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Posted on Jul 19, 2012

How Athena Learning Centers is Filling the Void in Supplemental Education

Deven Klein is theco-founder, COO, and General Counsel ofAthena Learning Centers, a community of year-round Learning Centers where children go to improve their math and reading skills.

Devenworked for Kumon North America, Inc. for almost 16 years. He started the Legal Departmentfrom scratch and served as VP and Corporate Counsel for 10 years. He then led the FranchiseRecruitment and Development Department at Kumon for 5 years.

Since leaving Kumon inlate September 2010, Deven was outside legal counsel for a few franchisor clients and worked in aconsulting role for an on-line learning company. He startedAthena Learning Centers with Mark Mele in October 2011.

Franchise Help (FH): What led to your decision to go into the supplemental education business?

[caption id="attachment_18105" align="alignleft" width="240"]Deven Klein, Co-Founder/COO/General Counsel of Athena Learning Centers Deven Klein, Co-Founder/COO/General Counsel of Athena Learning Centers[/caption]

Deven Klein (DK): Im a lawyer by profession but an educator at heart, and always thoroughly enjoyed the educationspace. Mark Mele and I have a combined 42 years of working for franchise companies, and acombined 24 years in the supplemental education industry. We worked together so well atKumon in high level positions, and we both have direct and extensive experience working withnew and existing franchisees in the supplemental education sector. So I think we know thissector so well that it was just a natural progression that we decided to start our own supplementalfranchise 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 ofsystems out there that are not in sync with the way kids are learning in school today orthe testing expectations students now face almost every year.

So we wanted a curriculum that matched very well between what students are expected tolearn 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 StateStandards because 46 states have already adopted these standards and are ready to beginimplementing the standards in the next school year. Finally, we wanted a research-basedcurriculum that included carefully aligned instructional materials crafted over many yearsusing a rigorous development process.

B. The second void is that there is much unhappiness among franchisees in this sector. Markand I know that failure rates are high, some franchise systems in this category offer noterritory protection to their franchisees, and franchisees are paying very high royalty
fees -- sometimes nearing 40% of the franchisors recommended monthly tuition chargedto parents. There also seems to be much distrust between franchisor and franchisee in thesupplemental education category as franchisors increase their profits with aggressive newcenter opening strategies (with no territory protection) at the expense of the franchiseesbottom line.

We are going to provide a clear alternative to what exists in this space in terms ofroyalty, territory protection, payment systems, and overall franchisee relations. Wewill value our franchisees opinions and try to provide the best support possible. Wewill value competent staff support over marketing. We wont waste our franchiseestime by arguing over center openings because each franchisee will have a clearlydefined territory. Our royalty rates will be locked in by the terms of the contract and notsubject to change at the whim of the franchisor. We will not change the layout and designrequirements of the center in mid-contract on a whim. We will value data and researchand 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 themsucceed academically in school, prepare for high stakes exams, and give them the necessarycritical thinking skills necessary for the 21st century workplace. Weve adopted a best-in-classstrategy for our in-center curriculum (Pearson), online component (Virtual Nerd), and testpreparation (The Princeton Review).

Athena Total Solutions also takes into accountthe realities of parents busy lives and the disposal income available to them for supplementaleducation.We put much thought into this when formulating Athena Total Solutions. We know that parents aretoo busy sometimes to attend the center each scheduled time, or kids need academic extra helpwhen the center is not open. Thus our relationship with Virtual Nerd.

We know that studentsreceive ample homework already and that extra-curricular activities should be well-roundedand not focus just on academics. Thus we do not assign homework.

We know that takinghigh stakes tests is part of the college admissions process and that test taking-strategies is animportant 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 educationservices and one of the pioneers of the American standards movement?

DK: We had very specific requirements for our in-center curriculumneeds, 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 toall Athena franchisees that comes with the Navigator curriculum. This will provide properplacement in our programs and allow our franchisees to communicate with parents a thoroughevaluation of the students 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 learningportion of our curriculum as part of Athenas best-in-class strategy. Virtual Nerd has the bestwhite board available in the market, and the company received a seal of approval from the ParentTested Parent Approved organization for quality and value.Also very important to us was thatthe video tutorials from Virtual Nerd are in easy-to-understand English taught by U.S. basedteachers.

Through our partnership, Athena students will receive the first month free and then aspecial discount of 20% (compared to prices offered to the general public) each month they useVirtual Nerds award-winning video tutorials. We feel that online learning can be an excellentcomplement to Athenas in-center Navigator curriculum.

FH: Can you tell us about your partnership with Princeton Review to offer test preparation coursesfor PSAT, SAT, and AP subject tests?

DK: As with Pearson and Virtual Nerd, The Princeton Review is a best-in-class partner. We feltthat The Princeton Review offers our students the best high stakes test preparation for collegeadmission. For over 30 years, The Princeton Reviews methods and techniques have remainedthe gold standard in the test prep industry. Last year, The Princeton Review helped 3.5 millionstudents realize their college dreams. We also are looking forward to the possibility of havinglive Princeton Review SAT courses taught at our Athena Centers.

FH: What can you tell us about the estimated initial investment, royalty fee, and profit potentialfor 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 of7% of gross sales, an advertising/marketing fee of 2% of gross sales, and must purchase localadvertising of at least $500 per month.

Since we choose not to provide Financial PerformanceRepresentations 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 expensesand 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 neverfeel like a number going through a factory-like initial training process. Our initial trainingprogram is detailed in Item 11 of the FDD and includes curriculum training, marketing, businessmanagement, risk management, center management, site selection, center design, and leadershiptraining.

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, franchisecandidates will be evaluated based on business abilities and experience, personal drive forsuccess, and financial strength.

We seek ambitious and entrepreneurial individuals willing to assume the risks -- and eagerto reap the rewards -- of owning their own business. As an owner of the business, they must put forth a full timecommitment and attention to the key business drivers. Becoming an Athena Learning Centerfranchisee requires being prepared to make a significant financial commitment, thereforerequiring an equal commitment of your time and energy.

FH: What are your growth targets in 2012 and beyond? Which regions of the country are youtargeting for expansion?

DK: We are looking to grow smartly not rapidly. We want to avoid the situation that some of ourcompetitors currently find themselves where they are forced to open new units rapidly -- somewould say recklessly -- because of high failure rates. This type of unit expansion strategy isunsustainable and extremely frustrating for existing operators.

Athena will not get caught in thisillogical 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 franchiserelationship so our franchisees may devote the majority of their time developing their LearningCenter 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 in2013.

To learn more about Athena Learning Centers, visit their website atathenalearningcenters.com.

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