Click here to load reader

FRANCHISE DISCLOSURE DOCUMENT KUMON 5-14-2012 FDD.pdf · PDF file2 Kumon Disclosure Document – 04/12 In 1954, Toru Kumon developed the Kumon Method in Osaka, Japan. Mr. Kumon, a

  • View
    574

  • Download
    40

Embed Size (px)

Text of FRANCHISE DISCLOSURE DOCUMENT KUMON 5-14-2012 FDD.pdf · PDF file2 Kumon Disclosure...

  • Kumon Disclosure Document 04/12

    FRANCHISE DISCLOSURE DOCUMENT

    KUMON NORTH AMERICA, INC. A Delaware Corporation Glenpointe Centre East

    300 Frank W. Burr Blvd. Teaneck, New Jersey 07666

    (201) 928-0444 [email protected]

    www.kumon.com

    The franchisee will operate an after-school center that provides math and reading programs using the Kumon Method of learning (Kumon Center). Children are given the opportunity to attend Kumon Centers twice each week throughout the year for approximately 20-30 minutes per subject and complete daily assignments at home on non-Center days.

    The total investment necessary to begin operation of a Kumon Center franchise ranges from $69,943 to $147,050. This includes the $1,000 franchise fee that you must pay to us. [If you are applying for your first Kumon Center franchise, at the time that you sign the Training Agreement, you must pay us a deposit of $500. If you successfully complete Start-Up Training and sign a Franchise Agreement, we will apply the deposit towards your franchise fee.]

    This disclosure document summarizes certain provisions of your franchise agreement and other

    information in plain English. Read this disclosure document and all accompanying agreements carefully. You must receive this disclosure document at least 14 calendar-days before you sign a binding agreement with, or make any payment to, us or our affiliates in connection with the proposed franchise sale or grant. Note, however, that no governmental agency has verified the information contained in this document.

    You may wish to receive your disclosure document in another format that is more convenient for

    you. To discuss the availability of disclosures in different formats, contact our Franchise Recruitment and Development Department at Glenpointe Centre East, 300 Frank W. Burr Blvd., Teaneck, New Jersey 07666, 201-928-0444.

    The terms of your contract will govern your franchise relationship. Dont rely on the disclosure

    document alone to understand your contract. Read your entire contract carefully. Show your contract and this disclosure document to an advisor, like a lawyer or an accountant.

    Buying a franchise is a complex investment. The information in this disclosure document can help

    you make up your mind. More information on franchising, such as A Consumers Guide to Buying a Franchise, which can help you understand how to use this disclosure document, is available from the Federal Trade Commission (FTC). You can contact the FTC by calling 1-877-FTC-HELP or by writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. You can also visit the FTCs home page at www.ftc.gov for additional information. Call your state agency or visit your public library for other sources of information on franchising.

    There may also be laws on franchising in your state. Ask your state agencies about them.

    Issuance Date: April 2, 2012

  • Kumon Disclosure Document 04/12

    STATE COVER PAGE

    Your state may have a franchise law that requires us to register or file with a state administrator before offering or selling franchises in your state. REGISTRATION OF A FRANCHISE BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE FRANCHISE OR HAS VERIFIED THE INFORMATION IN THIS DISCLOSURE DOCUMENT.

    Call the state franchise administrator listed in Exhibit F for information about us or franchising in your state.

    MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN A NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDER TO CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDER WHAT RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU MIGHT HAVE TO ACCEPT IN ORDER TO RENEW.

    Please consider the following RISK FACTORS before you buy this franchise:

    1. THE FRANCHISE AGREEMENT STATES THAT NEW JERSEY LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.

    2. THE FRANCHISE AGREEMENT PERMITS YOU TO SUE US ONLY IN NEW JERSEY. (SIMILARLY, IF WE SUE YOU, WE MUST DO SO IN YOUR STATE.) OUT-OF-STATE LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST MORE TO SUE KUMON IN NEW JERSEY THAN IN YOUR HOME STATE.

    3. THE FRANCHISE AGREEMENT PERMITS US TO CHANGE THE ROYALTY RATES OR DUE DATES ON AT LEAST 60 DAYS NOTICE. YOU HAVE THE RIGHT TO TERMINATE THE FRANCHISE AGREEMENT IF YOU ARE UNWILLING TO PAY ANY INCREASED ROYALTY.

    4. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

    This disclosure document is for use in the District of Columbia and all states.

    The Effective Date of this disclosure document for the following states is listed below:

    Hawaii April 16, 2012 South Dakota April 9, 2012Maryland April 12, 2012 Virginia April 29, 2012Minnesota April 11, 2012 Washington April 26, 2012North Dakota April 9, 2012 Wisconsin April 9, 2012Rhode Island April 26, 2012

  • Kumon Disclosure Document 04/12

    TABLE OF CONTENTS

    ITEM PAGE

    ITEM 1 THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES ............1

    ITEM 2 BUSINESS EXPERIENCE.........................................................................................................5

    ITEM 3 LITIGATION ..............................................................................................................................7

    ITEM 4 BANKRUPTCY ..........................................................................................................................9

    ITEM 5 INITIAL FEES ............................................................................................................................9

    ITEM 6 OTHER FEES............................................................................................................................10

    ITEM 7 ESTIMATED INITIAL INVESTMENT ..................................................................................17

    ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES....................................22

    ITEM 9 FRANCHISEES OBLIGATIONS ...........................................................................................23

    ITEM 10 FINANCING .............................................................................................................................25

    ITEM 11 FRANCHISORS ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING.............................................................................25

    ITEM 12 TERRITORY.............................................................................................................................35

    ITEM 13 TRADEMARKS........................................................................................................................36

    ITEM 14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION....................................37

    ITEM 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS ..........................................................................................38

    ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL ............................................39

    ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION.......................40

    ITEM 18 PUBLIC FIGURES ...................................................................................................................44

    ITEM 19 FINANCIAL PERFORMANCE REPRESENTATIONS .........................................................45

    ITEM 20 OUTLETS AND FRANCHISEE INFORMATION .................................................................46

    ITEM 21 FINANCIAL STATEMENTS...................................................................................................55

    ITEM 22 CONTRACTS ...........................................................................................................................56

    ITEM 23 RECEIPTS.................................................................................................................................56

  • ii Kumon Disclosure Document 04/12

    ATTACHMENTS 1 Training Agreement 2 Kumon Center Franchise Agreement 1-A Early Signing Addendum 2-A Guarantee 2-B General Release 2-C (A) Confidentiality/Non-Competition Agreement (Instructors) 2-C (B) Confidentiality/Non-Competition Agreement (Assistants) 2-D Takeover Center Addendum 2-E Rental Subsidy Addendum 2-F Veteran Instructor Addendum 2-G Partnership Addendum State-Required Franchise Agreement Addenda 3 Operations Manual Table of Contents 4 Financial Statements 5 No Child Left Behind Participation Agreement EXHIBITS A Price List of Chargeable Items B List of Non-Cost Items C Kumon Franchisees as of December 31, 2011 D Franchisees Who Left the System During the Fiscal Year Ending December 31, 2011 E Agents for Service of Process F State Administrators G Additional State-Required Information

  • Kumon Disclosure Document 04/12

    ITEM 1

    THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES

    Kumon North America, Inc. is a Delaware corporation incorporated on December 4, 1989, with its principal place of business at Glenpointe Centre East, 300 Frank W. Burr Blvd., Teaneck, New Jersey 07666. On April 18, 2001, Kumon changed its name to Kumon North America, Inc. from Kumon U.S.A., Inc.Kumon North America, Inc. offers the franchise rights described in this disclosure document. In this disclosure document, Kumon, we, us, and our means Kumon North America, Inc. and you means the person who acquires the franchise. If a corporation or limited liability company acquires the franchise, you means the corpo