FDD Talk: Kiddie Academy Franchise Costs, Fees, Average Revenues and/or Profits (2022 Review) (2024)

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

• Section I – Estimated initial investment (franchise costs) for a Kiddie Academy franchise, based on Item 7 of the company’s 2022 FDD

• Section II – Initial franchise fee, royalty fee, and marketing fee for a Kiddie Academy franchise, based on Items 5 and 6 of the company’s 2022 FDD

• Section III – Number of franchised and company-owned Kiddie Academy outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

• Section IV – Background information on the Kiddie Academy franchise opportunity, including relevant news updates

• Section V – Presentation and analysis of Kiddie Academy’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average revenue, labor expense, occupancy expense, miscellaneous expense, and gross profit for the bottom quarter, top quarter, and all 227 Mature Academies (i.e., franchisee-owned Kiddie Academy outlets that have been open for at least 24 months) that submitted the required expense information to Kiddie Academy

• 2021 average revenue, labor expense, occupancy expense, miscellaneous expense, and gross profit for the bottom quarter, top quarter, and all 22 Ramping Academies (i.e., franchisee-owned Kiddie Academy outlets that have been open for at least 12 months, but less than 24 months) that submitted the required expense information to Kiddie Academy

• Section VI – Key ratios, comparables, computations, and analyses for the Kiddie Academy franchise opportunity (exclusive content for Platinum subscribers)

Section I – Kiddie Academy Franchise Costs

• Kiddie Academyfranchise costs (for a leased facility), based on Item 7 of the company’s 2022 FDD:

• Total Initial Fee: $65,000 to $145,000
• Lease Deposit: $20,000 to $70,000
• Tenant Contributions for Improvements and Construction Soft Costs: varies
• Professional Fees and Loan Fees: $20,000 to $215,000
• Kitchen Equipment and Supplies: $25,000 to $30,000
• Supplies/Equipment for Inside of Academy, Playground, and Online Training Component: $80,000 to $130,000
• Outdoor Fixed Playground Equipment: $70,000 to $185,000
• Computer Hardware and Software and Classroom Technology: $25,000 to $50,000
• Office and Lobby Furniture, Office Equipment and Supplies, and Telephone System: $20,000 to $25,000
• Indoor and Outdoor Signage: $25,000 to $30,000
• Travel and Living Expenses While Training and Plan Review: $2,000 to $5,000
• Transportation Vehicles and Equipment: $0 to $10,000
• Insurance and Utility Deposits: $3,000 to $5,000
• Business Licenses: $2,000 to $4,000
• Start-Up Marketing and Advertising Expenses: $35,000
• Additional Funds/Working Capital – 3 Months After Opening: $25,000 to $100,000
• Total Estimated Kiddie Academy Franchise Costs: $417,000 to $1,039,000

Section II – Kiddie Academy’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Kiddie Academy’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Fee: $145,000
• Royalties: 7% of Gross Revenues
• Brand Building Fund: 2% of Gross Revenues

Section III – Number of Franchised and Company-Owned Kiddie Academy Outlets

Franchised

2019

• Outlets at the Start of the Year: 213
• Outlets at the End of the Year: 246
• Net Change: +33

2020

• Outlets at the Start of the Year: 246
• Outlets at the End of the Year: 270
• Net Change: +24

2021

• Outlets at the Start of the Year: 270
• Outlets at the End of the Year: 286
• Net Change: +16

Company-Owned

2019

• Outlets at the Start of the Year: 1
• Outlets at the End of the Year: 1
• Net Change: 0

2020

• Outlets at the Start of the Year: 1
• Outlets at the End of the Year: 1
• Net Change: 0

2021

• Outlets at the Start of the Year: 1
• Outlets at the End of the Year: 1
• Net Change: 0

Section IV – Background Information on the Kiddie Academy Franchise

13 Things You Need to Know About the Kiddie Academy Franchise

Announces Emergency Relief Fund for Teachers and Staff

1. In mid-June 2022, Kiddie Academy announced at its annual conference a new community fund to provide its teachers and staff grants of up to $1,000 in times of personal hardship or natural disaster. The fund, which consists of donations from the Kiddie Academy community nationwide, has supported 13 teachers and awarded grants of more than $7,000 since its inception in 2019.

2. “The Kiddie Academy Community Fund helped me and my family through my COVID-19 recovery,” said Christine, a Kiddie Academy teacher in Illinois. “The grant helped me with the hospital bills I received during COVID-19. It’s unfortunate that things turned out this way, but I can truly say ‘I beat COVID!’ I am thankful for my life and so appreciative of Kiddie Academy.”

3. The Kiddie Academy Community Fund was created to help Kiddie Academy teachers and team members in need of immediate financial assistance following an unforeseen disaster or personal hardship. The fund relies on support from Kiddie Academy, as well as individual donations made by franchisees, vendors, employees, and the public. Kiddie Academy has donated to seed the fund and covers all operating expenses.

4. Following the fund announcement at the organization’s annual conference, which was held June 2-4 in Austin, Texas, attendees donated an additional $12,000.

5. According to Maria Dontas, director of corporate social responsibility for Kiddie Academy, “We believe that supporting one another when help is needed most allows us to grow stronger as a community. We see the community fund as a key opportunity to support our teachers and staff, who are the foundation of everything we do.”

Opens 300th Location

6. In mid-July 2022, Kiddie Academy celebrated the opening of its 300th location in Urbandale, Iowa. The 300th Academy in the Kiddie Academy system represents the first location in Iowa and will bring 28 jobs to the Urbandale area. The location will serve 182 children ages six months to 12 years using the Kiddie Academy brand and proprietary Life Essentials curriculum, which exceeds Iowa state’s early learning and preschool standards.

7. “We’re dedicated to developing what is unique in every child and understand that every interaction is an opportunity to leave a positive impact,” said Joshua Frick, president of Kiddie Academy Domestic Franchising, LLC. “The 300th Academy milestone is a chance to reflect on how far we’ve come and to look ahead. We look forward to nurturing, educating and inspiring thousands of children in communities across the country for years to come.”

8. Kiddie Academy Domestic Franchising, LLC has been ranked on the Entrepreneur Franchise 500 list for the past 20 years and has been recognized by top franchise lists published by Franchise Direct, Franchise Times, FranchiseRanking.com, Franchise Gator, and more. Frick added, “Rankings like this are based on a franchise system’s fiscal strength, stability and development, further solidifying Kiddie Academy’s reputation as an industry leader in both franchising and educational child care.”

9. In the past year, the Kiddie Academy system celebrated 40 years of early childhood education with a $40,000 donation to Family Promise, a national nonprofit focused on providing prevention, shelter, and stabilization services to communities nationwide. The donation was used to launch a leadership academy offering training to staff at Family Promise affiliates, and scholarships focused on helping women achieve career growth in early childhood education. As a result of this effort, Kiddie Academy Domestic Franchising, LLC was named the 2022 Cause Marketing Champion in Franchise Update Media’s Franchise Innovation Awards.

Company History

10. Kiddie Academy was founded in 1981 by Pauline and George Miller in Baltimore County, Maryland. Pauline Miller, a mother and educator, wanted to provide better child care options that went beyond typical child care. Using her experience in education and as a mother, Miller developed a program that made learning fun. The program was a success and Miller had to open additional locations in the area to keep up with demand.

11. As demand grew, Miller decided to begin franchising Kiddie Academy in 1992. Over the next few decades, Kiddie Academy continued to grow around the United States. As growth continued, Kiddie Academy expanded its program to include infants and toddlers – the company also added a summer learning program.

12. Kiddie Academy’s expansion continued in the 2010s and the company also updated its programs, integrating modern technologies and teaching methods. Today, there are Kiddie Academy locations across more than 33 states and Washington, D.C.

Entrepreneur’s Franchise 500

13. Kiddie Academy ranked No. 118 on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Kiddie Academy Franchise (Item 19, 2022 FDD)

• The information below represents an actual historic financial performance representation.

• The information was obtained from the financial results reported to Kiddie Academy by its existing franchisee-owned outlets for the full calendar year ended December 31, 2021 (the “2021 Reporting Period”). This information has not been audited or verified by Kiddie Academy or a third party.

• As of December 31, 2021, there were 286 franchised Academies. As of that date, 20 of these Academies (6.9% of the total) had been open and operational for less than 12 full months and have therefore been excluded from the 2021 Reporting Period data set.

• Of the remaining 266 Academies, 17 Academies (6.4% of the total) had failed to report the required information for the full calendar year ending December 31, 2021. The results of these Academies have also been excluded from the 2021 Reporting Period data set.

• Accordingly, the financial performance information presented in the tables below for the 2021 Reporting Period represents the results of the remaining 249 Academies that had reported results as of December 31, 2021 (the “2021 Reporting Academies”).

• The results reported for the 2021 Reporting Academies are divided into two groups: the 227 Academies open 24 months or more as of the end of the 2021 Reporting Period (the “2021 Mature Academies”) and the 22 Academies open less than 24 months as of the end of the 2021 Reporting Period (the “2021 Ramping Academies”).

• Financial performance information about Kiddie Academy’s Mature and Ramping Academies includes Gross Revenue, Labor, Occupancy, Miscellaneous Expenses, and Gross Profit.

• All Academies offer substantially the same services and products to the public. However, the actual financial performance among Academies varies substantially.

• The results presented in the tables below indicate the Gross Profit, which is the Gross Revenue minus the listed operating expenses.

• The time periods expressed in the chart below are not meant to be an indication as to when or if an Academy will reach maturity. Each Academy’s growth rate will vary by location, competitive environment, the region and market area in which the unit is located, labor costs, programs, and the individual franchisee’s marketing efforts and management skills.

• Accordingly, the information presented should only be used as a reference guide in conducting an independent analysis of the proposed business.

Part 1 – Mature Academies (Calendar Year Ended December 31, 2021)

All Mature Academies

• The table below shows the average results achieved by the 2021 Mature Academies.

• Number of Academies: 227
• Average Number of Months Open: 98.45

• Average Gross Revenue: $1,632,080 (100.0%)
• Average Labor Expense: $720,929 (44.2%)
• Average Occupancy Expense: $326,266 (20.0%)
• Average Miscellaneous Expense: $200,795 (12.3%)
• Average Gross Profit: $384,090 (23.5%)

Top Quarter by Gross Profit

• The table below shows the average results achieved by the “Top Quarter” of the 2021 Mature Academies.

• Number of Academies: 57
• Average Number of Months Open: 82.92

• Average Gross Revenue: $2,332,385
• Average Labor Expense: $864,078
• Average Occupancy Expense: $356,938
• Average Miscellaneous Expense: $264,121
• Average Gross Profit: $847,248

• 23 Academies or 40% of the Top Quarter reported Gross Revenue above the reported average. 21 Academies or 37% of the Top Quarter reported Gross Profit above the reported average.

Bottom Quarter by Gross Profit

• The table below shows the average results achieved by the “Bottom Quarter” of the 2021 Mature Academies.

• Number of Academies: 57
• Average Number of Months Open: 102.06

• Average Gross Revenue: $1,127,331
• Average Labor Expense: $605,586
• Average Occupancy Expense: $343,577
• Average Miscellaneous Expense: $154,736
• Average Gross Profit: $23,433

• 26 Academies or 46% of the Bottom Quarter reported Gross Revenue above the reported average. 38 Academies or 67% of the Bottom Quarter reported Gross Profit above the reported average.

Part 2 – Ramping Academies (Calendar Year Ended December 31, 2020)

All Ramping Academies

• The table below shows the average results achieved by the 2021 Ramping Academies.

• Number of Academies: 22
• Average Number of Months Open: 18.29

• Average Gross Revenue: $1,325,640 (100.0%)
• Average Labor Expense: $595,113 (44.9%)
• Average Occupancy Expense: $267,283 (20.2%)
• Average Miscellaneous Expense: $164,294 (12.4%)
• Average Gross Profit: $298,950 (22.6%)

Top Quarter by Gross Profit

• The table below shows the average results achieved by the “Top Quarter” of the 2021 Ramping Academies.

• Number of Academies: 6
• Average Number of Months Open: 18.48

• Average Gross Revenue: $1,670,508
• Average Labor Expense: $641,168
• Average Occupancy Expense: $174,622
• Average Miscellaneous Expense: $192,146
• Average Gross Profit: $662,572

• 2 Academies or 33% of the Top Quarter reported Gross Revenue above the reported average. 2 Academies or 33% of the Top Quarter reported Gross Profit above the reported average.

Bottom Quarter by Gross Profit

• The table below shows the average results achieved by the “Bottom Quarter” of the 2021 Ramping Academies.

• Number of Academies: 6
• Average Number of Months Open: 18.74

• Average Gross Revenue: $909,133
• Average Labor Expense: $478,734
• Average Occupancy Expense: $280,259
• Average Miscellaneous Expense: $117,888
• Average Gross Profit: $32,252

• 3 Academies or 50% of the Bottom Quarter reported Gross Revenue above the reported average. 4 Academies or 67% of the Bottom Quarter reported Gross Profit above the reported average.

Definition of Terms

• Gross Revenue – Gross sales based on actual operating results as reported monthly by franchisees to Kiddie Academy, representing registration fees, tuition, and other amounts charged to families by the franchisee.

• Labor – Employee-related expenses including: wages, salaries, bonus, commission, payroll taxes, training, insurance benefits, and worker’s compensation expenses (where applicable) as reported monthly by franchisees to Kiddie Academy. This also includes the cost of an Academy Director(s).

• Occupancy – Includes rent, common area maintenance, real estate taxes, and percentage rent (if any). This includes other lease-related charges, such as: maintenance, security, trash removal, association dues, and shopping center marketing expenses as reported monthly by franchisees to Kiddie Academy, if applicable.

• Miscellaneous – Includes other (discretionary) variable expenses related to the operation of the business, including: royalties and Brand Building Fees, telephone, advertising, utilities, cleaning services, and postage as reported monthly by franchisees to Kiddie Academy.

• Gross Profit – Gross Revenue minus Labor, Occupancy, and Miscellaneous Expenses. Other non-listed revenue (i.e., state and federal funds, grants, etc.) and expenses (i.e., supplies, food, insurance premiums, etc.) will impact Net Profit.

Section VI – Kiddie Academy Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️