Your Investment

If you are applying for your first Kumon Center franchise, the Deposit Fee is $500 if you request one Training Kit for Start-Up Training.  If you intend to have a two-person Partnership, or if you intend to have a Corporation/LLC with two Corporation Instructors (see Item 15), you will require two Training Kits for use at Start-Up Training, but the Deposit Fee then increases to $800. We will apply the Deposit Fee towards your Initial Franchise Fee if you successfully complete Start-Up Training and sign a Franchise Agreement. 

The fee for your purchase of the materials you will need to operate your Kumon Center, such as instruction answer books, student achievement tests, student placement tests and  promotional posters, is $1,000. You must pay this entire fee when you sign the Franchise Agreement. This fee is not refundable.

The estimate includes the first month’s rent. You must operate your Center in retail facilities such as a storefront, strip mall or town center unless we grant you a written exception to this requirement. We will not accept a location where the lease term is less than three years, the space is less than 800 square feet, or you are unable to affix one of our exterior signs. We will not permit any activity other than the operation of a Kumon Math and Reading Center for any site we approve. You may not use or permit the use of the site we approve for any other purpose or activity at any time without first obtaining our written consent. Rent will vary according to the center’s location and whether your landlord shall require a security deposit. Kumon currently offers a rent subsidy program under which we will assist you with your rent for 24 months. You must sign our Rental Subsidy Addendum (see Attachment 2-E to this disclosure document) to receive the subsidy. The subsidy is 45% of your first month’s rent at the inception of the subsidy period, with a maximum amount of $12,000.00 to be paid by Kumon during the entire period of the subsidy. The subsidy shall be paid in the following manner: for the first 12 months of the subsidy period, the subsidy will not exceed $700.00 per month; and for the 2nd 12 months of the subsidy period, the subsidy will not exceed $300.00 per month. If your rent subsidy for the first year of your lease is less than $700 per month, you will receive no subsidy for the second year of your lease. You also may be entitled to a greater rent subsidy if your monthly rent is $3500.00 or more at the inception of the subsidy period. Please refer to Attachment 2-E, “Rental Subsidy Addendum” and Item 11, “Site Selection” for further information about the site approval process. Kumon does not under any circumstances act as a guarantor of the lease.

The amount of the build-out for a new Kumon Center depends on many factors such as the age of the building, a landlord’s willingness to make a contribution (which may take the form of a tenant improvement allowance or free rent for some specified time), and real estate market conditions. You also have the responsibility to ensure that the premises and signage, which must be approved by us, are zoned appropriately for the operation of a Kumon Center.

You must obtain a notebook computer for use at your Kumon Center. Your computer must be at your Center at all times when your Center is open. Your notebook computer must have the minimum specifications set forth in our Operations Manual. Note: Our proprietary computer software will not function correctly if your computer has Earthlink, Simply Accounting and/or Zune MP3 software.

You must use our proprietary software, applicable to your Center, which will assist in various aspects of operating your Kumon Center. (See Items 11 and 14 for more information regarding computers).

This figure is the current annual rate if you purchase the package policy liability insurance that Kumon makes available through its insurance carrier, based on an assumed Center enrollment of 100 math students.  (See Items 7 and 9 for more information.)  Many of our franchisees also obtain other types of insurance coverage for  their Centers, such as  property and casualty coverage, although we currently require only liability coverage.  We estimate that the annual cost of property and casualty coverage would range from $1,000 to $2,500. We also strongly encourage you to purchase sexual misconduct liability insurance for you and your co-workers; as such coverage is not included in the insurance offered through Kumon.  Almost every state requires you to purchase workers’ compensation  insurance for the employees of your Center. Whether or not your state requires you to obtain workers’ compensation insurance, Kumon will require you  to obtain and have proof that you have this type of insurance. You may have an obligation under state law to obtain other forms of insurance.

Your Center must have its own dedicated telephone used exclusively for the Center that allows  callers to leave a message. Incoming calls that cannot be immediately answered must roll over to a professional answering system. Upon the expiration or termination of our relationship, you must cease using the telephone number for this dedicated telephone and assign the number to Kumon.

If you are entering into your first Franchise Agreement with Kumon; open a second center; or takeover an existing Center, you must implement the Junior Kumon program at your Center. The Junior Kumon program is a specially designed program that is offered in a dedicated area of a Kumon Center. The purpose of the Junior Kumon program is to standardize proper instruction of Kumon worksheets and supplemental materials to preschool children; and is fully described in our Operations Manual. You must employ an assistant at your Center whom you have trained in Junior Kumon instruction to our satisfaction. If you entered into your first Franchise Agreement with Kumon before 2009 (if you are now renewing your Franchise Agreement), you have the choice of offering the Junior Kumon program at your Center. Should you offer Junior Kumon instruction, you must attend the Junior Kumon training offered by Kumon University and must employ an assistant at your Center whom you have trained in Junior Kumon instruction to our satisfaction. You must purchase the Junior Kumon Kit from us (inclusive of a table and 4 chairs, see Note 4 above) at a maximum cost of $800. You may purchase the furniture for the area of your Center to be devoted exclusively to Junior Kumon instruction from a vendor you select, subject to our prior approval in writing. If you offer the Junior Kumon program at your Center, you must purchase one complete set of the books on our Junior Kumon Library of Books at a cost of approximately $1150. Whether or not you offer the Junior Kumon program at your Center, we recommend that you purchase one complete set of our Recommended Reading List from our reading levels 2A – L at a cost of approximately $1700. You may purchase the books from a vendor of your choice.

You must have your fingerprints taken on Form FD-258, the fingerprinting card used by the FBI, to conduct a criminal background check. If you are invited to our Start-Up Training program, Kumon will provide this form to you along with detailed procedures to properly fill the card out, take it to a local governmental agency to obtain your full set of fingerprints, and mail to the FBI to conduct the criminal background check. You must authorize the results of the background check to be mailed directly to Kumon. The fee to process the fingerprinting card is $18. Additional fees may apply at the local level to have your fingerprints taken. We will not allow you to attend Start-Up Training until we have received the results of the FBI background check.

The estimate includes the first month’s rent. You must operate your Center in retail facilities such as a storefront,  strip mall or town center unless we grant you a written exception to this requirement.  We will not accept a location where the lease term is less than three years, the space is less than 800 square feet, or you are unable to  affix one of our exterior signs.  We will not  21  Kumon Disclosure Document – 04/10 permit any activity other than the operation of a Kumon Math and Reading Center for any site we approve.  You may not use or permit the use of  the site we approve for any other purpose or activity at any time without first obtaining our written consent.  Rent will vary according to the center’s location and whether your landlord shall  require a security deposit.  Kumon currently offers a rent subsidy program under which we will assist you with your rent for 24 months.  You must sign our Rental Subsidy Addendum (see Attachment 2-E to this disclosure document) to receive the subsidy.  The subsidy is $700 for the first 12 months of your lease and $300 for the next 12 months of your lease; or 45% of your monthly rental obligation for these months, whichever amount is lower.  (See Item 11, “Site Selection” for further information about our site
approval process.)  Kumon does not under any circumstances act as a guarantor under the lease.

The amount of the build-out for a new Kumon Center depends on many factors such as the age of the building, a landlord’s willingness to make a contribution (which may take the form of a tenant improvement allowance or free rent for some specified time), and real estate market conditions.

You also have the responsibility to ensure that the premises and signage, which must be approved by us, are zoned appropriately for the operation of a Kumon Center.

This is an estimate of the additional funds you will need during the initial period of operation, which we define as three months from the opening of the Center. These figures are estimates, and we cannot guarantee that you will not have additional expenses in starting the business.  Your costs will depend on many factors, such as: how closely you follow our methods and procedures; your management skills, experience and business  acumen; local economic conditions; the local market for our services; competition; and the enrollment level reached during the initial three-month period of Center operations.