FDD Talk 2021: Mathnasium Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Mathnasium franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Mathnasium franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Mathnasium franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Mathnasium outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Mathnasium’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020, 2019, and 2018 average, median, high, and low gross receipts for the franchised Mathnasium centers that had been open for 12 months or longer as of December 31, 2020, 2019, and 2018, respectively, broken down by quartiles and halves

Section I – Background Information

14 Things You Need to Know About the Mathnasium Franchise

Launched Live, Home Math Tutoring in U.S. and Canada

1.  In mid-March 2020, Mathnasium launched face-to-face, expert instruction from the comfort of customers’ own homes. Mathnasium@home features the same experience with highly-trained instructors and the Mathnasium Method as in learning centers, but live, through a computer. Initially slated to roll out across the U.S. and Canada over the course of 2020, Mathnasium@home’s nationwide launch was expedited due to increased public demand for education at home. Thousands of students have already experienced the new service.

2.  David Ullendorff, president of Mathnasium, said, “Mathnasium@home began as a way to serve customers whose busy schedules make it difficult to bring their children into the centers consistently. But given current concerns about public health issues and potential school closures, the public is especially eager to enjoy the Mathnasium Method live from remote locations. Three years of pilot testing proved that Mathnasium@home gives our students all the benefits of our in-center learning sessions, so we’ve worked to accommodate both our customers and their communities as quickly as possible.”

3.  As of the beginning of 2020, Mathnasium@home had been deployed in approximately 200 learning centers across North America. Independently-owned franchisees could choose when to launch Mathnasium@home for their local communities. Just like at a local learning center, students attend their live sessions an average of 2-3 times per week to work on a personalized learning plan. Because students are enrolled through their local Mathnasium Learning Center, they can participate in its local events and rewards program.

4.  The cost of Mathnasium@home is the same as traditional center enrollment, and anyone with an internet connection can take advantage of the service. Both in the centers and online, Mathnasium students boost grades and scores, learn critical-thinking and problem-solving skills, and gain self-confidence that transform their understanding and appreciation of mathematics.

Launches Kickstart Program in Response to ‘COVID Slide’

5.  At the end of June 2020, Mathnasium launched the Mathnasium Kickstart Program to address the loss of math skills and comprehension that resulted when schools were closed for the final 10-12 weeks of the academic year. The learning loss students experienced, dubbed the “COVID slide” by academic experts, further compounds the loss typically associated with the “summer slide.”

6.  The Kickstart Program ran through Algebra 1 in the U.S. and grade 9 in Canada. Students could learn from anywhere: in person at local learning centers, or live online with Mathnasium@home.

7.  Recent research by the NWEA stated that math was the academic subject hardest hit by the school shutdowns. The organization projected that some students could lose up to a full year of math comprehension if learning deficits are not addressed through additional instruction. Because math knowledge is cumulative, concepts missed now could take years to make up, jeopardizing future math learning.

8.  John Bianchette, associate vice president of education and training, said, “Mathnasium’s thorough evaluation of standards and curriculum frameworks resulted in a series of strategic assessments that pinpoint learning gaps students have developed over the past few months. The combination of our customized learning plans and instructional methodology addresses those gaps and reverses the COVID slide.”

Appoints New CEO

9.  At the end of January 2021, Mathnasium announced Shant Assarian’s appointment as CEO. Assarian joined Mathnasium in 2010 and had served in the role of COO since 2012. Co-founders Peter Markovitz and David Ullendorff will continue their governance responsibilities as members of Mathnasium’s board of managers.

10.  “Mr. Assarian is a ten-year veteran of the company and has served as COO for over eight years,” said Markovitz. “He has consistently demonstrated integrity, intelligence, reliability, and capability. He is a true supporter of the Mathnasium mission and fiercely upholds Mathnasium values. He lives by the belief that we can only succeed as a company when we help our franchisees succeed. We expect that the Mathnasium community will benefit greatly from his tenure.”

11.  Assarian has been instrumental to Mathnasium’s growth, leading its rapid expansion in North America, advancing its operating systems, and building a world-class team. “We have been able to attract incredibly talented professionals to fill each role throughout our organization. The Mathnasium team is truly outstanding and accomplished. We are committed to continuing to provide an exceptional learning experience for kids and an extraordinary business opportunity for our franchisees. Many exciting projects are underway that will keep Mathnasium at the leading edge of math education. Mathnasium’s greatest achievements lie ahead,” said Assarian.

Company History

12.  Mathnasium was founded in 2002 by Larry Martinek, David Ullendorff, and Peter Markovitz in the Westwood neighborhood of Los Angeles, California. Martinek was a math teacher who began writing his own supplemental materials and published Math Tips for Parents in 1985. Around the 1990s, Ullendorff and Markovitz, who also worked in education, recognized that students needed a better understanding of math to be successful. They felt there was a vast disconnect, though, between students’ learning skills and the math curriculum they were taught in school.

13.  After an exhaustive search, Ullendorff and Markovitz came across Martinek’s work and hired him to help develop the Mathnasium Method. A year after opening the first Mathnasium Learning Center, the business partners began franchising the concept. An instant success, Mathnasium quickly expanded across the United States as well as internationally. By 2019, Mathnasium had grown to more than 1,000 centers on five continents.

Entrepreneur’s Franchise 500

14.  Mathnasium ranked No. 31 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Mathnasium franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Mathnasium’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  786
• Outlets at the End of the Year:  860
• Net Change:  +74

2019

• Outlets at the Start of the Year:  860
• Outlets at the End of the Year:  935
• Net Change:  +75

2020

• Outlets at the Start of the Year:  935
• Outlets at the End of the Year:  927
• Net Change:  -8

Company-Owned

2018

• Outlets at the Start of the Year:  11
• Outlets at the End of the Year:  13
• Net Change:  +2

2019

• Outlets at the Start of the Year:  13
• Outlets at the End of the Year:  7
• Net Change:  -6

2020

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  7
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• The following is a historic financial performance representation for the period from (i) January 1, 2020 through December 31, 2020, (ii) January 1, 2019 through December 31, 2019, and (iii) January 1, 2018 through December 31, 2018.

• It includes average and median annual Gross Receipts of Mathnasium’s existing centers that had been open for 12 months or longer as of December 31, 2020, 2019, and 2018, respectively, broken down by quartiles and halves.

• “Gross Receipts” means the annual Gross Receipts from all sources in the operation of a Mathnasium Center, including student tuition, registration and testing fees, sales of learning materials, hourly per student private tutoring, and any other approved services.

• “Gross Receipts” excludes only sales tax receipts that you must by law collect from customers and that you pay to the government, any customer refunds actually paid, and coupons or promotional discounts approved by the company.

• As of December 31, 2020, there were 927 franchised Mathnasium centers in operation. Of the franchised Mathnasium centers, 48 were not included in this financial performance representation because they had not been open for 12 months or longer as of December 31, 2020.

• In addition, 8 franchised Mathnasium centers that had been open for at least 12 months were not included because they had not reported their Gross Receipts to the company for the full 12-month period.

• As of December 31, 2019, there were 935 franchised Mathnasium centers in operation. Of the franchised Mathnasium centers, 88 were not included in this financial performance representation because they had not been open for 12 months or longer as of December 31, 2019.

• In addition, 4 franchised Mathnasium centers that had been open for at least 12 months were not included because they had not reported their Gross Receipts to the company for the full 12-month period.

• As of December 31, 2018, there were 859 franchised Mathnasium centers in operation. Of the franchised Mathnasium centers, 88 were not included in this financial performance representation because they had not been open for 12 months or longer as of December 31, 2018.

• In addition, 9 franchised Mathnasium centers that had been open for at least 12 months were not included because they had not reported their Gross Receipts to the company for the full 12-month period.

• The annual averages and medians of Gross Receipts for franchised Mathnasium centers open at least 12 months and reporting throughout the year shown were calculated by Mathnasium based on reports on Gross Receipts furnished to Mathnasium by its franchisees. Neither the submitting franchisees nor Mathnasium audited this information.

• The financial information below does not reflect the costs of sales, operating expenses, or other costs or expenses that you will incur and that must be deducted from the Gross Receipts to obtain your net income or profit.

2020 Average Gross Receipts for Mathnasium Centers Operating 12 Months or More

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