KUMON: “Why I Sold My Kumon Franchise”
April 26, 2010
According to the Kumon tutoring services franchise website, “One of the largest and most established franchise businesses in the world, 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.”
As 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 burdensome new regulations, encroachment and intentional oversaturation by their parent company.
David Joseph, an outspoken owner who has posted his concerns on UnhappyFranchisee.com as well as his own blog, recently decided to sell his franchise and leave the Kumon system.
He explains why below:
“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”
ARE YOU FAMILIAR WITH THE KUMON TUTORING FRANCHISE? WHAT DO YOU THINK? SHARE A COMMENT BELOW.
What is your email address, I am planning to be kumon franchisee.
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I opened a Kumon franchise in 2002 and have been running it successfully since that date. I cannot say that I agree with Mr. David Joseph to any extent at all.
If he thinks that Kumon meddles in his business then he should look at any McDonald or Burger King out there. A franchise needs to set rules so that all stores meet a minimum standard of quality. Anyone who does not understand this basic rule should not look to acquiring a franchise. Start a mom and pop operation instead – you are then free to set your own rules.
Hi David,
I am planning to open a Kumon Franchise myself. Please let me know about your profit margins. I expect somekind of rigidness in all Franchises but my major concern is the profit margin. Their royalties are high, are we still able to make a good profit after giving all the royalties. Also what is an average no of students that a beginning center can expect and how many students can help reach a breakeven point?
I am a potential Kumon franchisee. I am interested in knowing what are the profit margins a new center can make especially if there are a couple of centers around you? The same questions as the other post r- How many students needed to reach a break even point and start turning in some profit each month?
How much is the time frame I am looking at before I start making some profit- 3 months/ 6 months etc.?
Hi David, I am considering Kumon and I’m interested in speaking with you about your experience a bit more. Please email me at [redacted]. Thanks so much!
Mr. Joseph, thank you for a very detailed and believable comment. You were clearly trying not to badmouth, just present a negative experience as well as you could.
Mr. Stephen, I think you are being unnecessarily judgmental. Mr. Joseph clearly understands the franchise concept and clearly explained the nitpicking that made him dissatisfied. Requiring that he buy blue chairs instead of black ones, when black ones were originally sold to him directly from the franchisor, is not a failure to “meet a minimum standard of quality.” Neither is refusing to move after a location was approved and built out.
Some franchisors are successful because they sell a great concept, train their franchisees well, and then take care of them. Others are successful in the short term because they milk the franchisees for all they can and then continue to recruit as fast as possible before the franchisees can figure out what’s going on. Mr. Joseph’s detailed account seems to indicate that Kumon is going from the former to the latter. At the very least, Kumon corporate is giving poor advice without regard to its effect on the franchisee — what if Mr. Joseph had heeded it and was then stuck in a 10 year lease that two years later was disallowed? Furthermore, the change of course from protected territories to saturation is a clear indication that they intend to maximize profit at the expense of, rather than in cooperation with, its franchisees. Nothing spells “screwed” better than a new franchisee about to cannibalize your territory.
Mr. Joseph makes the well-taken point that a franchisee with any business sense cannot be constantly changing his or her business plan at the whim of the franchisor. Anyone who does not understand this basic rule … is probably an employee of a franchisor.
Hi David,
I would be like to get some information from you. If it’s ok with you please email me.
SG
We are exploring a Kumon Franchise and would be interested in knowing about some of the pitfalls and profit margins to determine if it is worth the investment.
Hi David.
Thanks for giving insight intot eh Kumon Franchise Ecperience. I am currently considering opening a franchise as well. I would love the opportunity to speak with you and gain further insight befire making a decision. Please email me.
Thanks.
I wrote a comment and it was deleted. It was there one day and gone the next. It stated that after reading this, I am backing out due to the problems faced by franchisees. Why was it deleted?
Nancy: I believe you left your comment on a different post: http://www.unhappyfranchisee.com/kumon-announces-aggressive-northeast-franchise-push/
Your comment and IAKF President Nicole Smith’s reply are still there.
If you’re referring to a different comment, it may have been inadvertently deleted. Our web host recently switched us to a new server and we lost some data. If so, we apologize. Feel free to repost your comment. ADMIN
Hello All,
I am exploring a kumon investment. If possible can someone explain to me or post the profit margins we would expect on an average kumon. Another helpful detail would be on average the number of students per month a typical kumon has. I understand that each kumon would be specific, but some range would be greatly appreciated thanks again.
Thank you Mr. Joseph for sharing in details the unfortunate experiences that you had with Kumon Franchise. I am planning to start a Kumon center within a few months. Can you please provide any info on profit margins and the minimum number of students in order to stay in business? How much $ is the real investment including furniture and build out are we talking about? Thank you in advance for your assistance on this matter. Please e-mail all the necessary info soon before I attend my first training session.
Hi All,
I have been aiming for nice franchisee and I have shop around and looked at couple of out there in market, Currently looking at Kumon.
I have few questions and comments , any help appreciated
I have been trying to get the answer of million $ question, How much one kumon center make as a net profit(After all cost , All applicable Tax) ?
I never get answer of it from any website or blogs.
Is it worth to quit day job and start kumon, if one is making 3000-4000K net(After tax) a month ?, is there any long term growth or once you reach at certain point you have to buy another one or find another franchisee for more growth?
@Tom
Did you open any ? how was the experience?
Thanks All and really like info from this website..
keep rocking
Hi David,
Thanks for your post. I am also looking for more information on potential earnings. I would really appreciate it if you can email me. Thank you in advance.
David, I am considering a Kumon franchise also. If you could email me, I’d love to hear from you. Thanks so much.
Hello,
I understand everyones main concern for this, but i did some analysis, and i found out the one major problem when it comes to the numbers and the estimate of how much income one would receive by owning a kumon would be whether each child enrolled chooses to enroll in 1 subject or 2. If anyone has any input on that, that would be great. Thanks in advance.
My name is nate. I am a teacher and planing to open one in the Northern VA area. I am interested in knowing what are the monthly expenses (such as lease, utility, royalty, resources, labor, monthly or annual fees, etc ….) and the monthly profit margins for a new center especially if there are a couple of centers around you? And how many students are needed to reach a break-even point and start turning in some profit each month? What is the time frame I am looking at before the business sustains itself and compete with the other centers? Please let me know as well if the competition is minimal and if the center is located in a city where the average income is between $20,000 and $45,000, will the center be profitable? Is it possible to serve economically disadvantaged communities? Understanding the initial investment ranging between $30,000 and $140,000, is it worth to quit day job and start kumon, if one is making 3000-4000K net(After tax) a month ? Is there any long term growth or once you reach at certain point you have to buy another one or open or find another franchisee for more growth? I thank you in advance for taking your time to help me clarify my decision. I know you may have responded to similar questions, please help. thank you again.
nate
Thank you for you sharing your experience.
Hello David,
Thank you for sharing your experience and good like in your new venture. As I am considering buying the franchise, I would like to know the general financials of your business. Could you please email me [redacted] Thank you very much
David:
People like you are the source of honest opinion in franchise business. I’m thinking about buying a Kumon franchise. Could you please give me your contact information. I would really like to talk to you.
Thanks
[redacted]
Hi David,
I am a current KUMON instructor. I am seriously thinking about selling my franchise with the same concern that you have.
Could you share your experience in selling your KUMON franchise?
How did you value you franchise? I also understand that the process is sanctioned by KUMON, and the eventual buyer has to pass the KUMON training.
Does it have an adverse impact on the selling price? Were you able to sell your KUMON franchise close to your asking price?
thanks
Same query as Derick but i am in UK. Had problems with kumon myself and am selling my centre. How did you work out value of your kumon centre? Kumon are not offering any help in this whatsoever.
Thanks
I am thinking about opening one in my area. This would be the 1st one in an area of approx 100,000 people. Can you please tell me what the profits are per child, etc… You may be able to answer more
hello! I am thinking of opening a franchise in an area with zero Kumons in the area. The city has approx. 100,000 residents. What are the profits per child and any more questions I do not realize I need to ask at this point.
Thank-you,
Gloria
If you are interested in opening a KUMON center, check out this article:
http://www.franchisechatter.com/2011/09/21/franchise-chatter-exclusive-a-letter-from-the-president-of-the-international-association-of-kumon-franchisees-nicole-smith/
BTW:
To assess the value of the center, I am leaning toward using a simple net income formula. However, the hardest part is to gauge the market demand. There is not any available stats regarding the selling prices of KUMON centers.
My accountant recommended using the formula of one and half times annual net profit. Seems ok to me but wanted to know what other instructors had sold for?
PS Anyone interested in buying a centre in Kent, England contact me on this site asap.
Hello David,
I am hunting for a nice (affordable + profitable) franchise. Recently I started thinking about kumon franchise as I used to send my son and see lots of kids going to the kumon center and thought it to be a profitable business. But before jumping into it I want some advice from an experienced person like you.
I want to know what is the net profit (approx) if you open a center in a low to avg earning area ?
Is there a long term growth or there is a saturation point in it where there is no space left to grow?
Is it really worth quitting our day job?
Were you able to sell your kumon franchise close to an asking price?
Looking forward to your advice.
Thanks so much.
I want to know what is the
net profit if i want to open one
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.
I am new to franchise world. I want to know the pitfalls before I take the plunge. In particular I am interested in Kumon Franchise. I would like it very much if I could email Mr David Joseph privately,
Thanks
RB
hi, i decided to take kumon franchise, but i need to know more details about kumon. can anyone tell me? from the beginning until i got the franchise. tq
Kumon North America is pushing more ridiculous changes, which will decrease franchisees’ profitability. Savio is a jerk. If you are thinking of buying an educational franchise, check out Kumon’s competitor Enopi instead or wait until Kumon fires Savio.
I wonder if there are any answers by Mr. Joseph on the questions posted above? I am interested to know his reply.
Hi David,
I am planning to open a Kumon Franchise myself. Please let me know about your profit margins as posted by other users as well. My concern is profit margins as well. Their royalties are high, are we still able to make a good profit after giving all the royalties. Also what is an average no of students that a beginning center can expect and how many students can help reach a breakeven point? Finally what is the time frame before a center can reach breakeven?
thanks
shree
Hi David:
I am considering opening a Kumon center. I really want to know the profit margin, or probably the min, max and average subjects that I can reasonably budget ? Thanks