KME could be screwing their franchisees by charging them up to 20% of their revenue for their Gold class franchisees and 10% for their Silver.  This could create a bit of a pushback where the teachers might not see the value in that relationship.... On the other hand Gold class gets more students, more advertising and more support so it helps everyone.

During the last 4 months, 20 centres closed, they have not been able to train new franchisees in 5 months and sales for franchises has halved to 14!!  Revenues in Africa and the Middle East are down 22% and have not bounced back as yet.... 

This type of education is unregulated so there could be government intervention, possibly government online offerings that will be offered cheaper/free.

The teachers or bad press could severely harm the business..This is your childs future after all.

Speaking to a special needs teacher, I found out children are learning different today than when I was a child because of their attention span, due to the internet, also the amount of crack babies that have the same characteristics of "A.D.D".... basically I hope that they are a step ahead of this trend, and also hope this trend stops.

There have been bad reports from teachers teaching different age groups in the same class....some micro management (which could be a good thing).

There have been bad reviews from a range of parents who say that the classes were expensive and had a poor result.

Kip McGrath is basically a family/Founder run Company.

Kip, started the business in his garage with his missus, teaching kids after school in 1976. 

Kip retired from CEO, handing the reigns to his son Storm, and is now non Executive Chairman

Kip recently sold 2 million shares!!!  This is kind of ok, as it is a shit tonne of personal wealth kept in one asset.  Saying that I did not like it at the time, especially while the share price is trading at a discount (to my valuation at least).  

Between Storm and Kip  they still own 21% of the company.

The other directors all seem qualified for their roles.

Revenue growth through COVID was only 5.2%.  This was not that bad considering how bad it has ruined the global economy.  If KME can get back to previous revenue growth rates of 18% after this is all over then my valuation input of 7% is lame.

Before Covid, KME was investing heavily into their online platform which had a bit of resistance from parents.   During Covid this higher profit margin product was embraced and will likely stick around.

KME has been buying back franchisees and will likely keep pushing students to either their corporate owned centres, or online.  This should create a more steady, higher margin revenue stream over the medium to long term.