{YEL!} Youth Enrichment League Franchise
Risk Score
Pending analysis
Investment Range
$57,300 - $83,050
Franchise Fee
$16,500
Total US Locations
5
Business Summary
YEL Franchising, Inc. operates a business under the {YEL!} logo that provides after-school and summer enrichment camps and youth events for children from pre-kindergarten through 12th grade. These programs cover various subjects like chess, robotics, fencing, team sports, sewing, magic, coding, guitar, rocketry, and electronics, all using a proprietary curriculum. The camps and events are typically run in partnership with local schools, churches, parks and recreation departments, and other community organizations.
Corporate History
YEL Franchising, Inc. was formed as a Minnesota corporation on March 25, 2019, and began offering franchises in the spring of 2019. The franchise system is built upon the foundation of an affiliated company, Youth Enrichment League, Inc. ('Youth'), which was formed in 2004. Youth started by providing after-school LEGO programs in Minnesota and gradually expanded its program offerings and service areas, including Wisconsin in 2009 and Colorado and Iowa in 2015-2016. Youth Enrichment League, Inc. is the owner of the {YEL!} logo, 'Youth Enrichment League' service mark, and the curriculum used in the franchise system.
Financial Overview
Investment Range
$57,300 - $83,050
Franchise Fee (Low)
$16,500
Franchise Fee (High)
$22,500
Royalty %
6%
Marketing %
1%
Equipment Costs (Low)
$2,700
Equipment Costs (High)
$4,050
Working Capital
$10,000
Audited Financials
No
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
YEL Franchising, Inc.'s financial condition, as detailed in Item 21, presents significant concerns for prospective franchisees. The company has experienced ongoing losses and negative cash flows from operations since its inception, with net losses of $83,102 in 2023 and $69,969 in 2022. As of December 31, 2023, the company had a working capital deficit of $53,011 and an accumulated deficit of $361,338. The auditors explicitly state that these conditions raise 'substantial doubt' about YEL Franchising, Inc.'s ability to continue operating, a common indicator of financial distress known as a 'going concern' qualification. Management's plan to mitigate this involves raising additional capital through franchise sales. Due to this financial situation, several states require that the initial franchise fee payment be deferred until the franchisee's business is open.
Financing Details
YEL Franchising, Inc. does not offer any direct or indirect financing to its franchisees. This means YEL Franchising, Inc. will not provide loans or guarantee any notes, leases, or other financial obligations for franchisees. Franchisees are responsible for securing all necessary financing from third-party sources.
Performance Metrics
Total US Locations
5
Franchised Units
1
Corporate Units
4
Avg Square Footage
300
Franchising Since
2019
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
Yes
Litigation Summary
YEL Franchising, Inc. has no litigation to report. Item 3 of the FDD states that no litigation is required to be disclosed.
Bankruptcy History
YEL Franchising, Inc.'s financial statements, as reflected in Item 21, indicate recurring losses and negative cash flows from operations since its inception. The company reported net losses of $83,102 in 2023 and $69,969 in 2022. As of December 31, 2023, the company had a working capital deficit of $53,011 and an accumulated deficit of $361,338. These financial conditions raise substantial doubt about YEL Franchising, Inc.'s ability to continue as a going concern, a risk explicitly highlighted in the FDD's Special Risks section. Management plans to raise additional capital by selling franchises to address these issues. Additionally, several state addenda, including Illinois, Minnesota, North Dakota, and South Dakota, require the initial franchise fee payment to be deferred until the franchised business is operational due to the franchisor's financial condition.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their YEL! franchise, franchisees must provide at least 210 days written notice before their current agreement expires. They must have fully complied with all terms of their franchise agreement, successfully operated their franchised business according to YEL! standards, and exclusively used the YEL! brand names and marks. Franchisees are also required to upgrade their business, including equipment, curriculum, and classes, to meet YEL! Franchising, Inc.'s then-current standards. Additionally, they must provide proof of control over their business premises for the renewal term (if operating from a non-residential location), execute YEL! Franchising, Inc.'s then-current franchise agreement (which may have different terms, including higher minimum royalties), pay a renewal fee equal to 25% of the initial franchise fee charged to new franchisees (or $5,500 if YEL! Franchising, Inc. is not selling new franchises at that time), and sign a general release. However, in North Dakota, franchisees are not required to sign a general release upon renewal.
Training & Support Program
Franchisor Assistance
Before a YEL! franchise opens, YEL! Franchising, Inc. designates the franchisee's territory and provides a market introduction plan to help with initial marketing. For non-residential offices, it offers a sample layout and decor/signage requirements. YEL! Franchising, Inc. also provides a webpage on its website for advertising and an email address for business operations. Franchisees and their managers receive an initial training program at YEL! Franchising, Inc.'s expense (excluding travel and living costs). Within 14 days of opening, YEL! Franchising, Inc. provides 1-3 days of on-site assistance and loans the franchisee a copy of its Confidential Manual(s). It also provides various forms, a list of approved suppliers, sells instructor aids and apparel, and grants access to its proprietary Youth Database for scheduling classes. During the term of the agreement, YEL! Franchising, Inc. offers telephone support during normal business hours for operating issues, provides initial training for new managers (for a fee), and additional optional training (for a fee). It administers the Brand Fund, provides curriculum for classes, offers an example Chart of Accounts, provides advertising examples, and offers the chance to service 'House Accounts' if the franchisee meets certain standards. YEL! Franchising, Inc. also provides a file hosting service where the curriculum is stored, for which the franchisee pays a fee.
Initial Training Hours
77
Training Location
Carver, Minnesota
Ongoing Support
After opening, YEL! Franchising, Inc. provides ongoing support to its franchisees in several ways. Franchisees can access telephone support during normal business hours for any operating issues they encounter. YEL! Franchising, Inc. also provides the initial training program for any new managers (for a fee) and offers additional training on mutually agreed-upon topics for a fee. It maintains and administers the Brand Fund, which is used for general brand promotion. Franchisees receive curricula for their classes, examples of a Chart of Accounts for financial management, and access to the proprietary Youth Database for scheduling. YEL! Franchising, Inc. also provides advertising examples that franchisees can adapt for their local marketing efforts and offers them the opportunity to service 'House Accounts' within their territory if they meet YEL! Franchising, Inc.'s standards. Additionally, YEL! Franchising, Inc. provides a file hosting service for curriculum storage, for which franchisees pay a monthly fee.
Franchise Requirements
Ideal Candidate Profile
YEL! Franchising, Inc. is looking for potential franchisees who are self-starters and have experience working with children. While prior teaching experience is not required, experience working with children is valued. Additionally, YEL! Franchising, Inc. has found that sales experience is helpful for success in this business.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
full-time
Territory Type
Protected
Staff Count
6
Territory Size Requirements
YEL! Franchising, Inc. defines its Designated Territories primarily based on counties. A territory will generally cover the county where the YEL! business is located. If there are more than 75 public elementary schools in that county, the franchisee will pay an additional fee of $10 per school for each school exceeding 75. If a county has fewer than 75 schools, YEL! Franchising, Inc. may grant the right to service additional public elementary schools in contiguous counties, up to a total of 75 schools (subject to the additional $10 per school fee if the total exceeds 75). This means the base territory size is designed to include approximately 75 public elementary schools.
Staffing Notes
YEL! Franchising, Inc. requires franchisees to be personally involved on a full-time basis in the operation of their YEL! Business. Franchisees are expected to act as the Manager for their business and are responsible for managing their teachers. If a franchisee's Designated Territory includes more than one county, they must retain one Manager for each county, though a franchisee can only manage one county themselves unless otherwise approved. The number of instructors can range from 2 to 10. All Managers must successfully complete YEL! Franchising, Inc.'s Initial Training Program and sign non-competition and confidentiality agreements. Franchisees are responsible for hiring all personnel, setting employment terms, and ensuring their staff wears apparel that meets YEL! Franchising, Inc.'s standards. Franchisees are also responsible for staff training, ensuring initial training programs meeting YEL! Franchising, Inc.'s requirements are completed by all staff members before they perform services, and providing any required annual training programs.