Deven Klein is the co-founder, COO, and General Counsel of Athena Learning Centers, a community of year-round Learning Centers where children go to improve their math and reading skills.
Deven worked for Kumon North America, Inc. for almost 16 years. He started the Legal Department from scratch and served as VP and Corporate Counsel for 10 years. He then led the Franchise Recruitment and Development Department at Kumon for 5 years.
Since leaving Kumon in late September 2010, Deven was outside legal counsel for a few franchisor clients and worked in a consulting role for an on-line learning company. He started Athena Learning Centers with Mark Mele in October 2011.
Franchise Help (FH): What led to your decision to go into the supplemental education business?
Deven Klein (DK): I'm a lawyer by profession but an educator at heart, and always thoroughly enjoyed the education space. Mark Mele and I have a combined 42 years of working for franchise companies, and a combined 24 years in the supplemental education industry. We worked together so well at Kumon in high level positions, and we both have direct and extensive experience working with new and existing franchisees in the supplemental education sector. So I think we know this sector so well that it was just a natural progression that we decided to start our own supplemental franchise learning company.
FH: What void in the industry are you trying to fill with Athena Learning Centers?
DK: We seek to fill two large voids:
A. The supplemental education industry is a highly fragmented segment. There are a lot of systems out there that are not in sync with the way kids are learning in school today or the testing expectations students now face almost every year.
So we wanted a curriculum that matched very well between what students are expected to learn at their own school and the learning that will take place at Athena Learning Centers. We also sought a program that had direct alignment with the Common Core State Standards because 46 states have already adopted these standards and are ready to begin implementing the standards in the next school year. Finally, we wanted a research-based curriculum that included carefully aligned instructional materials crafted over many years using a rigorous development process.
B. The second void is that there is much unhappiness among franchisees in this sector. Mark and I know that failure rates are high, some franchise systems in this category offer no territory protection to their franchisees, and franchisees are paying very high royalty
fees -- sometimes nearing 40% of the franchisor's recommended monthly tuition charged to parents. There also seems to be much distrust between franchisor and franchisee in the supplemental education category as franchisors increase their profits with aggressive new center opening strategies (with no territory protection) at the expense of the franchisee's bottom line.
We are going to provide a clear alternative to what exists in this space in terms of royalty, territory protection, payment systems, and overall franchisee relations. We will value our franchisees' opinions and try to provide the best support possible. We will value competent staff support over marketing. We won't waste our franchisees' time by arguing over center openings because each franchisee will have a clearly defined territory. Our royalty rates will be locked in by the terms of the contract and not subject to change at the whim of the franchisor. We will not change the layout and design requirements of the center in mid-contract on a whim. We will value data and research and use it as guide for our future decisions.
FH: Can you describe how the Athena Total Solutions package works?
DK: Athena Total Solutions encompasses our entire tool box available to students to help them succeed academically in school, prepare for high stakes exams, and give them the necessary critical thinking skills necessary for the 21st century workplace. We've adopted a best-in-class strategy for our in-center curriculum (Pearson), online component (Virtual Nerd), and test preparation (The Princeton Review).
Athena Total Solutions also takes into account the realities of parents' busy lives and the disposal income available to them for supplemental education. We put much thought into this when formulating Athena Total Solutions. We know that parents are too busy sometimes to attend the center each scheduled time, or kids need academic extra help when the center is not open. Thus our relationship with Virtual Nerd.
We know that students receive ample homework already and that extra-curricular activities should be well-rounded and not focus just on academics. Thus we do not assign homework.
We know that taking high stakes tests is part of the college admissions process and that test taking-strategies is an important component of doing well. Thus our relationship with The Princeton Review.
FH: What is the scope of your partnership with Pearson Education, the leader in education services and one of the pioneers of the American standards movement?
DK: We had very specific requirements for our in-center curriculum needs, and Pearson met each one with the Navigator programs in Math, Literacy, and Science. What really impressed us even further was the assessment tools that will be available to all Athena franchisees that comes with the Navigator curriculum. This will provide proper placement in our programs and allow our franchisees to communicate with parents a thorough evaluation of the student's learning needs.
FH: Can you tell us more about your online learning solutions for students?
DK: We are partnering with Virtual Nerd for the online learning portion of our curriculum as part of Athena's best-in-class strategy. Virtual Nerd has the best white board available in the market, and the company received a seal of approval from the Parent Tested Parent Approved organization for quality and value. Also very important to us was that the video tutorials from Virtual Nerd are in easy-to-understand English taught by U.S. based teachers.
Through our partnership, Athena students will receive the first month free and then a special discount of 20% (compared to prices offered to the general public) each month they use Virtual Nerd's award-winning video tutorials. We feel that online learning can be an excellent complement to Athena's in-center Navigator curriculum.
FH: Can you tell us about your partnership with Princeton Review to offer test preparation courses for PSAT, SAT, and AP subject tests?
DK: As with Pearson and Virtual Nerd, The Princeton Review is a best-in-class partner. We felt that The Princeton Review offers our students the best high stakes test preparation for college admission. For over 30 years, The Princeton Review's methods and techniques have remained the gold standard in the test prep industry. Last year, The Princeton Review helped 3.5 million students realize their college dreams. We also are looking forward to the possibility of having live Princeton Review SAT courses taught at our Athena Centers.
FH: What can you tell us about the estimated initial investment, royalty fee, and profit potential for an Athena Learning Centers franchise?
DK: Our initial investment range according to Item 7 of our Franchise Disclosure Document (FDD) is $55,000 to $131,000. The Initial Franchise Fee is $25,000. Franchisees pay royalties of 7% of gross sales, an advertising/marketing fee of 2% of gross sales, and must purchase local advertising of at least $500 per month.
Since we choose not to provide Financial Performance Representations in our FDD, we cannot comment on any profit potential. Franchisees, however, will be required to do a business plan as part of the initial training so they can project expenses and revenues in the first two years of operation.
FH: What kind of training and support can your franchisees expect to receive?
DK: Athena franchisees will receive their initial training and ongoing support from the founders, Mark and I, and talented educational and operational consultants. Athena franchisees will never feel like a number going through a factory-like initial training process. Our initial training program is detailed in Item 11 of the FDD and includes curriculum training, marketing, business management, risk management, center management, site selection, center design, and leadership training.
We also have lined up best-in-class vendors for signage, point-of-sale payment systems, furniture, and design.
FH: What qualities do you look for in a prospective franchisee?
DK: Generally, franchise candidates will be evaluated based on business abilities and experience, personal drive for success, and financial strength.
We seek ambitious and entrepreneurial individuals willing to assume the risks -- and eager to reap the rewards -- of owning their own business. As an owner of the business, they must put forth a full time commitment and attention to the key business drivers. Becoming an Athena Learning Center franchisee requires being prepared to make a significant financial commitment, therefore requiring an equal commitment of your time and energy.
FH: What are your growth targets in 2012 and beyond? Which regions of the country are you targeting for expansion?
DK: We are looking to grow smartly not rapidly. We want to avoid the situation that some of our competitors currently find themselves where they are forced to open new units rapidly -- some would say recklessly -- because of high failure rates. This type of unit expansion strategy is unsustainable and extremely frustrating for existing operators.
Athena will not get caught in this illogical business model. We will allow our franchisees time to cultivate their markets, and as previously stated, have a clearly defined territory. We believe in clear expectations in our franchise relationship so our franchisees may devote the majority of their time developing their Learning Center and helping students achieve academic success.
We are aiming to have about 5-10 centers open by the end of 2012 and about 15-20 more in 2013.
To learn more about Athena Learning Centers, visit their website at athenalearningcenters.com.