Outline franchising Mathnasium

1. Overview of Mathnasium
a. History

Mathnasium (also known as Mathnasium Learning Center) is an American education brand

and supplemental math learning franchise consisting of over 1,000 learning centers in North
America, South America, Europe, the Middle East, and Asia that provides instruction to
students in pre-kindergarten through high school.

Larry Martinek, Mathnasium’s founder saw first-hand the struggles that many students had
with mathematics instruction. He spent three decades developing methods and materials to
help give grade-school children a better foundation in math. His curriculum became the basis
of the first Mathnasium Learning Center, opened by Peter Markovitz and David Ullendorff in
Westwood, California, in 2002. The company began expanding via franchising a year later
and now has locations across North and South America, Europe and Asia.
Mathematics is often considered one of the most challenging subjects for students in any
grade. As kids grow older, math becomes even more complicated when students are
introduced to algebra, geometry, and calculus. Mathnasium focuses on not only effectively
teaching math in a way that students can understand but makes sure kids are having fun as
they learn these challenging concepts.

Mathnasium centers are open to the public at least five times a week during after-school
hours for at least four hours per day. Children typically attend Mathnasium centers twice a
week for approximately 60 minutes per session. Some children attend more than twice a
week or for more than 60 minutes per session. The “Mathnasium Method” uses diagnostics,
instruction, guided practice and manipulatives. The Mathnasium system includes worksheets
for children between four and 17 years old. Based on consumer feedback, Mathnasium is
known for increasing self-esteem and confidence amongst students. The center also provides
a sense of relief for parents knowing that their child is improving their math skills and getting
the assistance they need to pass in school. According to numerous tutors, students, and
parents, the best part about Mathnasium is the level of personalization each center offers to
every student. Older and younger students who may not enjoy studying math often feel seen
and understood as they can grasp complex concepts with the help of their tutors. Mathnasium
provides a system that works effectively and produces positive results for everyone.
Upon signing up for Mathnasium, you must take an initial assessment. After completing this
initiation, you’ll then discuss the results and your goals for the math program with the center
director. From here, your child will design their binder and be given a personalized learning
plan.
Mathnasium measures a student’s progress through a rewards system. After a student passes a
certain number of master checks after completing a series of workbooks and lessons, the
student receives punches on their mastery card. Once they earn a certain amount of punches,
students can pick a prize from the Mathnasium prize cabinet. This method keeps every
student engaged and enthusiastic as they can track their progress and see results. After all,
kids love prizes!
Early Steps
For the starting level, this is suitable for children in the preschool age from 3 to 5 years old.
During this period, Mathnasium’s core curriculum focus on helping children identify colors,
learn numbers in a proficient manner and learning how to think. The program includes::
• Object properties
• Order of natural numbers
• Count and write numbers
• Spatial correlations
• Fractions
• Geometry
• Summation
• Classification
• Subtraction
• The concept of proportions and puzzles
• 1:1 . correlation
Elementary
With primary school, children in the 1st to 5th grade age group will follow this program. The
subjects taught in this elementary program will help children understand basic math concepts
and write how to think in math easily. The specific curriculum will include the following:
• Numbers and operations
• Measure
• Geometry,
• Pre-algebra
• Data Analysis and Probability
 Secondary
This is a math program for children from secondary school onwards. The children will learn
math problems of geometry and algebra from basic to advanced. The course content will
include:
• Algebra
• Geometry
• Data and statistical analysis
• Problem solving
• Measure

b. Vietnam Market Potentials, Consumer & Competition

Since the economic reforms in the 1980s, Vietnam has transitioned to a socialist-oriented
market economy. Together with the privatization and restructuring of state-owned companies,
the reforms have led to a continuously growing GDP for Vietnam since then. The economic
growth has enabled the country to invest more in its education sector to improve the quality
of the labor force

Vietnam’s young population and the government’s commitment to improving education offer
opportunities for investments. Since 2000, the government has committed approximately 15
percent to 20 percent of public expenditure on education – one of the highest in ASEAN.

Vietnam’s local rising middle class prefers the private education sector over the public school
method due to the better quality of services. This has translated into a strong market for
private institutions and vocational schools and services.

Vietnamese consumer: Underlying the demand for education in Vietnam is a rapidly

emerging middle class. Reporting from Boston Consulting Group (BCG) in 2013 showed that
Vietnam had the fastest-growing middle class in Southeast Asia. The report projected the
middle and affluent classes (MAC) in Vietnam to double in size between 2014 and 2020,
from 12 million to 33 million. Accompanying MAC growth is a clear uptick in confidence
from those within Vietnam’s current middle class. Survey data provided as part of the BCG
report indicated that 90 percent of MAC respondents believe their living conditions are
higher than that of their parents. On top of this, respondents in the report confidence that
conditions will continue to improve for their children.
Vietnamese consumers often associate Western brands with quality, an affluent life-style, and
product reliability. They are responsive to high-end, well-known, premium brands of
products and services. At present, most franchised businesses in Vietnam are focused on fast
food and retail, but a significant potential exists for a wide range of companies to enter the
Vietnamese market specifically in the education sector

Talent shortages: As investment in children’s education is given increased priority, the

demand for sending children to an international learning environment for a higher quality of
education is on the rise, making the market more attractive to step into. Vietnam is facing
major skill gaps, and local qualifications in many fields are not well acknowledged.
International qualifications are therefore seen as a valuable advantage, and in some fields,
they are almost essential.

Government support initiatives: In addition to the rising demand for international education
providers, investors can also find new opportunities offered by the government, especially
after the country’s participation in WTO. Education remains a national priority for the
government as it believes it will determine the economic success of the country. The
government is also working on improving access to schools and improving the quality of
education in Vietnam

CONSUMER

Through a 1 month nationwide survey conducted by Q&Me VN in regards to education in

Viet Nam, using a sample size of 431 participants ranging from 24-60 years old, with kids,
Q&Me had found that Math is the 2nd biggest category for external education after English,
indicating Vietnam’s preference in developing their kids abilities in the long run. Parents in
Vietnam place a high value on their children’s education. One of the key drivers of this shift
in favoured education methods in Vietnam is the increase in income and the growth of the
middle class. Vietnamese are extremely pragmatic, and they will reward brands that provide a
quality service at a price thought to be reasonable

For the expanding middle-classes, an international education is often seen as an essential step
towards bagging a coveted space at a foreign university, and out-of-hours lessons are widely
regarded as the best way to achieve that. According to the World Bank, approximately 27
percent of Vietnamese households send their children to private lessons or tutors, spending
between one and five percent of the total household income in the process.

Graph 1 : Time spent searching for information regarding international education, prior to
registration, distributed by city
The graph shows that parents tend to be more concerned about study plans for their children
than the students themselves, with 40% of parents starting to search for information more
than a year before the applications are submitted. Parents are typically the ones who are
financially responsible for their child’s education, and therefore more lead time is required to
save and prepare for future study. On the other hand, students typically began searching for
information from 6 to 12 months before the applications are submitted (around 40%)
English training center developments have grown significantly in the last few years. HCMC
and Hanoi have approximately 450 English language centers; in which, ILA is the market
leader, whilst the emerging APAX is rapidly increasing market share. In the Education First
English Proficiency Index (EFEPI) 2017, Vietnam ranks 7th in English Proficiency,
indicating the ambitious nature of the country.

Private household expenditure on education also varies greatly between richer and poorer
households in Vietnam. Even on compulsory levels of primary and secondary education,
spending on extra courses is 5.6 times higher among the richest households than among the
poorest. Kinh households, the ethnic majority population in Vietnam, spend over seven times
as much on extra classes for their children than ethnic minorities do. This disparity is likely
driven by lower household incomes, less availability of extra classes in remote areas where
many ethnic minorities live, and higher opportunity cost of keeping children in school.
Differences in educational expenditure across backgrounds translate into differences in
educational completion, which in turn affect future employment and economic opportunities
and can lead to wider inequality.
For the expanding middle-classes, an international education is often seen as an essential step
towards bagging a coveted space at a foreign university, and out-of-hours lessons are widely
regarded as the best way to achieve that. According to the World Bank, approximately 27
percent of Vietnamese households send their children to private lessons or tutors, spending
between one and five percent of the total household income in the process.
Kumon was created in Japan in the 1950s and had been using the same learning method to
teach the basic concepts of math and reading to students for over 60 years. Instead of
personalized learning plans, Kumon focuses on placing students in levels based on their test
scores and mastery of each subject. At every Kumon center, each student is responsible for
learning concepts independently and tracking their own progress.

At first glance, Kumon seems similar to Mathnasium as it is also an in-person learning center
that offers online tutoring options for elementary school students to high school students who
are struggling with math. However, Kumon offers lessons in reading as well, with teaching
methods that are far different from its competitors.

Kumon’s teaching method focuses on memorization and repetition. Math and reading lessons
with Kumon constantly repeat the basics of each subject until a student has memorized and
understood the concept. When a student is ready, they will take an assessment test where they
will be assigned to a slightly lower class than they tested into. According to Kumon, this
ensures that students master the basics of each lesson.

In each lesson, Kumon students work through worksheets until they have mastered the
concept being taught. Students are not allowed to bring in their homework as they are strictly
bound to learning the lessons in Kumon’s curriculum. Additionally, students cannot move on
to a different topic until they have mastered the current lesson they are on. Kumon then sends
students home with about 30 minutes of homework to work on after they complete their
tutoring session for the day.

Even though Kumon has an independent learning curriculum, the center does have tutors.
However, Kumon’s tutors are often high school and college students rather than certified
professionals. Instead of giving one-on-one advice and mentoring Kumon students, tutors at
Kumon are in charge of a classroom full of children working on the same subject. The tutors
are similar to teachers, as they are available to answer questions, but they do not offer
individual tutoring assistance.
2. Marketing Program
a. Marketing Mix Strategy 4Ps

b.

3. SWOT Analyzing

Strengths

For a tutoring business to succeed, one strength has to be its people. Whether you’re offering general
academic tutoring to grade-school students or specialized subject-matter knowledge in a more
advanced curriculum, your tutors have to be experts at their designated subjects and adept at
communicating their knowledge to the customer. If your people fit that description, you have a big
edge over rivals whose tutors lack one of those abilities. Having advanced resources, such as enough
computers to accommodate those looking for tutoring on their programming skills, can be a strength.
Location is also key: If you’re within walking distance of the local university, you’ll likely draw
more business than a similar service that requires its clients to drive and park.
Weaknesses

One weakness for a tutoring service is a lack of space. A tutoring service that can’t offer clients
enough space on site will be limited to customers who want the tutors to come to their homes. A lack
of funding can force your business to reduce its offerings. Maintaining qualified tutors may also be a
problem, particularly if their expertise is in a high-demand subject and competition for their services
is fierce. You might have low participation due to a lack of awareness of your services or apathy
among your target market, or low brand name recognition might make it difficult for you to stand
out.

Opportunities

A tutoring service can increase its offerings and operate on a more stable footing when it has a
regular source of clients. Use the strength of your people to find partnerships with academic
institutions that may have students who need tutoring. A local community college, for example, may
not have the funding or capacity to provide individual tutoring for those needing training in remedial
English or math. But the school might be willing to advertise the easy availability of your tutoring
services, which helps you expand your business at little cost. In addition, some schools have federal
or state funding available for tutoring or a line item in their own budget for this service. Find out if
you qualify to receive those funds for providing services.

Threats

Other competitors entering your space pose the greatest threat. That’s why building your brand name
is key; without a strong marketing campaign, one algebra tutoring service is likely to look much the
same as another. If a competitor is trying to poach your best people, find out what motivates your
tutors and make sure you provide it. It might not require a payroll increase; more flexible working
hours might be more motivating. A lack of physical space can be a threat, but if rents are too high for
an office and you can’t use the facilities at local schools, consider making your market niche online
tutoring and homework help.
a. Franchising

+ Training Overview: The franchisor requires that the center director (if the center director
is an owner of the franchise or the franchisee) and one principal who is the largest equity
owner of the franchise or the franchisee (if that person is not also the center director) start and
successfully complete the initial training program to the franchisor’s satisfaction.
The initial training program is currently divided into four stages.

Stage 1 of the initial training program consists of approximately 30 hours of online training.

Stage 2 of the initial training program consists of four half-days of live training instruction in
a virtual classroom and introduces franchisees to Mathnasium’s “Eight Success Factors” and
business practices.
Stage 3 of the initial training program consists of approximately 40 hours of online self-
paced training videos, written assignments, and a final test.

Stage 4 of the initial training program consists of four half-days of live training in virtual
classroom and explores deeper knowledge of Mathnasium’s Eight Success Factors and
business practices.

Stage 4X of the initial training program consists of three full days of practical application of
Mathnasium’s business and educational practices in Los Angeles, California. The franchisor
will provide periodic ongoing or supplemental training, as specified in the manuals.
Franchisees must participate in ongoing and supplemental training as prescribed by the
franchisor during the term of the Franchise Agreement. If the franchisor holds an annual
convention for franchisees, they must attend and pay the annual convention fee.

+ Territory Granted: Franchisees will be granted a designated territory with protective

rights. If franchisees are complying with system standards, minimum enrollment, and gross
receipts requirements, then the franchisor and its affiliates will not locate, and will not
authorize a third party to locate, another Mathnasium center within the designated territory.
The franchisor will assign the franchisee a territory that it believes to contain at least 2,500
children between the ages of 5 and 19 years at the time the franchisee executes the Franchise
Agreement. The actual location of the center must be inside of the territory’s boundaries and
approved by the franchisor.

+ Obligations and Restrictions: Franchisees or one their owners is required to personally

participate in and devote sufficient time and effort in the support and management of the
franchise to ensure its successful operation in accordance with the system and manuals. It is
the intention of the franchisor to approve only those franchisee candidates whose principals
plan to actively participate in the direct operation and daily affairs of the franchise.
Additionally, the franchisee must act as or employ a center director for the center. The name
of the center director must be disclosed to the franchisor and should the center director
change, the franchisor must be notified in writing. The center director must successfully
complete the initial training program or other training program designated by the franchisor.
The center director must devote his or her entire time during normal retail business hours to
the management, operation and development of the franchise business at the center. A live
person must answer the center telephones during minimum hours as set forth in the manuals.
Franchisees may offer only Mathnasium programs, and only in accordance with the system.
The franchisor must pre-approve the use of any additional services, programs or products that
franchisees develop for their centers. All Mathnasium franchises must maintain a minimum
sales level. Punishments for failing to meet this requirement can be loss of territory and even
the termination of your franchise.

+ Term of Agreement and Renewal: The length of the initial franchise term is for five
years. If franchisees are in good standing, they can execute a successor Franchise Agreement
for additional five-year terms.

+ Financial Assistance: The franchisor does not offer direct or indirect financing for the
franchisee’s first center unless they are employed as a Center Director at a Mathnasium
Center and meet certain eligibility requirements.
Another competitor in the space is Kumon. Kumon offers math and reading programs for
children. Kumon offers very similar services to Mathnasium as students are expected to
attend twice a week and spend 20-30 minutes on both math and reading. Kumon currently
serves over 4 million students, in 58 countries with 25,000 locations. In the United States, the
company owns 27 of these locations and 1,568 are franchised. The cost to open a Kumon is
quite similar to Mathnasium as it ranges between 67,428 and $145,640. The ongoing fees
operate differently at Kumon which is $15 x number of new students, $34 x number of full
paying students, $17 x partially paying students. Averaging this all together, the royalty fee is
about $22 per student. In order to open a Kumon the applicant must hold at least $70,000 in
liquid assets. The average Kumon earns $678,000 in annual revenue and typically takes a
little over 3 years to recoup your investment. A Kumon also typically sells
for $238,740 which is more than twice its midpoint investment of $102,174

The two companies are very similar, but the differences lies in the type of tutoring they offer.
Mathnasium centers offer individualized tutoring. Mathnasium centers offer personalized
lessons with homework and test prep sheets. Kumon centers rely primarily on memorization
and repetition, while Mathnasium centers focus on customized learning plans for children.
Mathnasium centers also allow students to bring their own math homework and prep for tests.
Both companies are known for their excellent service and their personalized approach.

Mathnasium teachers are also highly trained. Those working with middle and high school
students must have a college degree and must have passed a rigorous training program. On
the other hand, Kumon tutors do not undergo such a rigorous hiring process. Both companies
are primarily focused on teaching math, but each one offers different benefits. For example,
Kumon tutors typically teach students math at the same time, while Mathnasium tutors work
one-on-one with students.

If you are an entrepreneur looking to expand into child education, a Mathnasium or Kumon
franchise may be a good choice. Mathnasium Learning Centers are similar to Kumon Math &
Reading Centers in many ways, with Mathnasium having fewer start-up costs and less
business experience. Both companies offer extensive training and support, as well as
financing options.
Financial Projection

Mathnasium charges a premium compared to other education businesses. There is a base

of $500 paid for its royalty fee as well as 10% of monthly gross revenue. Similarly, the marketing
fee is $250 plus 2% of gross sales. The industry norm is 5% for royalty and 3% for marketing. 

Initial Investment

Name of Fee Low High

Initial Franchise $26,500 $49,000

Fee (for first
center)

Expenses While $2,500 $3,000

Training

Base Royalty Fee $0 $500

(per month)

Technology Fee $110 $110

(per month)

Additional $0 $45
Technology Fee
(per month)

Rent (1st and Last $6,000 $14,000

Month's Rent)
Paint, Carpet and $5,500 $13,500
Tenant
Improvements

Furniture, Signs, $10,000 $17,000

Equipment and
Supplies

Insurance $1,200 $1,500

(annually)

Business License, $250 $1,000

Name Registration

Professional $1,300 $2,000

Services (Legal
and/or Accounting)

Phone and Utilities $500 $1,000

Video Surveillance $500 $2,500

and Related
Equipment

Pre-Opening $4,000 $4,000

Advertising

Additional Funds $32,000 $40,000

(4 Months)

ESTIMATED $112,860 $149,155

TOTAL (for first
center)
The above information has been compiled from the FDD of Mathnasium, Year 2022.
(https://www.franchisedirect.com/directory/mathnasium/ufoc/164/)
Other Fees

Type of Fee Amount

Initially, 10% of the monthly gross receipts from all sources as a result of operating the
center, plus a base royalty fee of $500 per month (payable on the first center only).
Monthly Royalty
Beginning in the 24th month of operation of the center, the base royalty fee plus the
greater of (i) the 10% monthly royalty or (ii) $1,500.

$250 plus 2% of monthly gross receipts from all sources as a result of operating the
Monthly Marketing Fees
center.

Technology License Fee Currently $110 per month, subject to increase.

Additional Technology
Currently $45 per month per center, subject to increase. 
Fee 

Annual Convention Fee Currently $250 per franchisee.

Administrative Fee for Late

$100 every two weeks until payment is made.
Payment

Administrative Fee for Late

$100 every two weeks until reports submitted.
Submission of Reports

Non-Compliance Fine $300 per month for each non-complying incident.

Other Fees

Type of Fee Amount

Returned Check Service

$60 per check returned by bank for non-sufficient funds.
Charge

Shipping costs Actual cost of shipping only.

Payments for "Chargeable

Items" Purchased from Prices determined by Mathnasium.
Mathnasium

Transfer Fee $7,000

Training Fee $3,000

Renewal Fee  $7,000 

Initial Training Tuition for

$750 per day per person.
Additional Trainees

Additional Marketing
Pro rata amount to cover special advertising program.
Assessment

Local or Regional As determined by cooperative. All money spent on cooperative advertising will be a
Other Fees

Type of Fee Amount

Cooperative Advertising credit against the local advertising requirement.

Amount of taxes assessed against Mathnasium due to the operation of the franchisee’s
Reimbursement of Taxes
center.

The median of the top 50% of Mathnasium franchises earned $336,945 in revenue.

Based on the 2022 ITEM 19 for Mathnasium, we estimate that the average Mathnasium franchise
made $270,000 in revenue for 2021. These estimates include a 1.5 year period from when a
Mathnasium Franchise Agreement is signed as a standard franchise takes about 1.5 years to open and
scale up after the initial agreement is completed.

The median Mathnasium Learning Center is expected to sell for $213,109.68. This is for the top 50%
of Mathnasium locations. This means that after a minimum of 4.30 years of collecting revenue you
will earn approximately $100,250 if you decide to sell your location.
4. Conclusion