard to promote fair and legal labor practices.
As parents ourselves, and as a business dedicated to providing quality education to our students, we understand that Ms. Jackson is upset her daughter’s employment with Kumon did not work out. I want her, and all of you, to know I have no intention of hurting Ms. Jackson or her daughter, and wish them both the best.
It is kind of you to spend more time on this forum “explaining” things than you did when you let these “employees” go with no such kindness, respect or explanation.
May I ask why you did not require INS documentation prior to hiring? Can I also ask why you did not have this information for your records? I am expecting her to be paid for the hours she worked.
Your kind words would have been better utilized for the students who worked for you, prior to their quick firing. Whether a high school student works one day or months, it is only decent to realize that they will take their “firing” hard…especially for a “first” job. I would think that since you hire such young high school students (as young as freshmen or sophmores in high school) that you would also take their eagerness and excitement for a first job more seriously. Perhaps four days to you doesn’t seem like much. If you were truly intuned to these students you would know that these are formative years and they are trusting you. A short “exit” interview to explain that the job is possibly not a good match, that they did nothing else wrong, or where they could have made improvements would have been the preferred method. Just to “toss” them outside is bad business practice.
Inquiries to the appropriate agencies regarding these issues of concerns should be made. May I also suggest that the wonderful families that you serve look into your practices as well. They are entrusting you with their most valuable assets, their children. Perhaps you should consider “testing” your employees prior to offering them employment.
Please understand that I am concerned when I see an agency involved with children having to live up to the highest standards in all applicable areas of their business.
Your response is appreciated. All this could have been avoided with a few elements of human kindness and decency being applied. My daughter would have preferred that I “let matters alone”. Her confidence broken, and a sense of humilation lingers with total confusion. It just seems to me, being in the field you are in and a parent as well….as you mentioned….that your company would have been more sensitive and would have handled things better.
I hope you will do so in the future.
Thank you for your followup response.
Can anyone recommend a franchise attorney in the Orlando, Florida area?
Hi BigFish,
There is a Gary M. Berkson Esq. of the firm Moran Kidd Lyons Johnson & Berkson. His phone number is (407) 841-4141 and his email gberkson@moran-shams.com
The mailing address is P.O. Box 472
111 North Orange Avenue
Suite 1200, Orlando 32801-0472
Regards,
Nicole
as a former kumon contractor, I witnessed first hand the overexpansion issue that everyone has witnessed first hand. Senior managment does not “get” the US market, and applies the japanese model of flooding the market & driving down prices. I should also point out the 800 lb gorilla in the room: only 30 percent of US students actually complete the whole process from start to finish.
I was considering buying a Kumon center, but after reading all the comments, I have second thoughts. So, thanks everyone.
Just one more comment. For those that said, well, that was in the FA and that was how franchisor work. There is nothing one can do. I am sorry. I disagree. By debating in a pubic forum, potential franchisee like me and a few others before me would think twice. It will slow down the expansion plan which is good for all the current franchisees. As the words get out and by continuing pressuring corporate, hopefully they will change their expansion plan.
Good luck to all and keep up the fight!
Guest, thanks. It is good to remember that there are always alternatives to just giving up. Good luck to you too,
Nicole
For those Kumon instructors, former kumon instructors, potential instructors, laid off Kunmon empolyees and parents, You will not believe how badly and unjustly I was treated by Kumon North America.
I am an MBA graduate with over 10 years experience in the private sector. I have decided to apply with Kumon to become a franchisee in Sacramento California because I strongly believe in education. I applied and signed a training agreement; Kumon policy states that if a potential condidate decides to buy an existing center and the deal didn’t go through, Kumon provides the option to open a new center.
I worked so hard and sacrified a lot to complete my training that involved 2 trips to the east coast, a comprehensive business plan, countless worksheets to solve and grade and a system certification. I was ranked one of the top trainees that I was approved right after my first trip to New Jersey. Unfortunately, most of the fine people I worked with in the franchising department were laid off to everybody’s surprise.
After that, things started to look bad for me. The San francisco branch denied giving me the option to open a new center and put tremendous pressure on me to buy a costly and neglected existing center; furthermore, Kumon wanted me to relocate the center after paying a huge amount for it. The owners of the center have been with the company for a long time and have a lot of influence within the management; they wanted the center to be sold so bad and I was the person who had to buy it.
The management tried every tactic to force me to buy this center and threatened me with terminating my training agreement if I didn’t agree to take over the center. when I kept asking for the other option to open a new center, they informed me that my 2nd training session was not satisfactory so Kumon can only approve me to buy an existing center. I called Kumon University and talked to the main instructor who denied the information regarding my performance and informed me that I was one the strongest condidates and that Kumon will be pleased to have me as an instructor.
Unfortunately and after the management realized that their tactics to put pressure on me to buy the existing center failed, they sent me a letter informing me that my training agreement has been terminated. I have the letter of approval, an email trying to convince me to buy the existing center and a recent phone message again asking me to take over the existing center.
Those are not acts of people who believe in the Kumon mission, there are within the management many people who wouldn’t hesitate to use deceptive tactics to advance their corporate interests. I have sacrified so much to successfully complete my training and I did all that based on written promises that were made to me; unfortunately, all my hard work was thrown away. There are many people within Kumon who felt bad for me and were surprised by the actions of the West Coast management.
I would like the support of everybody. Please send letters of support to Kumon North America President and help stop the injustice done not only to me but to many other franchisees and former Kumon empolyees. Thanks.
Seems weird that Kumon would pass up a new franchise sale to a qualified prospect, especially in this economy.
Who is this SF branch? Why do they have more of a say than the Home Office?
I don’t get this.
SF branch is part of Kumon NA. An instructor with a lot of influence decided to retire so her husband couldn’t own more than 2 centers; they decided to sell their 3rd center, the most neglected one of the three. They put tremendous pressure on the SF branch to convince me to buy their center. When I asked to open a new center, they used various deceptive tactics and terminated my agreement although I was ranked top in during my training, received my aproval letter and successfully completed all the required tasks.
Mr. Bouchaib Benmira,
As an MBA graduate with over 10 years experience, you deserve better. May be you should be glad that this Kumon deal did not work out for you. Consider opening your own and don’t be surprised that it may turn out to be better ones too! You have our support. After all that is what we did for Kumon North America until about one year ago.
Signs2000 Corp. provided and installed most of the Signs and Graphics to all the recent newly developed Kumon owned centers in NYC :
Chelsea, 320 West 23rd Street
Midtown West, 747 10th Avenue
Gramarcy Park, 381 2nd Avenue
West Village, 80 Carmine Street
Chinatown, 123 Baxter Street
Upper East Side, 1582 First Avenue,
Battery Park City, 2 South End Avenue,
Upper West Side,700 Columbus Avenue
Harlem Central, 2235 Fredrick Douglas Blvd.,
Can anyone please recommend a good franchisee attorney in the Chicago area? Thanks for your help.
This is crazy! My children attend Kumon – and i love and respect the approach to education.
But after reading all the crazy comments, the challenges, the deceptions, the neglect, and the behavior of the Kumon management – anyone would be out of their mind to enter into a contract with them.!
I wish all the franchisee’s currently in business the best of luck… Including the owner of the center my children attend…
Javier
Thank God, I read this post,
Very enlightening!!!
I have been pre-approved by Kumon to buy one of the existing franchise that are for sale. Kumon will not interfere in pricing and closing of the deal with the current instructor. I am supposed to start the negotiations as of early next week.
Which figures should I look into when deciding to buy or not to buy.
Thanks
I find this paragraphs on another website whe I do some research on Kumon. Is true or not? Somebody in Kumon tell me the truth please. I am thinking to start a franchise with Kumon but now not sure.
>>
To all those out there who are considering a Kumon franchise, you need to think long and hard about the franchise business model as well as the culture of the organization – not just amongst the franchisees, but amongst the corporate staff. Indeed, this is the case for any franchise. In order to assist the entrepreneurs, I’d like to discuss the basic structure of the business model first.
Consider three major points from the business model. 1) Kumon requires that its centers occupy commercial space. Given that the company’s expansion plans focus on major metropolitan areas, it is very likely that the rent for these spaces will be quite high on average. 2) At the same time, Kumon has a tuition policy that basically limits the amount a center can charge to approximately $110-$120 per student/subject per month. There is some variation and some centers do charge slightly more, but this policy has remained stagnant for nearly a decade. 3) Kumon assesses a royalty of approximately $35 per student/subject per month; this royalty is consistent across the board, regardless of the center’s tuition charge. This is approximately a 30% royalty – obviously the percentage will change based on the tuition charged – and it is far higher than the industry average (10-15%). Kumon raised its royalty rates in 2008, and the previous rate increase was in 2002. It is therefore reasonable to expect that another royalty increase will happen in the next few years. Please note that aside from the assumption about increasing the royalty, all of the above information is readily available from the Kumon Franchise Disclosure Document, the Kumon Franchise website, and by researching other educational franchise opportunities.
Using those figures, a wise entrepreneur can start to create a rough business plan. If your center has 150 student/subjects and you charge $115/month, your monthly GROSS revenue will be $17,250. Kumon will recoup $5250 as royalty ($35 x 150). From the remaining $12000, you would need to subtract rent, payroll, utilities, taxes, workers’ comp insurance, supplies for the center (pencils, cleaning supplies, etc.), advertising expenses, travel expenses, and other items that eventually add up. If rent alone is $2500/month (which is certainly a reasonable estimate) and payroll is $3000/month (conservative estimate of 6 staff members working 15 hours per week at $8 per hour), you’d be left with $6500 to cover the remaining expenses, and you’d be very fortunate to wind up with $4500 net revenue per month. Many centers are larger and have higher enrollment, but bear in mind that your expenses grow along with your enrollment. Additionally, while the franchise fee itself is very low, the cost of setting up the center and maintaining it can be very cost-prohibitive. Please keep in mind that as a Kumon franchisee, you cannot have any other employment (full-time OR part-time) effective the day you sign the franchise agreement. Finally, most new centers will have to build their enrollments from the ground up, so it is possible that the center will not break even (let alone turn a profit) for a long time.
Again, please remember that the above figures are rough estimates, but they do provide a basic framework for you to begin estimating the costs of operating a Kumon center. Also, please remember that I am not advocating for or against the Kumon business model; I am merely trying to provide insight so that you can make an informed decision as an entrepreneur. As I mentioned earlier, there are many decisions to consider when pursuing a franchise. The above is a brief introduction to the financial considerations, but I’d like to discuss some of the internal issues that being part of the Kumon family entails.
In September 2010, approximately forty Kumon employees were laid off without any warning or explanation. Many of these people had been with the company for significant periods of time and were well-respected by fellow employees and franchisees alike. This forced many departments to scramble to complete the work that was suddenly not getting done. Even more surprising was the lack of communication from the upper management to the people who still remained with the company. The franchisees did not receive an explanation either, which continues to cause great concern among the franchisee community. Following the layoffs in September, the company has seen more staff members leave voluntarily. Good communication is a sign of a company that values its employees and treats them well. It goes hand-in-hand with retention; employees want to stay at a company that communicates well. It does not appear that such an attitude is present at Kumon.
Two disturbing points about the layoffs should be mentioned: First, the president of Kumon North America conveniently scheduled an international business trip beginning a day or two before the surprise layoffs. He was not around at all when the layoffs happened, and that is cowardice personified. Secondly, the layoffs occurred on September 29, 2010. During a layoff, most companies give their employees at least one or two months of continued insurance coverage before they have to begin COBRA. Kumon did not give anyone that courtesy, and the employees who were laid off had only one day of insurance coverage before having to decide whether or not to begin COBRA on October 1. As I mentioned before, many of the employees who were laid off had given many years’ service to Kumon (some had been there more than twenty years) and they certainly deserved more than one day to get their affairs in order.
The fallout from the layoffs has resulted in a company where fear is the motivating force behind continued employment. As there is very little internal communication, Kumon associates are constantly wondering when the next round of layoffs might happen and for what reason they might occur. At the same time, the company treats a select few high-performing franchisees to luxury vacations (perhaps the fact that there are so few high-performing franchisees is an indication of the questionable sustainability of the Kumon business model), hosts multi-million dollar conferences all over North America, and maintains a lavish headquarters in northern New Jersey, one of the most expensive areas of the country. It is concerning to consider all of the above in light of the increased focus on expansion coupled with one of the highest royalty rates in the franchise industry. Again, both the increased focus on expansion and the high royalty rate are public knowledge; one can certainly find plenty of information on these topics if the proper research is done.
Hi Tim,
I’d like to know at which website you found the above, as it didn’t come up in any of the searches I did. It is well-written, thoughtful and brings up a lot of valuable points.
Wondering about its accuracy?
1) Yes, you do need to think long and hard about the above-mentioned aspects before going into any franchise.
2) Yes, Kumon does require that its new franchisees (and current franchisees in the US except Hawaii) use commercial space, and usually specifically retail space, which depending on the area can be quite expensive. Kumon Canada is more in transition in this area, and many centres are still in non-commercial space, but this is changing gradually.
3) While it is true that many centres charge $110-$120 per student/subject per month and in fact some charge less, the current tuition policy states that franchisees may set their own tuition rate. Many choose to offer discounts. There are also centres that charge $150 or more per subject. It depends on the market – some areas are more expensive, or more saturated with centres charging less so people feel more constrained against charging higher tuitions.
4) Yes, Kumon did raise its royalties in 2008 and 2002. The rates are somewhat as described above. The royalty begins for a new franchisee at $36 per subject, to which may be added taxes, for most Canadian franchisees. It drops to $32 per subject (again sometimes plus taxes) when you reach full license. You must attain full license to have your franchise renewed at the end of the initial three year term. In addition, Kumon collects royalties on the initial registration fee.
5) Yes, a wise entrepreneur will start to rough out expected profit based on the local “going rate” for Kumon (and what you think the market will bear) and how many students you might expect within the first years (which will again depend on your market – ask around to find out the growth of other new local franchisees to see what’s realistic). It is very unlikely that you will start with anywhere near to 150 students.
Find out what your rent would be – in some cases it is less than $2500, in others higher. Staffing costs vary widely. Take into account the cost of build-out for a new centre, which can be tens of thousands of dollars as well as the time-limited initial subsidies for rent and marketing. It is important to remember not only the full time requirement, but also the fact that you cannot reduce your rent by sharing with another business.
6) The information above about the layoffs is a good summary of what happened as well as some of the consequences amongst staff and franchisees.
7) Interestingly, there were so many people who qualified for those “luxury vacations” (annual weekend retreats and bonuses) by 2010, and the accompanying pay-outs became so substantial, that the company has completely revised the points system to reduce the number as well as to keep the payout within their desired budget. The amount spent by the company on conferences and headquarters is indeed considerable.
Finally, if you do decide to go for a Kumon franchise, don’t forget that another option in many areas is to buy an existing, profitable centre rather than starting up one of your own. It may look a lot cheaper to begin from scratch, but add up all the start-up costs and unknowns versus the actual accounting of the centre for sale to figure out which is best.
Feel free to ask more questions, and keep doing your due diligence.
All the best,
Nicole.
“Finally, if you do decide to go for a Kumon franchise, don’t forget that another option in many areas is to buy an existing, profitable centre rather than starting up one of your own. It may look a lot cheaper to begin from scratch, but add up all the start-up costs and unknowns versus the actual accounting of the centre for sale to figure out which is best.”
Nicole,
Is there rule of thumb to price an existing centre for sale?
Thanks
Hi Francois,
Generally existing centres are valuated at something like two to three times the net profit of the most recent year – there are a number of “soft” factors that will influence it up or down of course, as well as other factors like how much furniture is included.
Does that help?
Nicole
Thanks Nicole,
One of those “soft” factors to be considered I think is when an existing center that uses a church should be moved to a commercial space after being sold to a new owner. Correct? So the rent will be much more for the new owner and there is no furniture included.
For a centre with 300 students how large do you think a suitable commercial space should be.
Thanks
Francois
That’s right, Francois, or when an existing centre is not using the CMS computer program. For a centre with 300 students, it depends how many days you plan to be open. Some centres are open only two or three days, others are up to four or five. So, it could be as little as 900 square feet (depending on how the space is allocated, let’s say seating up to 30 students or more at a time) or 1200-1500 square feet.
Nicole
Hi. It is written above that some Kumon centers are open only 2 or 3 days in a week. Can those owners have a part-time or not? Thanks. This is a very informative thread. – Subbu
Hi Subbu,
Nearly everyone starts at only 2 or 3 days a week for 3 or 4 hours at a time. That does not mean that it is only a 10 hour a week job! To be successful, you ideally would be at your centre five days a week or more to be available to provide information to walk-ins and establish your presence. You need to spend a lot of time on marketing, getting to know the business community and networking with your local Chamber of Commerce and other such opportunities. ‘
The worksheet requirement alone is very time-consuming, as you want to be fully licensed within the first 12 to 18 months to bring the royalty down to 32 dollars per subject as soon as possible. In addition to worksheets though new franchisees should take advantage of all other professional development opportunities – not just the basic monthly meetings but also any worksheet study groups or other voluntary study groups and regular informal visiting of other centres to learn from veteran instructors.
And of course as you grow, you will want to add on more class days and hours to attract people of different schedules, and to target for example parents with younger children who want to come in in the morning or early afternoon.
In short, there is a lot to learn and do in your first two to three years to be an effective and successful Kumon franchisee. Part-time hours are not an option if you wish to optimise learning, growth and profitability.
If you have any more questions, don’t hesitate to contact me more directly.
Warm regards,
Nicole,
President, IAKF.
Hi Nicole,
I am considering buying an existing Kumon in Ottawa. I read all above posts and specially your post about pricing of an existing centre is very helpful to me. I have 2 questions maybe you can help me with your thoughts.
-From your experiment, considering the fact that Kumon is aware that you have paid a lot of money to buy an existing centre, do you think they will give you a chance to earn the money you invested before they open a new centre close to you.
-When an existing centre is overtaken by a new instructor, does it normally lose some of its clients? if yes typically by what percentage?
Best Regards,
Reza
Hi Reza,
1) It is possible that Kumon will take that into consideration – however, since this is a valid concern on your part, it is better to ask this up front to see how Kumon responds to your question, and proceed accordingly,
2) A centre almost always loses some clients, yes. There will always be certain students who either are greatly loyal to the outgoing instructor or families who use the change as a pretext for leaving, or some combination. But the numbers who drop are far too variable for me to give you any realistic idea of what will happen in this case. Just expect it to happen and also expect that the marketing you will do in the first year especially will also bring new students to your centre. Will the two balance out? Again, hard to say, but with careful planning and hard work on your part both in terms of developing your instructional skills and marketing your centre, you would in time prosper your centre, should you choose to pursue this purchase,
Feel free to ask further questions if anything else occurs to you, and all the best in your process.
Nicole
I was a takeover three years ago. KNA rolled out the new expansion plan 8 months after I took over. The economy collapsed 2 weeks after my take over (and a car drove through my waiting room a week after that!). I was the lucky recipient of a “green dot”. In my experience that will not make a difference, if KNA thinks there is room for another center it will not matter if you are new. My perception though is in Canada there seems to be better communication and understanding of the market potential.
Kumon did put the green dot on hold for a year after I made a strong case against the center. As with any business it takes a few years to start to make money let alone recoup some of your initial outlay. At the end of the day you need to do your research and understand the market potential for KUMON in your area.
I did not lose many students. Great communication and coordination with the current owner will prevent loss.
I truly believe in the Kumon philosophy, and love the program. Their corporate side, however, is going to destroy the company.
Kumon is getting a lot of press because they are opening many new centers, and boast low starting franchise costs. Do not believe their quotes for the starting franchise costs. Yes, the amount you pay Kumon to start the franchise is low. They then require you to pay our of your own pocket for furniture that they pick out. You can not find deals on your own. At the drop of a hat they can then decide that a table you paid $500 for doesn’t fit what they think is right now, and want you to replace all your furniture at your cost. Not only that, now they are forcing franchisees to close based on their current location, locations that had been approved before. So the franchisee has the option to give up and close (and still have a 4 year lease), or find a new location in a matter of a couple of months, and pay double the rent. Soon they will decide to make all franchisees pay an extra $3000 per year. We have no say.
Kumon changes initiatives so often, and the franchise agreement is so one sided that you have no option pour more resources and hours in to make these changes, only have it to all change a few years later.
They have now adopted the policy that they are not your friend, they are not here to help you. If you don’t like it, go ahead and quit and throw away the hundreds of thousands of dollars and countless hours you have put into your business. They do not respect their franchisees, and treat them worse than employees. We front the money and they look out for themselves. Then after devoting yourself to a company for 20+ years, they put 2 new centers a mile away from yours, shut you down with unquantifiable reasons, and you have nothing left, and no way to fight. At least working in corporate america, I would have gotten a severance package.
Let me speak out on behalf of a friend of mine who’s kids have been with KUMON since 1st Grade. The oldest one is now in middle school and when time to take a test to determine if he qualified for Algebra, he failed and ended up with Pre-Algebra while a friend of his who never took Kumon is now in Algebra Honors. The program has failed him and probably countless others because this program does not make the kids think but just “memorize”/crank out solutions over and over. Needless to say, they dropped all their kids from the program.
I guess no one has seen this:
http://losangeles.cbslocal.com/2011/09/09/math-tutor-63-accused-of-sexually-abusing-13-year-old-girl/
This is a SERIOUS Disaster for the company, and for anyone considering opening a center. The negative PR has done unacceptable damage to the image of Kumon
Hi Jmen
You speak the truth and the heart of many Kumon franchisees today, especially in the US.
1) We truly believe in the Kumon philosophy, and love the program. At the same time we worry very much about the corporate side.
2) Kumon is putting out more press releases about all the new centres they wish to open in the Central region and in the South. They boast low starting franchise costs. Of course, not mentioned there are all the very high costs besides the franchise fee of actually starting a Kumon centre. It looks like they are actually paying you to open a Kumon
but pay close attention to what they say at the end of the press release about how much cash on hand you need for a start up (and usually considerably more for buying a centre of course as some centres are worth well over two or three hundred thousand dollars) and how much net worth you need. They are not exaggerating in the slightest.
We have put some information on our website at http://www.kumonfranchisee.com for prospective franchisees including prospective buyers. Please if you are in that position go and check it out. We will be continuing to develop and expand our information to potential franchisees over the coming months. The need is very, very great right now – I am constantly on the phone with PFs giving them up to date and accurate information about costs, profitability issues and so on.
3) Feel free to contact me directly at info@kumonfranchisee.com if you have any questions by the way.
4) It is true that we all spent a lot of money on Junior Kumon u shaped tables and will be requiring us to replace them as well as the rest of our furniture, in accordance with the new centre transformation initiative which begins in April 2012. I have learned from the head of Kumon Canada, Lisa Kaul, at the recent consultation day she held at the head office for selected franchisees all over Canada, that they will be reimbursing us 500 dollars for the table, which I will certainly be looking forward to. That should more than cover the cost of the two small tables I will need to purchase to replace the u shaped table as the new tables are to be subsidised by Kumon – in the US they are about 60 dollars each. Kumon Canada at last report was still looking for a supplier who could provide us with tables at that price.
5) The International Association of Kumon Franchisees (IAKF) is deeply concerned about wrongful forced closures of Kumon centres for a bewildering variety of stated reasons (including locations previously approved) which seem to be proliferating currently at an alarming rate at this time of writing. We have had to intervene recently on behalf of six franchisees who were being terminated, and I am happy to report positive outcomes for five of those. Sadly the sixth will be terminated within the next week, but because she was not willing to contest further, the IAKF could not help her.
6) The annual Kumon changes have accelerated to the point where franchisees literally do not know what to expect next. They have accelerated to the point where Kumon associates, ie staff employed by Kumon North America (KNA), can no longer tell us what is going on as they themselves are bewildered and confused and out of the loop. Communication on wide sweeping changes while forthcoming from Lisa and Kumon Canada imminently is deferred to the Annual General Meeting in January and franchisees and associates alike are left wondering and worrying about all the details.
7) Regarding the one sided franchise agreement, this too is a grave concern of IAKF and to that I would add that it is modified four times every year by changes made to the Operations Manual, so it is something we urgently need to negotiate with KNA.
8 ) In conclusion, like you, jmen, many feel that KNA is not our friend, not here to help and that the only alternative to navigating the new strange landscape is throwing away everything we have invested so far.
However, is the picture so bleak? I say no. I have put my money where my mouth is and after selling my centre a year again because of the need to relocate to a completely new area, I have opened a new centre and re-invested everything in the hope that I can work with Lisa and Kumon Canada as well as KNA as a whole toward a brighter future and a stronger Kumon in NA, for the sake of the franchisees, the parents and students, as well as associates of KNA.
IAKF works tirelessly for each and every franchisee in NA as well as supporting our sister associations throughout the Kumon world in their efforts to do good in their countries. We are even now in the process of setting up a badly needed first meeting with the new president of KNA, Akira Hamanaka, to discuss wrongful closures, rampant expansion and the centre transformation, among other vital issues.
Because of the pressure on franchisees our membership is growing daily. The very active chapters in Chicago and Houston are building extensive strategies to deal with the expansion plans which will be revealed at the appropriate time. As an association, too, we are deeply involved in short term and long term strategy to ensure that the investments we have made over the years will not be lost.
I invite all current franchisees who have not yet joined or renewed this year with us to join or renew at http://www.kumonfranchisee.com today. Together we are stronger all the time and our influence is increasing exponentially. Let’s do great things in unity and alignment with each other, persevering in the face of every obstacle, always getting new members to join in the work and the discussions, as our franchise lawyer Andrew Selden constantly advises us. This is how every franchise association that is successful reaches its goals, and this is how we will too.
Again, contact us directly at info@kumonfranchisee.com if you have anything to ask or mention in a comment privately.
Best wishes,
Nicole,
President, IAKF.
Comment to blog editor – I meant to put point number 8 at my conclusion and it was converted to a smiley face – please edit that for me if possible. Thank you!
Nicole
Hi Macar
That is very disappointed for you and for your friend, to invest all that time and money in Kumon and not to see the results that the family had hoped.
I would like to know more about this situation, if you care to share here or at info@kumonfranchisee.com – there are a number of possibilities that may be in play here to lead to this outcome and without knowing more about the family, child or the centre in question it is impossible for me to make an informed comment.
I would like to share just one of my personal experiences of the program. My eldest daughter also joined Kumon in grade one. By grade six she was studying at a grade 11 level in Kumon math and had completed the English program. She had already decided to become a mathematician, all unbeknownst to me. She ended up convincing her school to allow her to skip a year of high school and went through her undergraduate and graduate degrees in math and computer science on scholarships and grants, studying at McGill and partly at Oxford University.
When she is asked what Kumon did for her, she replies that not only did she gain very strong mental arithmetic and excellent fundamental skills in the four basic operations, operations with fractions and decimals and throughout algebra and functions, but she learned to think and to learn on her own.
In its early stages, it would appear that Kumon is just memorising a lot of facts, but that is only the foundation. Once the addition, subtraction and multiplication facts are memorised, students can go on to complete their basics and move on to the challenging problem based levels in J to O where they have to learn from more and more complex examples to solve very advanced word problems in algebra, calculus and other high school and university topics.
Looking forward to hearing more from you,
Nicole
Hi Nyc tech guy,
Like you, I was deeply alarmed when I learned of this on the day when the news broke. I have to say that I was very much impressed with how professionally and competently this crisis was handled by KNA. The head office almost shut down that Friday as the whole day was consumed by communications with the California office, the California franchisees, all the parents of the centre, media communications and so on. They covered all the bases. They made sure that the parents knew what was happening, offered them all to transfer immediately to other centres, gave them three months free tuition at the new centres, and so on.
The franchisee in question had his centre closed the following week. There were other allegations as well so it would appear that it was not a groundless charge.
Kumon had done all the background checks every company must do. Sometimes in spite of that checking someone like this gets in.
If you can suggest anything more Kumon could have done in this situation, I would be very interested in hearing it. Personally, I can’t think of anything.
I don’t think it has damaged Kumon as a brand. Parents very much relate to each Kumon centre and franchisee on an individual level. A centre in California is not very real to someone at a centre in Canada or even in other parts of the US or California itself.
Best wishes,
Nicole
Easy, MAKE A VIDEO STATEMENT FROM THE PRESIDENT. Instead they hid behind a PR person, and not hold a news conference or anything to “face the music”. No “we will be conducting an internal investigation” or any statement to that effect. It was a slap in the face to the victims and their families to have no word from the top management!
That would have been a great idea, Nyc Tech Guy! Perhaps that did not occur to them.
Cheers,
Nicole
Well, the Kumon management style is to not say anything – so who knows? I DO know that their is a new president of KNA- I don’t think that this was not a coincidence!
The new president, Akira Hamanaka, started in his position on October 1. At that same time, the former president, Hideki Kusuzawa, assumed a much higher role. He is now on the board of directors that controls Kumon internationally – the youngest member on the board.
Cheers
Nicole
The timing was just not right!
I thought it was odd too but since Kusu got the promotion, I guess Japan feels he did a good job.
Any other questions?
Cheers
Nicole
Dear Macar,
I am sorry to hear that the program did not seem to help your friend’s child. I do feel though, that one would have to know all the details of that student’s situation before jumping to the conclusion that Kumon fails their customers.
I have witnessed many students achieve great success with their education and they absolutely love and believe in the program. We have even had a bunch of program completers get perfect scores on their SAT’s and they thanked Kumon for helping them.
Of course not everyone will have success in the program, but isn’t that the case with all programs? I always appreciate when others share their experiences (good or bad) but at the same time, we cannot just assume that one child’s experience will be the same for everyone.
I have to disagree with you on your stance that Kumon does not make kids think. In fact, that is one of the programs strengths. We do not teach the children how to do their work, but we do teach them how to become self-learners.
Like Nicole mentioned, some of the material in the early levels are fact-based and students are expected to memorize them until they become automatic. However, it is necessary. Wouldn’t it be a shame to be studying Algebra and beyond, yet still be counting on your fingers or struggling with your basics? Building strong mental calculation skills helps our students save time on calculations so that they can put more effort into learning new concepts.
—
On another note, I am very displeased with the way Kumon has been treating the franchisees.
Hi Amelia,
Well said. Thanks so much for joining the discussion here.
I wrote Mr Hamanaka yesterday on behalf of the franchisees in Kumon North America, and the IAKF board of directors. I said,
Dear Mr Hamanaka,
We write this on behalf of the Kumon franchisees in North America, hoping that you are enjoying good health.
Since we wrote you requesting a December meeting or resolution of the termination cases before us at that time, 5 out of the 6 cases have been resolved or mitigated. Thank you for your swift attention to these vital matters.
Over the past weeks, we have continued to hear from franchisees who worry about termination, but much more, we have heard from franchisees in Chicago, Houston, Dallas, California and other parts of the US where green dots have populated their area to the extent that they feel they will all be driven out of business.
We have also seen the sudden withdrawal of supplementals from the US K-store in apparent anticipation of the CTI, without any announcement or explanation whatsoever.
Though Kumon was in the top five of “Low Cost” franchises according to Entrepreneur.com ranking for the past few years, this year, not only was Kumon not in the top ten, it did not even break the top 100. This is an enormous and startling change.
In short, there are a plethora of alarming and highly worrisome issues that are continually preoccupying franchisees currently. Dealing with these on a daily and weekly basis means that we have less and less time aggressively to promote our businesses and to do the vital work of professional development and the care of our Kumon students.
This clearly cannot go on, if we are to have a healthy and growing brand in North America.
We understand that the New Year will be very full with meetings for you, and again suggest that in order for us to find a mutually agreeable time, that we schedule a two-hour video teleconference first, prior to January 16, and subsequently have an in-person meeting in February or March to follow up on any items still outstanding from the first meeting.
Looking forward to hearing from you at your earliest convenience,
Nicole Smith, President, IAKF
SK Lo, US Treasurer, IAKF
Linda Birley, Canadian Treasurer, IAKF
Paul Matsunaga, Member at Large, IAKF
The overexpansion is spreading throughout the Midwest, Texas, and west Coast. http://www.businesswire.com/news/home/20111212005299/en/Kumon-Franchise-Expands-Midwest-Southern-U.S.-Regions. This expansion is resulting in a doubling and tripling of the number of Kumon Centres in major metropolitan areas in the United States. In my opinion, this is the beginning of the end of the Kumon franchise in the US as Kumon declines to expand into new markets but prefers to super saturate existing ones.
The true irony is that Kumon says that it is placing Centres two to three miles apart so that it can realize Toru Kumon’s dream of reaching as many children as possible. It thinks its franchisees are too stupid to notice that the correct way to realize that dream would be to expand into new markets, not by beating existing markets to death.
Be very careful about getting involved with this franchisor which is, in my opinion, arrogant and opaque. You could lose your shirt.
I hear you Josephine. IAKF is working very, very hard developing an intensive North-America-wide anti-overexpansion strategy for 2012. Stay tuned…
Happy holidays everyone! See you in the New Year!
NIcole,
IAKF President.
Thank you, Nicole. What are the chances Kumon will actually listen to IAKF? My perception is that Kumon is very convinced that it is right and its Franchisees are wrong. It is patronizing. My understanding was that Kumon’s new president has refused to meet with IAKF. That is not indicative of a constructive environment. How can IAKF heal the situation if Kumon refuses to talk with it?
My experience with this franchisor is that it is warm and fuzzy while it is courting a potential Franchisee, but once the FA is signed it has no qualms about placing another centre nearby, undercutting the ability to reach break-even, let alone to recoup initial expenses.
Dear Josephine,
I am sorry to hear of your experience with Kumon North America. I encourage you to contact me off-line so I can get you in touch with other franchisees that are dealing with similar situations. Through the franchise association we are working to improve the situation for all franchisees.
Mr. Hamanaka has not refused to meet with the association, in fact he has worked to resolve several cases and issues brought before him by the franchise association. We are very hopeful we will be able to help Mr. Hamanaka improve the franchise system and our prospects for the coming years so we may all share the beauty of the Kumon Method with more children AND make a reasonable salary/return on all of our resources and hard work.
I encourage you to join us as one voice, we need brave, passionate franchisees like yourself to help Kumon North America make changes to the current growth plan and franchise system.
Connie Schmidt Kirman
Kumon of Howell, NJ
http://www.kumonhowellnj.com
Josephine–
It is also my experience with this franchisor. I thank you for speaking the truth. I wish I had read your post before buying into this franchise. I hope your post will help prospective franchisees to make a sound decision. This franchisor has no long term corporate stragegy. It feels like that I am paying franchise fees to be a guinea pig.
Hi Josephine and Just the Truth.
This is one of the reasons we have a page on our website for prospective franchisees – unfortunately many people make the leap into Kumon with starry eyes and without even looking at sites like this online first, which are very easy to find.
No, that is not true that Mr Hamanaka has refused to meet with IAKF. We have exchanged quite a few emails since he took office in October, and he has expressed difficulty fitting us into his jam-packed schedule. I just sent another email yesterday suggested a new possible meeting time and will be following up by phone in January to firm up the date.
In addition, Mr Hamanaka was very helpful when six franchisees complained to me that they were not going to be renewed. Five out of those six cases are now resolved, and action was extremely prompt.
That said, it is indeed the experience of too many that Kumon is “warm and fuzzy while it is courting a potential Franchisee, but once the FA is signed it has no qualms about placing another centre nearby, undercutting the ability to reach break-even, let alone to recoup initial expenses.” This is only one of the issues I have kept on the table in my latest letter to Mr Hamanaka.
Best wishes,
Nicole
Thank you for your response. Happy Christmas and best wishes that the new year might bring a new receptiveness on the part of Kumon management.
The rumor Kumon is planning to shut down half of its existing centers in some areas. They may cut that down if some instructors can save themselves. It is disturbing that that is already their plan and their plan is not to help instructors improve to meet their new requirements. To them it is cheaper and easier to just cut these centers who are not just falling into line, or not performing superbly (to their standards, and not taking in that center’s market), and start anew with a new instructor. They can use any excuse to shut you down. Leases that they approved before may now be the reason why they decide to shut you down. Following instructional principles that they taught you for the last 3 years may now be the reason they decide to shut you down.
They did this in NJ, they will do this in other branches, and they can do this to you.
There are still many staff and employees that are trying to do what they can, but they have been strong-armed by the company also. This company honestly does not care about or respect its franchisees at all anymore, and that is a fact.
Hi Jeff,
Like you, we are deeply troubled about what we are hearing from different parts of the US and the kind of leadership we are seeing from Mr Hamanaka’s lieutenants. That is why I wrote and sent the very strong letter I have copied above. There is no time to waste. Immediate action must be taken to address the issues for the sake of not only Kumon franchisees, their families and employees, but also Kumon associates (employees of KNA), their families and all our Kumon families who bring their children to our centres.
We will need to stay very united and focused on our strategies throughout the coming year. Are you with us? Are your colleagues with us?
If you have not yet joined or renewed please do so at http://www.kumonfranchisee.com – also feel free to contact me privately if you wish at nicoleksmith@gmail.com
Warm regards,
Nicole
Hello Jeff and any others who want to comment during our terribly needed Christmas break:
Can you please hold you comments until January 3rd. We have been working diligently over the past 11-1/2 months without a break and desperately need it.
Thank you for understanding being patient for the next 7 days.
Anytime you are asked to “hold your tongue” while the 1% enjoys a well deserved rest…you should be up in arms. Desperately needing a break? When the New Year brings closures, firings and the unemployment line, perhaps then you can speak. But it will be much too late then.
There must be a reason they are requesting a 7 day reprieve. Contact your attorney ASAP. We will.
Happy New Year? I think not.
Hello Diane,
What a very interesting perspective you have shared with me. I can appreciate where you are coming from.
It’s true that our personal lives can interfere at times with a full bore professional existence, and that it appears that the urgency of the situation does not allow for any time off and we are distancing ourselves from important matters.
However, I do not regret, nor think it is unimportant, personally or professionally, to enjoy this time with my family. Family is the time-honoured foundation from which we are nurtured and grow. To seek time to be with family is in my opinion part of the professional character and personal worth. Specifically, I hadn’t seen my son in a year and he came by to spend time in our home. I was grateful that he had the time off, albeit limited, to travel to see me. It was an opportunity that I didn’t think should have been passed up.
Furthermore, my oldest daughter came along as well, and thus we could all celebrate together the birthday of my youngest daughter who is now a full-fledged teenager. My children are becoming busier and busier as they mature and I feel blessed that I was able to spend time with them all.
I know that these 7 days off may seem like a long stretch when I spend 358 days of the year working for the association, compared to your average CEO who gets weekends and many weeks holiday a year off, or your government officials who take the whole summer off plus Christmas break and other holiday privileges.
However, don’t you worry, Diane, I will be right back at this on Tuesday January 3 at 6 am.
In the meantime, best of luck with finding that attorney. I know it can be a challenge, because we were fortunate enough to work closely with ours right up to the time they went on their holidays. In fact, we will be meeting with one of them on January 3rd.
Sincerely,
Nicole
I apologize for disrupting everyone’s holiday break. Please do not read or respond until the new year. I didn’t even realize it, because even though I am off for the week and spending time with my family, I still am responding to emails daily, and mentally working on Kumon issues (especially the amounting stress and changes of what the new year in Kumon will bring). I don’t think KNA realizes this either, as our branch office has been pretty much gone since 12/21, and probably won’t even answer emails even once until the new year.
Nicole, I have read your letter, and Mr. Hamanaka’s response. You speak of action, but what action are you planning? Even when the new center started popping up 2 years ago (especially in NJ), everyone was up at arms at first, but then what happened? We had meetings in our branch about our outrage, but zero action was taken. KNA execs met with us, but pretty much stuck with the same canned responses. Then nothing happened, the rage died down, and KNA won.
We can show a united front, send emails, and dress up, but what does that do to them? They won’t care. I haven’t seen them concede or work with us on any of IAKF’s demands.
Hi Jeff!
My name is Connie, I am an instructor in NJ and I was the most vocal (still am) instructor when we were hit with green dots two years ago.
I feel the need to share what happened in NJ as a result of the green dots, positive and negative and why from my perspective it went that way.
Positive:
over 80% of franchisees in my NJ/PA region join IAKF, met to brainstorm how to counter and communicate with an uncommunicative and uncaring franchisor. We tried to appeal to the fact profitability is low (started a study), we stood united and yellow when Kusu told us he “felt” all would be fine.
we opened communication between instructors, most of which still is intact
Negative:
The rest of the country stuck their heads in the sand and thought..whew, glad that is not me. We fought solo, no group actions, no dialogue except past exit 121 on the NJ parkway. Even North Jersey could not get themselves together and some of the centers are abysmally close up there.
KNA shut down some centers with green dots, lured new franchisees into what we know to be not viable markets and impacted good instructors in bad ways.
People in NJ lost their steam. They thought..I paid my $60 dues..why didn’t we sue? why didn’t the few people who have put a lot of hours (unpaid) fix this? The answer to these are obvious to me and I think detailed in above postings. Suing is not the answer nor can we afford it. At this point I will be happy to start paying myself min. wage. If asked to dump a few thousand into a lawsuit I would walk away from this franchise, it is just not worth it.
So we are watching now and trying to analyze what exactly happens when centers are 2-5 miles apart. I have some interesting observations on this, but for those observations you will have to pay your $60 and enter the conversations we have daily.
Positive…we have learned a lot and now we have three newly formed IAKF chapters going in armed with the information we learned. PLUS they have large groups of people working. Not just a few!!!!! We did not have that NJ. I am a lot of things, but a good delegator/get volunteers moving leader I am not. This is my shortcoming that possibly hurt our efforts here, for that Jeff, I apologize.
Now…I am not bitter about any of what happened in NJ, please keep your anger aimed where it rightfully belongs, KNA management, not franchisees volunteering their time to make a difference for ALL OF US.
We all did what we could at the time. This is all human nature. A new center..my green dot…just opened. I wish them luck, but to be honest you need more than luck in this current franchisor/franchisee environment. You need a large, strong group of colleagues who have your back, offer advice on profitability, instruction and running a business ( aka support). Support you are NOT getting from the franchisor. That is what in the LONG HAUL. Do I think as we continue to grow in numbers we will be able to influence and educate our franchisor. Absolutely.
Rome was not built in a day, children don’t develop into fantastic readers or students of math after paying a one time fee and showing up. It takes work and commitment. I invite you to join us.
Humbly,
Connie Schmidt Kirman
Kumon Center of Howell
Happy New Year, everyone.
FYI Kumon ranked high in the December, 2011 UNHAPPY FRANCHISEE 25 ranking both in terms of readership and comments.
Thanks for commenting. Here’s to a happier 2012!
See December’s rankings here:
UNHAPPY FRANCHISEE 25 – December 2011
Thanks! Hopefully the potential franchisees our franchisor plans to flood the market and destroy our businesses with will check these comments out. To them I ask, do you REALLY want to put your life’s savings behind a franchisor which has no qualms about destroying its franchisees? Seriously, move on to another business opportunity and count yourself lucky not to have been caught in this trap. All my opinion, of course. Do your own research.
Like Fred, I agree. Read the comments, both negative and positive, do your research and think hard. I am sure that when you do this, you will reconsider investing in this franchise. Do you REALLY want to RISK it all for what will likely be a failed business?
Move on, as Fred said.
DO NOT INVEST IN THIS COMPANY!
YOU CAN AND DESERVE BETTER!
There is always the prospect of a franchise failure, and the smart entrepreneur should always look at the down side when contemplating any sort business investment. The franchise failure rate will vary by industry and even depend upon the brand in question. Specific details are noted below.
Here are the top five reasons why franchises fail:
1. Ineffective Parent Company
If the parent company’s business plan is overly complex, or should the franchisor not provide an adequate level of support, your business will suffer accordingly.
2. Poor Location
Even the best franchise concept in the world will fail to draw customers if your store can’t be easily found. Higher-profile spots always cost more in rent than those in less advantageous places. After all, that’s the nature of the real estate business, with its cry of “location–location–location.” Most parent companies spend lots of time and effort to ensure that their franchisees are situated in a place that optimizes the opportunity to generate maximum sales. But some do a better job of this than others, and oftentimes the franchisee is forced into a lesser location because of cost.
3. Too Much Competition
Another definitive franchise failure tactic is to allow franchise locations that are too close in proximity. A new store may offer additional revenue to the home office, but the overall result is less profit for each individual store owner. Are there enough six-figure-income families around to warrant the opening of a second feng shui consultancy? Many franchise deals come with rights of exclusivity, which means that no one else in your district is able to purchase a franchise from the same corporation (AS WARNED IN THE CASE OF SPECIFIC FRANCHISE) But that hardly protects you from competition in general. Also, a too-small territory may mean that the same operation across town is bleeding off customers who would visit your establishment if the other place did not exist.
4. Lack of Adequate Marketing
Many franchise deals include access to national or regional ad campaigns. In some cases, franchisees are allowed to run their own local ads; for others, they must make do with whatever the brains in the home office dream up. Just because you have a well-recognized brand name, that doesn’t mean you’ll automatically capture a big chunk of the business. Franchise failures litter the landscape thanks to inadequate promotion—which can be caused by a lack of advertising or a marketing plan that people choose to ignore.
5. Unrealistic Goals
Everyone wants to be successful, but buying a franchise without understanding all the risks can set you up to fail. Some of the fault may lie with the franchisor, as sales reps inevitably paint as rosy a picture as possible to entice you to buy. Don’t expect to work a 40-hour week or see very much of your family—unless you’re working alongside them, of course—and always assume that you’ll need more of a cash cushion to weather the tough times than anyone at the home office may admit.
Those Failure Rates
A 2007 survey taken by the U.S. Small Business Administration (SBA), which guarantees loans for business startups, offers some examples of franchise failure rates as indicated by individual franchise brands (which have been rendered here generically):
The franchise companies that enjoy long-term success are those that focus on royalty payments; this aligns headquarters’ goals with its franchisees. Forcing franchisees to buy equipment at tremendous mark-ups only bodes well for headquarters, and it is a very greedy short-term profit generating solution.
Indeed, some companies look to their own profit rather than the profit of all franchisees. This may be especially true for a company that has gone public and trades stock shares on the public market. The pressures to produce profit can be extreme, and it could cause corporate leaders to make poor decisions, even leading to improper financial reporting.
Look for these kinds of signs from franchises, particularly a company that is publicly traded. A private franchise corporation may be a better opportunity since owners are generally more interested in seeing the company succeed as a whole, rather than pleasing fickle investors. Watch for signs that suggest that they could be growing too quickly.
You don’t want your franchise opportunity to turn in to a failed franchise. If you want to join the success ranks of franchise owners, do your homework and assure that your business will have the support needed to prosper.
Best Wishes for a successful and prosperous New Year 2012
There is a question that comes to mind when reading Connie’s comment above:
So we are watching now and trying to analyze what exactly happens when centers are 2-5 miles apart. I have some interesting observations on this, but for those observations you will have to pay your $60 and enter the conversations we have daily.
No need to pay the $60 fee to chat. Why pay a perfectly good $60 when you can read what is here, for free and forget the chat sessions. Most of us don’t have the time for such chat sessions.
Many are busy trying to fix a dying franchise.
Connie–
Have you heard about Contingency-Fee Lawyers? I think your association should hire a contingency-fee Lawyer to handle your case. Case action suit is another option. Talk is cheap and has no teeth.
Diane,
The article you posted above has fantastic points. Thank you for sharing it.
Why observe what is happening and discuss with other owners who are also fighting for their business? Because you need data. You need facts to put credibility behind what you post to the public, what you share with the franchisor who does not want to look at the data, and to share with potential franchisees.
Why pay the $60? So you have half a chance of improving this franchise. What I see in some of these posts above is a lot of emotion and anger. I understand it, but we need to be smart and stand united. Alone you will accomplish nothing. Look at the political system in the US. When a political party fights the other party is able to win. Working together evens out the power and will help improve this business model, Kumon’s growth strategy, and our lack of support.
Wishing all of my colleagues a prosperous new year!
Thanks, Connie. Excellent points.
Joshua, Fred and Diane:
We have been fortunate to have a top franchise lawyer offer his advice pro bono to our associate for years now. There is no way we would have been able to afford his counsel otherwise. We have explained repeatedly in comments on blogs on this website, including this one, why legal action is out, so I would only say to you this: read the Franchise Agreement, especially where it spells out that the franchisor may open new franchises in any location it wishes fully at its discretion. We would have no case, even had we the big bucks to launch a lawsuit.
More importantly, we have been studying and learning from successful and healthy franchise models, which have excellent communication between franchisor and franchisee association and full consultation. Trust is extremely difficult and slow to build between an old-style franchisor and a franchisee association but can be destroyed in a heartbeat when lawsuits are filed. We already experienced this with the previous association and it has taken years of painful struggle to recover from that debacle. We still have to convince potential members person by person that we are not like that old litigious association and that they may join us with confidence. It would be utmost folly, demonstrating an inability to learn from others’ mistakes to repeat that today.
At $60 per year, with all the many benefits our association offers, and considering the need for us to have an overwhelming majority of over 70% to wield the influence for profound change, it simply makes for every NA franchisee to join us.
I do not understand what you seek to gain by continuing these public rants – do you believe that Kumon will read them and bow to your demands? Do you think that by so doing it you will pressure our association to ignore the counsel of our experienced franchise lawyer and do what seems best to you, because you say so? Or does it just feel good to unload your wrath in this public and destructive way?
We have continued without interruption on a daily basis throughout our attempt of a week’s holiday to correspond by email with our members, to go on building our careful strategies (which for obvious reasons we will not be discussing here, hence the most compelling reason you need to join us) and to continue to support each other within our community.
Tomorrow we begin again with the endless phone and skype meetings to ensure that all aspects of our strategies are in place and ready to go for each day and week of the crucial months to come.
You’re absolutely right, talk is cheap – and there has been a lot of cheap talk here from people who seem unwilling to roll up their sleeves and participate with us in doing the day in, day out work that is necessary to turn things around.
Are you going to continue to be part of the problem, or will you join us in participating in the solution?
The choice is yours, but I for one am reluctant to go on with these useless public wranglings where people make the same suggestions over and over that have been explained many times that they are counter-productive. If you have something concrete to offer in terms of constructive strategy, I am all ears – email me privately so that we may move forward together and not waste further time shadow-boxing here.
None of us, as you pointed out, Diane, has time to lose in this time of crisis.
Best wishes for 2012,
Nicole
i’m currently going to take kumon franchise, but after read all these article, i think i need to think twice. anyone can tell me more about kumon? i want to know from the beginning how they operate until end. tq
Hi Connie and Nicole,
I am actually a member of IAKF, as is my wife who is an instructor also. I truly appreciate all you do to organize the instructors, and find useful information in all the forum emails.
However, I feel the need to let the public and potential franchiseesknow what is going on also, and what the corporate side of Kumon is doing to the company and to its instructors. I don’t think suing will work, because the franchise agreement is SO one-sided that what they are doing is completely legal. It just isn’t right. But with this current CEO and COO, I doubt there is anything we can do. I don’t think just showing them a united front will even make them blink an eye. They have made it perfectly clear: they don’t care about us, they can easily replace us.
Terence, email me privately and we can set up a phone meeting if you wish.
Jeff, that’s good to know. I am not ready to make a decision about Mr Hamanaka since none of us has received his response to the most recent letter I wrote him, which I copy below, and since we have not yet seen what will happen in any of the six meetings he has set up for January or other meetings planned for the first quarter of 2012.
(begin forward)
——————————
Dear Mr Hamanaka,
As promised, I have shared your letter with the board of directors and our rapidly growing IAKF membership, collected their responses and studied the current situation.
We are ever more grateful for the demonstration of your leadership and your willingness to share your thoughts and approach frankly.
In return, please allow me to reciprocate with some observations.
A. CTI-related issues: You said, “I believe their (NA franchisees’) anxiety was seeded through some events and is growing larger without facts… However, their concerns arose before KNA has officially announced anything. I perceive the current situation as: Instructors received partial information unofficially and guessed the consequences, then rumor spread as if it were true information. KNA will officially announce the Center Transformation Initiative in January 2012. I will visit 6 regions to explain this initiative directly to Instructors by myself.”
Thank you for committing to the 6 in-person branch visits. It is always good when a leader makes this kind of direct contact with franchisees at the outset of his mandate as CEO.
However, I wish respectfully to point out that all of our anxiety about CTI comes not from speculation but from facts communicated directly by KNA and its associates.
1) At the July KNA conference in Vancouver, KNA revealed that the very successful Junior Kumon program, which was heavily promoted by KNA for a number of years, and into which many of us have invested much time, energy, furniture, equipment, training and money, will be eliminated in favour of a model similar to that with which we were trained 15-25 years ago – with worksheets only, without the support of supplementals, and without a clear brand for the “early learners”. I’m sure that you have yourself reviewed the conference presentation to which I refer and are familiar with its contents and tone and as a former instructor of a centre yourself you are familiar with the history of the Kumon program.
While we have very much committed myself to the implementation of Primary Instruction (which for the Western markets would be more effectively titled “Kumon study skills”), we hesitate to embrace fully an Early Learner model which has a number of educationally and financially questionable aspects. More on this below.
2) This revelation did not take place in the context of an open discussion but rather through KNA’s presentation at the conference of videos depicting how poorly-run Junior Kumon math areas in company-run centres were improved by common-sense measures many franchisees have been using for years – e.g. proper training of staff, careful development of independent learning skills in the very young, and encouraging them to transition to the big room as soon as they are ready – but without any research into how effective this kind of approach would be with the Reading program.
There was no opportunity whatsoever for Q and A after the conference presentation, and thus there began a tremendous build-up of frustrated emotion, confusion and consternation on the part of those who attended the sessions.
3) Next, we were informed by KNA associates that even though KNA had not yet worked out all the details of CTI, there would be an all-staff training session in November in preparation for a big announcement at the January AGMs to franchisees.
4) KNA associates bit by bit since then have shared all the information that we now have and know well. I should clarify here that it is primarily IAKF members who are well informed. When you speak with franchisees who are not in our information loop, unless they have insider information from associates, they only know changes are coming. Otherwise they know very little and many of them are panicking. They had only a trickle of information through the Voices and Bridge articles upon which to draw.
For example, we have been informed that everyone will have to get rid of the U-shaped JK tables and buy standardised furniture (which is very problematic and distasteful for those who have purchased much more expensive and high-quality furniture); that we will no longer be encouraged to tell parents to home-mark but will have to make it wholly voluntary (thus greatly increasing our staff hours in marking homework); that worksheets will be the focus so the use of supplementals will be very much reduced if not wholly eliminated in some cases; and that everyone will have to use classroom style instruction (though many families specifically choose certain centres over others because they have island-style and are reassured that their children will be properly taken care of).
5) At the consultation day called by Kumon Canada on November 29th, all of the above changes and more were confirmed directly by the head of Kumon Canada. I wish to note here that this was the first action by a KNA leader to consult and communicate fully and directly with its franchisees on any of these issues. We applaud Lisa’s initiative, transparency and professionalism in implementation. These characteristics are consistently demonstrated by her year after year, to our deep admiration. If only we had more individuals of this calibre!
6) Finally, many items were suddenly deleted from the K-store at the end of November without any notice at all. KNA specifically informed us through the iforum that they were gone, would no longer be available and were not merely out of stock. I quote from the iforum response to numerous anxious queries:
“(December 9, 2011) Response from KSNA: Dear Instructor, Thank you for your interest in our products. Please note, KSNA does not remove anything when Items are out of stock. We only remove them when they are discontinued. John Elmore, KSNA”
These are all documented facts, as noted above, confirmed at every point by KNA executives and high-ranking associates.
The scope of the changes, and the fact that quite a number of them mean major alterations in the way we understand and run our Kumon operations, imposed unilaterally by KNA without consultation, have meant that you are quite correct: there is an extremely high level of anxiety and stress throughout the franchise community throughout North America.
That said, I fail to see how this could be alleviated by your meetings in January. Even if the changes are made more gradually; even if there is more leniency in how everything will be implemented and mandated across North America; even if KNA were to conduct robust consultation with experienced franchisees, and even if you and Kumon University have decided to reverse the discontinuing of some K-store items, as has been indicated on the iforum and in your letter, the coming transformations to the Kumon Brand are vast and alarming to the franchise community.
Our distress stems in large part from the fact that KNA, as usual, did not provide timely notice, much less consult with franchisees, in advance of making these wide-sweeping changes that will affect us all immensely. Instead over the past 5 months very alarming indices of major changes have been given, followed by KNA promptly clamming up and leaving us in the dark about specifics while continuing to make further alterations to its plans during in camera meetings.
KNA has a management structure that presides over an educational business that empowers individual students to reach full potential, but actually functions more as a reactive bureaucracy.
It is far from transparent, sadly, and very far from the ideals which you and we support, that “in reality, KNA never makes any decision without the consideration of franchisees. But if Franchisees ever feel such anxiety, as the franchisor, we have to be concerned seriously and sincerely. The most important thing in the franchise system is the mutually trusting relationship. This is another management policy I believe in.”
Trust, Mr Hamanaka, is at a far, far lower point right now than I have ever seen it in nearly 16 years as a Kumon franchisee.
Clear, concise, and unambiguous communication without any duplicity or political posturing is what we as franchisees have always longed to see from KNA. I do not perceive such in any sense in this chain of events and in the cloak of secrecy surrounding CTI-related decisions. This secrecy exacerbates KNA’s short-sighted failure to collaborate with its own experienced franchisees in setting system policy or launching initiatives.
Furthermore, these changes are being implemented without any thorough research and data-sharing with franchisees about their educational efficacy for all our students with their many kinds of learning challenges, especially for the Reading program; nor have they been tested to assure that they will be economically viable for centres, many of which operate with a very narrow profit margin already. The 1:2 ratio for early learners and primary instruction is very challenging in this regard.
The changes are being implemented although company-run centres are having such a great struggle in making them work that some of them are reluctant to allow franchisees to visit their centres because they “need to work out the bugs first”. Those centres that do allow visits are visibly in a state of tremendous flux and upheaval. This is not good for our business and not good for our brand.
Kumon franchisees, Mr Hamanaka, are not averse to change or the promotion of our product and growth. We are eager to embrace change which enhances our brand and provides better service to our customers. Most successful innovation has come from franchisees! We are, however, highly averse to disrespect, non-communication, non-collaboration and to inconsistent management, policy implementation and messaging. We resist changes that demonstrate a lack of adequate planning, research, testing and confirmation of viability.
These factors create unwarranted anxiety, but for the above-stated reasons, rather than for the purported reasons that you shared in your letter to me.
You also said, “For the branch offices which I will not be able to visit this time, we will provide the video of my session to make sure all Instructors will have the opportunity to be properly informed about it.”
Mr Hamanaka, while such videos might possibly have been helpful at a preliminary stage of the process, what is desperately needed now at this time of crisis for KNA, after months of suspense and near-silence, is face to face dialogue and open discussion between us until we can all reach mutually agreeable positions and procedures going forward.
B. Reinstatement of the IAC: You stated further in your letter: “To improve the relationship between Instructors and the Company, we already have had in depth discussions and decided to take action. As one of the actual plans, we will start the new Instructor Advisory Council in 2012 in USA. The main purpose of this Council is to have Franchisees’ points of view and to make decisions regarding the strategies after the opinions of all Instructors have been considered. This will improve all Centers of KNA. While promoting the new IAC, I would like to strengthen further the mutual trust between the Company and Instructors in North America in a timely manner. We will announce the details of IAC to all Instructors before the winter break.”
No program or innovation can be successfully launched by being developed in secret, unilaterally, and then announced to franchisees.
We have already had over 10 years of experience with various versions of IAC meetings that were expensive, ineffective and futile, and which were in 2009 abandoned by your predecessor as useless. The most recent version of the IAC in the US Northeast was conducted in such a way as to inspire, if possible, even less confidence in franchisees. There was much worse communication, no representation by IAC members, and, most worrisome, no clear outcomes or improvements as a result of the meetings were communicated to franchisees.
It has become quite clear to us over the past two years as franchisees that the new ACs that were set up to replace the IAC have for the most part also been at best completely ineffective and a waste of time and money, with the exception of the Business Operations Advisory Committee (BOAC) which was put indefinitely on hold after it had barely begun to gather useful data on profitability, and the ITAC. It would appear that KNA tacitly agrees since meetings of PAC were postponed and then canceled this year. Therefore we have no basis upon which to be sanguine that the new IACs will be any improvement on any of the former iterations.
C. Addressing all current issues – You also stated: “I regret that any Instructors have any uneasy feeling regarding plans of KNA. I believe, my responsibility as the President of Kumon North America is, not to correspond about each issue separately, but understand and face the fundamental problem which causes issues, then take actions to solve this core problem radically from the bottom. I truly appreciate the time you have taken to tell me about the current Instructors’ anxiety. I sincerely hope this message will start the process to eliminate any anxiety” and that “I already grasp all the information you have shared.”
We are glad that you are taking this kind of responsibility. As a sign, then, that you have a clear sense of all the issues that worry us, and because you are reaching out to us in this letter, we ask that you address the following recommendations on beginning the process toward slowly re-building trust and eliminating unnecessary anxiety:
1) Set firm dates for a series of meetings with IAKF, which is the only independent, democratic and representative franchisee association for all North American Kumon franchisees. As the need is so urgent to develop trust and cooperation, and January is too busy for you, we request that the first meeting be set now to take place early in February. This would not only benefit KNA and all the franchisees but would also honour our Founder’s vision of listening closely to instructors. A third delay of this meeting will only further cement the lack of trust, while meeting this soon is a wonderful opportunity to start the healing and begin our working productively toward a better relationship, which can only lead to a much healthier system.
2) Scrap the current poorly-conceived, mis-directed expansion lists which have been the single greatest source of franchisees’ fears over the past weeks, months and years in favour of a collaborative and consultative approach with each area’s chapter of the IAKF to develop an equivalent number of new expansion areas which will build the brand without encroaching on current franchisees. Ensure that North America-wide there is a clear distinction between first and second-tier markets and how expansion is carried out in them.
3) Commit to working energetically with franchisees who are perceived to require extra help in developing their centres by setting clear goals and timelines with them and giving them a minimum of a year or more to cure the perceived issues, instead of having KNA associates threaten them with imminent termination if they do not comply with vague and poorly-communicated demands.
4) Provide KNA franchisees with opportunities to work more directly with KNA branding and marketing to recommend courses of action that will permit us as a brand truly to penetrate the mainstream market instead of merely talking about it while pursuing courses of actions that continue to turn off the mainstream market as it exists in North America and mainly appeal to our traditional Asian market. The two are very different!
5) Reinstate the BOAC or its equivalent. Share all the profitability data you now possess as well as inviting new data from all franchisees to seek a truly profitable model of running Kumon centres that is in harmony with the integrity of the Kumon method. Consult with franchisees with regard to policies which severely but unnecessarily impact viability of Kumon for franchisees such as full-time commitment and enforcing retail space.
6) Work on marked improvement of two-way communications between KNA and its franchisees including a very clear policy on anonymously-gathered recordings by KNA of its franchisees.
I am doing my best, Mr Hamanaka, to maintain a spirit of hope and collaboration among my colleagues through my ongoing communications with you and the other high-ranking KNA associates.
I am wondering if perhaps you are unfamiliar with franchisee associations in the context of North American business and are thus reticent to meet. I can assure you that I have been working with Kumon franchisee associations for well over 10 years and have the requisite tenure, as well as the support from my board, members and franchisee networks such that an early meeting would be to your benefit. As IAKF we are a completely separate entity from KNA and can thus be of great assistance to the Kumon brand here in North America by mutually enhancing perspectives.
Our IAKF membership has become increasingly restless and anxious in the absence of real mutual cooperation. They are not satisfied or comforted by your kind letters. Franchisees will work relentlessly, individually and through IAKF, to protect their investments in Kumon, and it will best serve all of us if that is done collaboratively with KNA.
I look forward to having my confidence and trust in your desire to work with us rewarded by a concrete and satisfactory response from you.
I will call you in the New Year to confirm the date and time of our February meeting.
Merry Christmas, and Happy New Year!
Warm regards,
Nicole
Thank God I found this web site.
I was about to buy an existing Kumon but all above made me to think twice before going further. The only point of I moving to Kumon was to be my own boss but apparently with Kumon you WILL HAVE a boss that does not even respect you.
Thanks again to all the contributes to open up my eyes.
Agreed, Jeff. Franchisors with good business sense value their Franchisees and the millions of dollars and hours we have collectively poured into being ambassadors for the company. Unfortunately, this company, in my opinion, is being run by people who arrogantly disregard the destructive impact their inept decisions have on us. Frankly, Nicole, KNA has made it very clear it could not care less about its Franchisees. It hands out opportunities for new Centers as its means of punishing Instructors who have lost favor with the company. KNA has made it clear that no matter how much money and years we have devoted to Kumon, it will do it’s level best to ensure our equity when we try to sell our Centers will be worth ZERO. How? They will simply drop a green dot by us as we close in on retirement. Take a look in the St. Louis branch where they have dropped FOUR green dots adjacent to a beloved and respected Instructor with 1000 students. KNA obviously intends to decimate the value of her business. Watch and learn, PFs. Save yourselves.
@ Josephine, you ARE aware that the head of Kumon University owns the main center in St Louis? That means the company can put up it’s own centers wherever they want – and put the individually owned centers out of business? It happened in NJ, and it is happening all over!
@nyctechguy: oh, please. Why would KNA spend its OWN money to put up a centre to drive us out of business? It just recruits PFs who don’t understand what’s happening. The PFs put up the money to drive us out of business. Then the whole scheme collapses like a house of cards, destroying Franchisees and ultimately KNA. We can only hope KNA might come up with a less sadistic and more intelligent expansion plan. It is possible to have a win-win expansion. Unfortunately for all of us KNA prefers to go with a quick fix with frightening long term implications.
It’s called unfair compettion
Dear Nicole Smith,
Thank you for reply my message. Sure, no problem. Email to this address
tuitionchia@hotmail.com
Wait for your mail. Really appreciate your help.
Thank you for your comments. They are worth reviewing and considering. My comments here are for those who are considering entering into this quagmire of complex issues. If I can make one individual reconsider or at least look more in depth to this franchise prior to establishing a commitment, then it has been worthwhile.
I must commend Nicole and Connie on their commitment and time here on this post, in addition to their full fledged efforts to convey the worry and concerns of all of the franchise owners to the CEO’s, etc. Their expertise is admirable.
My attitude, although morose, still clings to an ever decreasing slim hope of profit or success. That being said, I, myself, would not choose investment if doing it again.
Growth for the sake of growth is the ideology of the cancer cell.
- Edward Abbey, writer, essayist, novelist
Let’s pray that those at the helm have the foresight to turn the ship towards safer waters. It is a red sunrise.
Thanks, Diane, it is my profound hope as well.
Terence, I have emailed you, let me know when you wish to meet by phone by reply of email.
Nyc Tech guy, Curious and Josephine, please contact me at nicoleksmith@gmail.com
Happy Tuesday, everyone,
Nicole
Thanks to all of you who have posted here. My wife and I were seriously considering a Kumon franchise. We have the capital and experience to do it, however after reading all of the above comments we will not risk our money to do so now.
We are pulling both of our children out of it and will just tutor them ourselves. We love the Kumon method, but neither of us wants to have any part of an organization that treats its partners this way.
Good luck to those of you who are currently stuck in a bad situation and thanks again for saving me from the same fate!
Best,
Mike
Best of luck to you and your family, Mike.
There are individuals that wish we would stop informing individuals, such as yourselves, about the issues, here on this venue. However, I disagree. Chatting away on private emails and on a private forums does nothing to alert possible prospective investors to issues that they have a right to be aware of.
Everyone deserves to have the information to make a knowledgeable decision.
Especially when it involves such a crucial investment, time and commitment as required for a franchise. If nothing else, at least to be forewarned of things and be able to make a smarter decision.
If then, someone makes the decision to invest-they have had the ability to do so with their eyes wide open.
Anyone have the contract for Kumon, possible to mail to me as review? Because I need to review before taking Kumon franchise.
[redacted]
Thanks
Mike, I am very sorry to hear you are pulling your kids out of Kumon. As much as we are struggling as franchisees, I am sure none of us ever want to lose students because of our difficulties with KNA. The program is as excellent and helpful as it ever was and your children and all of our students are benefiting greatly from it – it would be a great loss if others decide based on their feelings about the KNA leadership not to continue to provide their children with Kumon. As well as being counter-productive for your children, it is a loss to the hard-working franchisee who is their instructor. It seems to me that you are punishing the wrong person. What do you think?
Diane, I doubt you would be so jubilant about Mike’s decision if he were one of your Kumon parents.
Also, I think it is unfortunate that people are making such decisions based on information from people most of whom post anonymously and whose posts are filled with an indiscriminate and indistinguishable mixture of fact, rumour and conjecture, without seeking to provide any substantiation for their claims and accusations.
Due diligence means getting the facts – don’t look to people who are not providing their full names and who are unwilling to talk openly to people like me who are who we say we are to provide accurate and helpful information.
Michael, you can get an FDD directly from the franchisor – but again, if you are seriously considering opening a franchise, get the facts most relevant for your specific situation. Check out our website for a summary of some of the most important questions you need to ask the franchisor and franchisees in your area, as well as other facts you will need to gather to decide.
Cheers
Nicole
Nicole;
It is necessary to clarify that there was no jubilant reaction intended, nor implied to Mike.
It is wished that he and his family do well in whatever decisions they go forward with. Committing to purchasing a franchise requires much forethought and serious contemplation.
It is my hope that anyone rethinks their possible investment and commits to further investigation with an attorneys advice.
A question from a prospected Kumon franchisee for current Canadian franchisees :
As you know in Canada to the royalty fee that should be paid to Kumon, sale tax (HST) should be added. My question is that can this HST then be taken back from the provincial and federal government as an ITC (Input Tax Credit).
For those of you unfamiliar with ITC, many businesses (In fact almost all of them) when they pay HST for the expenses of their business, they can get it back quarterly (or yearly) . This is called ITC. Also if you collect HST from your customers, then you obviously should pay it to the governments(This part of course does not apply to us as Kumon franchisees does not collect HST on the tuition fees)
Please do NOT answer that I should talk to an accountant. I have already done so and I have been given different contradiction answers. One said Kumon is considered educational business hence considered exempted from HST rules so you can not get back your HST. On the other hand I know at least one Kumon that gets back the HST ( could it be illegal and problematic for him later?). Do you apply and get it back?
Please note that it could be a lot of money (about $45 per student per year). So if you have 120 students it will cost you less $5400/year if you can claim it.
Any comment is appreciated.
Francois, it’s a great question and you’re right, accountants don’t say the same thing about this type of issue. I am trying to track down an official response for you. Feel free to contact me privately if you have other questions as well.
Bonne journée,
Nicole
Lisa Kaul, head of Kumon Canada, responded: “Kumon tuition is GST/HST tax exempt (we have a ruling on this from the government) so instructors should not collect this tax from customers. Therefore instructors are not eligible to claim ITC credits.
We announced this when the HST came out in Ontario, because we received similar questions at the time.”
Perhaps the over-expansion strategy targets under-performing centers to deliberately drive them under….replacing them with more productive operators. If so, its a horrible thought.
I am considering an educational franchise, but this trend is very troubling.
Nicole,
Above discussions are very helpful for someone like me who is in the process of taking over a Kumon centre. (Unfortunately a very lengthy process)
I am sure there are much more subjects that could be useful in kumonfranchisee.com
Is there any way prospective franchisees to become members of this site.
Thanks
Reza
Wilber,
I wouldn’t say that Kumon is necessarily using their expansion plan to drive any centers under.
I have seen Kumon place “green dots” near both excelling and under-performing centers.
Unfortunately , I can’t tell you for sure what their strategy is because I myself have not received any information about how they came up with the plan.
Prospective frachnisees:
Please take any advice with a grain of salt. Keep in mind, there are current franchisees who are seeking to sell their centers and those who would like to avoid competition. The former might not tell you all of the negatives of owning a Kumon center and the latter might not tell you all the benefits of owning one.
Miss Smith– Please keep in mind this is a public forum and in America we deeply value freedom of speech. If I choose to “rant” in a public forum, it is no business of yours. Neither you nor your association owns this website. I for one would like to hear a variety of posts from others, as opposed to only your posts and attempts to answer every single question.
Well said.
Thank you Amelia
I’m probably stating the obvious, without a general understanding Kuman expansion strategy, it certainly adds risk to operators/instructors….. i.e. to see profits evaporate due to market saturation (if excelling) , while potentially being kicked to to curb if performance falls below a yet undefined margin (by displacement).
I realize business strategy is closehold, but Kuman needs to clarify these risks to potential franchisees to engender more trust. Current policy seems to have created a climate of distrust with existing franchisees in any case. With an overly aggressive expansion strategy, you begin to see the franchisor as a competitor.
Reza, I hear your question and have discussed it with the board. At this time we prefer to keep the site only for IAKF members but we will continue to make more resources available on the open page to inform PFs and we are always open to being approached for in depth discussions via email and phone. I have spent many hours recently with PFs on the phone. So anything you need to know, please be in touch.
Amelia and Wilber, absolutely agree.
It has been quite some time that many Kumon franchisees have seen KNA as our main competitor and this is most unfortunate, especially as the expansion plans keep ramping up instead of becoming more consultative as they ought.
Warm regards,
Nicole
We re also looking at a franchise and Kumon is one of them. I did quick pro forma and the only way we can cover one of our corporate salaries (assuming the other will still work full time) is to have 400 students with one if five taking two subjects. Granted, I am estimating a lot, especially in staffing and materials, but even if I had over estimated by 100% I still don’t see how you can make a good profit with Kumon.
Hi Teri,
I would absolutely agree depending on what you mean by a good profit (perhaps you are thinking of 6 figure annual income?). We have done a number of profitability studies over the years and are embarking on a new one. The only people who are making very large amounts of money (6 figures) with Kumon are those with huge enrollments (double or more the average monthly enrollment of 170-190 student subjects) and especially those whose expenses are low due to being in non-commercial space, low staffing costs etc.
However the non-commercial space/low staffing/no computer data entry etc is the old model which is gradually disappearing. The new Kumon business model is very much full-time – being on site 40 hours a week in the US, 28 hours in Canada; retail space (in the US) and commercial in Canada; CMS Standard; and now with CTI (centre transformation initiative) we are all, including the company centre staff hired by Kumon to run their centres, trying to work out how we can do Primary Instruction at a one to two ratio with new students and Early Learners without drastically increasing our staffing costs.
So the short answer is not don’t quit your day job, because under the Kumon FA you have to do that. But if you are getting into Kumon to make big bucks, think again. Most of us who are in Kumon for the long haul are not primarily motivated by money – we do it because of a fervent belief in the Kumon method and its ability to transform ability and children’s futures, and because we have a spirit of generous giving to our communities.
That said, we all have bills to pay, and this is not a volunteer job. I personally don’t have the luxury of being able to rely on my husband’s income to pay all the bills – I have to begin making a significant profit, and soon.
So anyone before opening a Kumon centre really needs to crunch the numbers to see if you can live with the relatively limited income Kumon will provide you in the early years unless you have a market where you know can grow quickly (ie getting to at least 100 in the first year and 200 in the second).
Consider too that under the new rules you will have to get to an enrollment of 40 math and 40 reading students within 2 years and attain all your full license requirements to have your FA renewed. What does this new FA requirement tell you about the Kumon business and typical growth parameters?
Feel free to contact me directly if you have any other questions.
All the best,
Nicole
Hi Nicole,
Could you elaborate more on “the new Kumon business model” ? Specially what is CTI?
Thanks
Raj
Hi Raj,
New Kumon franchisees will now be required to have their centres open at least 28 hours a week or more in Canada. It will be 40 hours at least, 10 am to 6 pm in the US. You must now spend a minimum of $4000 per year on marketing in the US, without any subsidies on an on-going basis, though there may still be a new centre marketing subsidy for the first year only in the US. In Canada, the marketing subsidy is more generous and this new requirement for marketing does not yet exist.
There are many other policy changes this year related to the CTI or centre tranformation initiative, KNA is trying to ensure uniformity in its brand in what furniture franchisees use for their students by requiring them all to buy from the same suppliers; less flexibility about things like centre home-marking policies and stapling of worksheets; the implementation of Primary Instruction for new students and transitioning students; the elimination of the Junior Kumon program including the use of supplements in class; and so on.
Nicole
I was thinking about opening a center, but after talking to many current franchisees, I have decided to rethink everything.
1) Kumon is looking to keep most of their centers at around 200 subjects. Centers that have less may be shut down, centers that are successful and have many more have multiple new centers placed next to them.
2) All new franchisees are now required to have the center open for 40 hours or more.
Given the profitability of a center with around 200 students, one could possibly pull in 40-60k per year if and when you hit that 200 mark. This type of income with no benefits, might have been worth it for a 2-3 day job, but for a more than 40 hour week full time job, it is not worth it (not to mention making this after also investing 100-150k of my own money and probably not making an income for 1-2 years first). I was not in it to make big bucks, but wanted to have a fulfilling job helping kids. I also, unfortunately, need enough income to support my family. At this profitability though, I may as well stay an engineer and volunteer or donate to local schools. I also don’t like that everything seems one-sided, and franchisees have no protection against any unfair practices the corporate side may use.