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Sample UFOC

JEI Self -Learning Centers



4221 Wilshire Blvd., Suite 224

Los Angeles, California 90010

(323) 936-3300

The franchise offered is for the operation of learning centers offering a nurturing education environment utilizing the "Self-Learning System"' of helping students understand theories and concepts by working on their own.

The initial franchise fee is $25,000. The estimated initial investment ranges from $60,200 to $97,100.





Information comparing JEI SELF-LEARNING SYSTEMS, INC. with other franchisors is available. Call the state administrators listed in Exhibit A or your public library for sources of information.

Registration of this franchise with the state does not mean that the state recommends it or has verified the information in this Offering Circular. If you learn that anything in this Offering Circular is untrue, contact the Federal Trade Commission and the state administrators listed in Exhibit A.

The Effective Date for this Franchise Offering Circular is____________or as listed in Exhibit I for your



ITEM                                                                                                                                              PAGE

1.        THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES........................................................I

2.        BUSINESS EXPERIENCE......................................................................................................................3

3.        LITIGATION...........................................................................................................................................3

4.        BANKRUPTCY.......................................................................................................................................3

5.        INITIAL FRANCHISE FEE....................................................................................................................3

6.        OTHER FEES..........................................................................................................................................5

7.        INITIAL INVESTMENT.........................................................................................................................7

8.        RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES...................................................9

9.        FRANCHISEE'S OBLIGATIONS........................................................................................................II

10.      FINANCrNG..........................................................................................................................................12

11.      FRANCHISOR'S OBLIGATIONS.......................................................................................................12

12.      TERRITORY.........................................................................................................................................18

13.      TRADEMARKS....................................................................................................................................18

14.      PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION.................................................21


OPERATION OF THE FRANCHISED CENTER................................................................................22

16.      RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL.........................................................23

17.      RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION...................................23

18.      PUBLIC FIGURES................................................................................................................................29

19.      EARNINGS CLAIM..............................................................................................................................30

20.      LIST OF OUTLETS...............................................................................................................................30

21.      FINANCIAL STATEMENTS...............................................................................................................31

22.      CONTRACTS........................................................................................................................................31

23.      RECEIPT..............................................................................................................................LAST PAGE











The Franchisor

To simplify the language in this Offering Circular, the words "we." "our" and "us" refer to JEI SELF-LEARNING SYSTEMS, INC., the franchisor of this business. "You" and "your"' refer to the person who buys the franchise, whether you are a corporation, limited liability company or other business entity. If you are a corporation, limited liability company or other business entity, certain provisions of this Offering Circular also apply to your owners and will be noted.

We were incorporated in the State of California on March 23, 1992 for the purpose of offering JEI Self-Learning Center franchises. We were originally incorporated as Jaeneung Educational Institute. Inc. We officially changed our name to JEI America, Inc. in September 1998 and then changed our name to our present name, JEI SELF-LEARNING SYSTEMS, INC in July 2004. Our principal business address is 4221 Wilshire Blvd., Suite 224, Los Angeles, California 90010. We do business under our corporate name or "Jaeneung;" "JEI Self-Learning Centers," "JEI Self-Learning Center," "Jaeneung Math Class," "Jaeneung Korean Class," "Jaeneung Chinese Character Class," "Hanja," "Jaeneung English Class," "Jaeneung Classes," "JEI,"' "JEI America."'

Our Business Activities

We grant franchises to qualified persons or business entities in conjunction with the service mark "JEI SELF LEARNING CENTERS" and certain associated trade names, trademarks, logos and other commercial symbols (collectively referred to as the "Marks").* We refer to these businesses as "JEI Self-Learning Centers." We refer to the JEI Self-Leaming Center you will operate as the "Franchised Center." We also supply franchisees with proprietary, copyrighted course materials, workbooks and other items, which have been specially developed for use in operating a JEI Self-Learning Center. We refer to these items as the "Proprietary Products."

JEI Self-Learning Centers offer a supplemental form of education using a method developed by our parent company, JEI Corporation, (see below), called the Self-Leaming System. This method allows each student to fulfill their potential by providing customized study programs based on each student's study ability. JEI Self-Leaming Centers use diagnostic testing to evaluate each student and tailor study programs to maximize the student's learning potential. Progress is monitored by an academic advisor and new study programs are assigned based on student performance. The Self-Learning System was developed to cultivate creative and talented individuals who can resolve problems on their own. Self-Leaming System study programs are offered in mathematics, Korean language. Chinese Characters ("Hanja"), and English language to pre-school. primary and secondary school students.

Each JEI Self-Leaming Center typically requires 900 to 1,200 square feet of space and is located near retail shopping and residential areas in a highly visible location, with sufficient parking. You must operate the Franchised Center in accordance with our standards, methods, procedures and specifications, which we refer to as our "System" and which is more particularly described in our Franchise Agreement attached as Exhibit C to this Offering Circular. Other than offering and selling franchises and supporting and supplying franchisees, we are not engaged in any other line of business. We have offered franchises in the United States and Canada since April 26, 1993. As of the date of this Offering Circular, we were providing support and supplies to approximately 79 franchisees throughout the United States in markets within Arizona, California, Delaware, Georgia, Illinois, Maine, Maryland, Michigan, New Jersey, New York, Nevada, Oregon, Tennessee, Texas, Virginia and Washington, and to 4 franchisees in Canada.

" Capitalized terms nol otherwise defined have the same meaning as in our Franchise Agreement attached as Exhibit C to this Offering Circular. " We update these figures annually.

We have not previously offered franchises in any other line of business.

Our Parent Company

We are a subsidiary of JEI Corporation (our "Parent Company"). Our Parent Company is a Korean corporation, originally incorporated in May 1977 under the name. Jaeneung Math Research Team. Our Parent Company officially changed its name to JEI Corporation in 2001. The Parent Company's principal business address is 55-5 Hyehwa-dong, Chongno-gu, Seoul, Korea. JEI Corporation, our Parent Company, has not offered and does not currently offer franchises in this or any other line of business. Our Parent Company developed the Self-Learning System and has granted us the right to sublicense the use of the Self-Learning System to our franchisees for use in the operation of JEI Self-Learning Centers.

Our Predecessors and Affiliates

We have no predecessors. We have no affiliates.

General Description of the Market and Competition

Our concept is targeted to pre-school. primary school and secondary school students. We are one of a growing number of businesses offering supplemental educational programs to students. As a franchisee, you will compete with other educational facilities and private and public tutoring services. Your competition may be local, independent businesses or may be part of a regional or national chain or franchise. We do not grant exclusive territories to our franchisees. You may encounter competition from other JEI Self-Learning Centers operated by us or other franchisees. Fluctuations in population demographics and density, availability of qualified instructors or advisors, traffic patterns and local or national economic conditions affect this industry; these factors are generally difficult to predict.

Regulations Specific to the Industry

Some states and local jurisdictions may have laws that regulate supplemental educational study programs and educational facilities. We do not consider a JEI Self-Learning Center to be a "school," since courses are offered in a limited number of subjects and instruction is conducted using the Self-Learning System. Some state laws may impose requirements concerning licensing, tuition, curriculum and teacher certification. Additionally, every state has enacted laws, rules, regulations and ordinances which may apply to the operation of a JEI Self-Learning Center, including those which: (a) establish general standards, specifications and requirements for the construction, design and maintenance of the premises; (b) regulate matters affecting the health, safety and welfare of your students, such as general health and sanitation requirements, restrictions on smoking, and availability of and requirements for public accommodations, including restrooms; (c) set standards pertaining to employee health and safety; (d) set standards and requirements for fire safety and general emergency preparedness; and <e) regulate the proper use. storage and disposal of waste. You should investigate whether there are regulations and requirements that may apply in the geographic area in which you are interested in locating a JEI Self-Learning Center ("Applicable Law'") and you should consider both their effect and cost of compliance.


Managing Director, Eastern Region: Dae Ha Kim

Mr. Kim serves as our Managing Director, Eastern Region, and has done so since April 2000. Previously, from 1995 until April 2000, Mr. Kim was the Marketing Director for our Parent Company.

Managing Director. Western Region: Chong Tae ("Brian") Moon

Mr. Moon serves as our Managing Director, Western Region, and has done so since November 2003. Previously, from February 1999 until October 2003, Mr. Moon was the Account Supervisor for A's Match Inc., dba National Dyeing Co., a garment manufacturer located in Los Angeles, California.

Vice President, Franchise Development, Western Region: Sung Joon ("Justin") Hong

Mr. Hong serves as our Vice President. Franchise Development, Western Region, and has done so since February 1999.

Franchise Operations Manager, Easter Region: Jicun Hong

Jieun Hong is one of our Franchise Operations Managers and has been working at JEI since May 2005. Previously, she had worked for about two years as an ESL instructor after receiving her Master of Arts in TESOL from Columbia University. New York. New York in 2004. She had also worked as a high school English teacher in llsan, Korea from 2001 to 2002.

Franchise Operations Manager, Western Reagion: Hye Jin ("Jin") Kim

Hye Jin Kim serves also as one of our Franchise Operations Managers and has done so since January 2006. Previously, from'August 2003 until January 2005, Ms. Kim was the Office Manager for Primax Manufacturing & Training, Inc., located in Bellflower. California. In August 2003, she received a Bachelor of Arts in Sociology from the University of California. Los Angeles.


No litigation is required to be disclosed in this Offering Circular. ITEM 4.         BANKRUPTCY

No person previously identified in ITEMS 1 or 2 of this Offering Circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed in this ITEM.


Franchise Fee

You must pay an initial "Franchise Fee" of $25,000. The Franchise Fee is paid to us in a lump sum when you sign the Franchise Agreement and is nonrefundable except as described below. The Franchise Fee is payment, in part, for expenses incurred by us in furnishing assistance and services to you as set forth in the Franchise

Agreement and for costs incurred by us, including general sales and marketing expenses, training, legal, accounting and other professional fees.

We will refund 50% of the Franchise Fee if we, in our discretion, determine that you are unable to satisfactorily complete the training program described in ITEM 11 of this Offering Circular and if we terminate the Franchise Agreement as a result of making that determination.

Initial Inventory Fee

We supply you with an initial inventory of proprietary course materials, workbooks and other materials, ("Proprietary Products"), which are listed in Exhibit F to the Franchise Agreement. The Proprietary Products are specially developed and suited for use in the operation of JEI Self-Learning Centers. The fee for the initial inventory of Proprietary Products ranges from approximately $3,000 to $4,000, plus any shipping costs.

If the Franchise Agreement is terminated before the opening of your JEI Self-Learning Center, you maybe required to return the initial inventory of Proprietary Products to us. We will issue a refund for returns, provided the items are returned within 30 days after originally delivered to you, and remain in an unopened or unused and saleable condition. Otherwise, the initial inventory is not reiiindable. Further information concerning our policy on returns of Proprietary Products is provided to our franchisees in our Manual. This policy may change from time to time. There are no limits on our right to change or implement new policies. You must pay the shipping costs to return the initial inventory of Proprietary Products.

[The remainder of this page is intentionally left blank.]

ITEM 6.          OTHER FEES

Below is a detailed description of other recurring or isolated fees or payments that you must pay to us or that we impose or collect for a third party under the terms of the Franchise Agreement.

Name of Fee


Due Date


Royally Fee

Will vary. Exact amount is calculated by multiplying number of subjects by aSubjecl Fee and adding a Minimum Fee of $250 and SI 5 per subject for the Registration Fee'Diagnostic Test Fee. The highemumber of subjects, the lower the Subject Fee that is applied to calculate the Royalty Fee:

Number of Subjects Subject Fee 1-100 $17 101-200 $14 201 and up $12


See Definition of Registration Fee/Diagnostic Test Fee

Marketing Fund Contribution

Up to 1% or Gross Sales


No fee is currently assessed but we reserve the right lo charge one. (Sections 3.4 and 11.3) We may require Marketing Fund Contributions lo be used in cooperative ■ advertising.

Local Advertising

During the first 2 years of the initial term of the franchise, the greater of $350 or 2%; from the beginning of the third year through the remainder of the initial term. 2%


You pay directly subject to our approval. (Sections 11.2) We may require Local Advertising expenditures to be used in cooperative advertising.

Telephone Directory Advertistng

Varies according to area and type of listing

As invoiced

You are required lo list and advertise in the "white pages" and "yellow pages of your local telephone directory. (Section 11.6)

Audit Expenses

Alt costs and expenses associated with audit

Upon demand

Audit costs payable only if the audit shows an understatement in amounts due. (Section 12.6)

Late Fees

18% per year or the highest rate allowed by applicable law. whichever is lower

Upon demand

Applies to all overdue Royalty Fees. Marketing Fund Contributions and other amounts due to us, including any taxes. (Section3.7) Also applies to any understatement in amounts due revealed by an audit. (Section 12.6)

Ongoing Puichases of Proprietary Products

As incurred

As invoiced

You are required to replenish your inventory of workbooks, course materials and other items ("Proprietary Products"), which we supply for use in the operation of JEI Self-Learning Centers.

Special Chargeable Items

As incurred

As invoiced

We may periodically supply you with certain items to be purchased from us, such as apparel, supplemental instructional material, promotional products, etc. We will publish prices for these items as we make the items available.

Approval of Products or Suppliers

All reasonable costs of evaluation

Time of evaluation

Applies to new suppliers you wish to purchase from or products you wish to


Name of Fee


Due Date


purchase that we have not previously approved. (Section 13.1)

Insurance Policies

Amount of unpaid premiums plus our reasonable expenses in obtaining the policies

Upon demand

Payable only if you fail to maintain required insurance coverage and we elect to obtain coverage for you. (Section 15.5)

Transfer Fee


At the time of transfer

Does not apply lo an assignment under Section 18J of the Franchise Agreement. (Section 18.2.8)

Sysiem Modifications

Not to exceed $5,000 during the initial term of the franchise, subject to adjustments based on Consumer Price Index

As required

If we decide to modify the System by requiring new equipment, copyrighted materials, fixtures, software, trademarks, etc., you must make the modifications at your expense. (Section 10.2)

Relocation Assistance

Costs and expenses of providing relocation assistance

Time of assistance

We will charge you for relocation assistance if you request it and we agree to provide it. (Section 5.6)

Customer Service

All costs incurred in assisting your students

Upon demand

You must reimburse us if we determine it is necessary for us to provide service directly to your students. (Section 13.8)

Ongoing Training Programs

Attendance fees, (if applicable), plus your expenses as well as employees" expenses in attending

Time of program

Attendance will not be required more than one time per year and collectively will not exceed 3 days in any year. (Section 8.5)

Additional Training

Market rates: currently, S250 per day, plus our expenses and your expenses as well as your employees" expenses in attending

Time of service

We provide an initial training program for you and one additional person at no charge. You pay for additional training if you request it, or if you appoint a new Director to manage your day-to-day operations. (Sections 8.1 and 8.4)

Additional Operations Assistance

Market rates; currently. S250 per day. plus our expenses

Time of assistance

We provide approximately 3 days of assistance around the beginning of operations. You pay for additional assistance if you request it. (Section 8.2)

Cost of Enforcement

AM costs including attorneys' fees

Upon demand

You must reimburse us for all costs in enforcing obligations if we prevail. (Section 22.4)


All costs including attorneys' fees

Upon demand

You must defend lawsuits at your cost and hold us harmless against lawsuits arising from your operation of the Franchised Center. (Section2t.2)

No other fees or payments are lo be paid to us, nor do we impose or collect any other fees or payments for any other third party. All fees are generally nonrefundable.


1 Registration Fee/Diagnostic Test Fee. The term "Registration Fee/Diagnostic Test Fee" means the royalty fee collected by us for each diagnostic test administered by you to determine placement of the customer based on their educational level; and each registration of a customer for a class. You may charge whatever price you wish for this Diagnostic Fee/Registration Fee.



We anticipate that you will incur the following estimated initial expenditures in the establishment of the Franchised Center.

Names of Expenditures

Actual or


Amounts For You

Method of Payment

When Due

To Whom Payment Is To Be Made

Franchise Fee1

$ 25,000

Cashier's Check

Upon Signing Franchise Agreement


Real Estate/Rent2

1,350 7,200

As Arranged

Before Beginning Operations


Utility Deposits3

0 800

As Arranged

Before Beginning Operations


Leasehold Improvements'1

10,000 20,000

As Arranged

Before Beginning Operations

Third Parties

Office Equipment & Supplies5

2,000 3,000

As Arranged

Before Beginning Operations

Approved Suppliers

Initial Inventory6

3,000 4.000

As Arranged

Before Beginning Operations


Furniture, Fixtures & Equipment

2,000 4,000

As Arranged

Before Beginning Operations

Third Parties


600 1,000

As Arranged

Before Beginning Operations

Third Parties


1,000 3,000

As Arranged

Before Beginning Business

Third Parties


1,000 4,000

As Arranged

Before Beginning Business

Third Parties

Grand Opening

1,000 2,000

As Arranged

First 3 Months of Operation

Third Parties

Legal & Accounting'2

500 2,000

As Arranged

Before Beginning Business

Attorney, Accountant

Licenses & Permits13

100 1,000

As Arranged

Before Beginning Business

Licensing Authority

Additional FundsM (3 months)

10,000 15,000

As Arranged

As Necessary

You Determine


$ 57,550 $ 92,000


1  Franchise Fee. The Franchise Fee is described in greater detail in ITEM 5 of this Offering Circular.

2  Real Estate. You must lease or otherwise acquire a suitable facility for the operation of the Franchised Center. We expect JEI Self-Learning Centers to be located near retail shopping and residential areas in a highly visible location. The facility typically ranges in size from 900 to 1,200 square feet. It is difficult to estimate lease acquisition costs because of the wide variation in these costs between various locations. Lease costs will vary based upon square footage, cost per square foot and required maintenance costs. We assume you will have to pay the first month's rent and a security deposit equal to one month's rent in advance. The amounts you pay are typically not refundable, but in certain circumstances the security deposit may be.

3 Utility Deposits. Ifyouarea new customer of your local utilities, you will generally have to pay deposits in connection with services such as electric, telephone, gas and water. The amount of deposit will vary depending upon the policies of the local utilities.

4 Leasehold Improvements. To convert an existing facility into a JEI Self-Learning Center, the facility must be improved or renovated according to our standards and specificalions. The cost of the leasehold improvements will vary depending upon the size and location of the Franchised Center, local wage rates and material costs. The low estimate assumes that your landlord will provide a partial build-out allowance.

5  Office Equipment & Supplies. You must purchase general office supplies including stationery, business cards and typical office equipment, such as a personal computer and a point-of-sale system with accompanying software. Factors that may affect your cost of office equipment and supplies include local market conditions, competition among suppliers and other factors.

6 Initial Inventory. You will be required to purchase an initial inventory of course materials, workbooks and other proprietary items ("Proprietary Products'') that are necessary for the operation of JEI Self-Learning Centers using the Self-Learning System.

7  Furniture. Fixtures & Equipment. You will be required to purchase and install equipment, fixtures, furniture and items of decor necessary to outfit and operate your Franchised Center according to our specifications, including tables, chairs, lighting, filing cabinets, shelving and other items. The cost of the furniture, fixtures and equipment will vary according to local market conditions, the size of the Franchised Center, competition among suppliers and other related factors.

8 Insurance. Requirements are described in greater detail in Section 15 of the Franchise Agreement. Factors that may affect your cost of insurance include the size and location of the Franchised Center, value of the leasehold improvements, amount of inventory, number of employees and other factors.

9  Training. The cost of initial training is included in the Franchise Fee, but you are responsible for transportation and expenses for meals and lodging while attending training. The total cost will vary depending on the number of people attending, how far you travel and the type of accommodations you choose.

10  Signage. This range includes the cost of all signage used in the Franchised Center. The signage requirements and costs will vary based upon the size and location of the Franchised Center, local zoning requirements and local wage rates for installation, among other things.

Grand Opening. You must spend a minimum of $1,000 on Grand Opening Advertising during the first 3 months of operation. You may choose to spend more. See ITEM 11. Factors that may affect the actual amount you spend include the type of media used, the size of the area you advertise to, local media cost, location of the Franchised Business, time of year and customer demographics in the surrounding area.

12 Legal & Accounting. You will need to employ an attorney, an accountant and other consultants to assist you in establishing your Franchised Center. These fees may vary from location to location depending upon the prevailing rates of local attorneys, accountants and consultants.

13  Licenses & Permits. Local government agencies typically charge fees for occupancy permits, operating licenses and sales tax licenses, among other things. Your actual costs may vary based on the requirements of local government agencies.

M Additional Funds. We recommend that you have a minimum amount of money available to cover operating expenses, including employees" salaries, for the first 3 months that the Franchised Center is open. However, we cannot guarantee that our recommendation will be sufficient. Additional working capital may be required if sales are low or operating costs are high.

15 Total. In compiling this chart, we relied on our and our Parent Company's combined industry experience and over 10 years of experience in operating JEI Self-Learning Centers. The amounts shown are estimates only and may vary for many reasons including the size of your Franchised Center, the capabilities of your management team, where you locate your Franchised Center and your business experience and acumen. You should review these estimates carefully with an accountant or other business advisor before making any decision to buy a franchise. These figures are estimates only and we cannot guarantee that you will not have additional expenses in starting the Franchised Center.


Except as indicated below, you are not required to purchase or lease products or services from us or from suppliers approved by us or under our specifications.

Authorized Products, Services and Suppliers

You must remodel, furnish and equip the Franchised Center according to our standards and specifications. All equipment, fixtures, furniture, insurance, inventory, decorations, signs and other products or materials for use in or sale through your Franchised Center must meet our specifications and quality standards and, if required by us, shall be purchased only from an Approved Supplier, which may be us. We will provide, in the Manual or by other written or electronic form, a list of items you will need to purchase for resale or to operate your Franchised Center and, if required, a list of Approved Suppliers for some or all of these items, and from time to time we may revise this list. Our specifications may include minimum standards for performance, design, appearance and quality. We formulate and modify our specifications and standards for products and services based upon our and our Parent Company's industry knowledge and our Parent Company's experience in operating JEI Self-Learning Centers for more than 10 years.

If you would like to use any item or service in establishing or operating the Franchised Center that we have not approved (for items or services that require supplier approval), you must first send us sufficient information, specifications and/or samples for us to determine whether the item or service complies with our standards and specifications or the supplier meets our Approved Supplier criteria. We may charge a reasonable fee to you or the prospective supplier in connection with determining whether we will approve an item, service or


supplier. We will decide within a reasonable time (usually 30 days) after receiving the required information whether you may purchase or lease such items or services or from such supplier. We apply the following and other general criteria in approving a proposed supplier: the ability to provide sufficient quantity of product; quality of products and/or services at competitive prices; production and delivery capability; and dependability and general reputation of the supplier.

From time to time, we may review our approval of any item, service or supplier. We will notify you if we revoke our approval of an item, service or supplier, and you must immediately stop purchasing disapproved items or services, or must immediately stop purchasing from a disapproved supplier.

Proprietary Products

We. and our Parent Company, have developed and are continuing to develop certain proprietary items, such as course materials and workbooks ("Proprietary Products"), which are specially suited for use in JEI Self-Learning Centers. In order to maintain the uniformity of the System, you must purchase all of your requirements of Proprietary Products from us. There are no alternative sources of supply. We may introduce new or modify existing Proprietary Products. We require you to carry a sufficient inventory of Proprietary Products to operate the Franchised Cenler at full capacity, including any new Proprietary Products we may introduce as part of the System. As a result of our supply of Proprietary Products to you and other franchisees, we will derive revenue equal to the price we charge you and other franchisees for such products. As of the end of the most recent fiscal year ended December 31, 2005, our revenue for the sale of Proprietary Products to franchisees was $0.

Computer/Point-of-Sale System

You are required to purchase and use the point-of-sale system and computer hardware and software described in ITEM 11. We do not derive revenue as a result of your purchase of the point-of-sale system or computer hardware and software.


You must purchase and maintain in effect during the term of the Franchise Agreement the type and amount of insurance specified in Section 15 of the Franchise Agreement in addition to any other insurance that may be required by applicable law, any lender or lessor. Your insurance policies must name us as an additional insured and/or loss payee. We do not derive revenue as a result of your purchase of insurance.


We may negotiate group rates, including price terms, for purchases of equipment and supplies necessary for the operation of the Franchised Center. Presently, there are no such purchase or supply agreements in effect and no purchasing or distribution cooperatives that you must join. We do not receive revenue or other material consideration from third-party suppliers as a result of purchases made by you or any other franchisee. However, in the future we may receive volume rebates, markups and other benefits from suppliers.

We estimate that approximately 10% to 27% of your expenditures for leases and purchases in establishing your Franchised Center will be for goods and services that must be purchased either from us or an Approved Supplier, or in accordance with our standards and specifications. We estimate that approximately 25% to 31% of your expenditures on an ongoing basis will be for goods and services that must be purchased from either us, an Approved Supplier or in accordance with our standards and specifications.


We do not provide or withhold material benefits to you (such as renewal rights or the right to open additional JEI Self-Learning Centers) based on whether you purchase through the sources we designate or approve; however, purchases of unapproved products or purchases from unapproved suppliers in violation of the Franchise Agreement will entitle us, among other things, to terminate the Franchise Agreement.


This table lists your principal obligations under the Franchise Agreement and other agreements. It will help you find more detailed information about your obligations in these agreements and in other ITEMS of this Offering Circular.


Section In The Franchise


ITEM In the Offering Circular


Site selection and acquisition/lease

Sections 2 and 5

ITEMS 11 and 12


Pre-opening purchases/leases

Sections 5, 13 and 15

ITEMS 7 and 8


Site development and other pre-opening requirements

Sections 5 and 8

ITEMS 7, 8 and 11


Initial and ongoing training

Section 8

ITEMS 6, 7 and 11



Sections 5, 8, and 11




Sections 3, 5, 8, 10, H, 12, 13, 15, 18,21 and 22

ITEMS 5, 6 and 7


Compliance with standards and policies/Operating Manual

Sections 5, 6, 7,9, 10, 11 and 13

ITEMS 8 and 16


Trademarks and proprietary information

Sections 6, 7 and 9

ITEMS 13 and 14


Restrictions on products/services offered

Sections 5, 6, 7, 9 and 13

ITEMS 8 and 16


Warranty and customer service requirements

Section 13



Territorial development and sales quotas

Section 4.1



Ongoing product/service purchases

Section 13

ITEMS 8 and 11


Maintenance, appearance and remodeling requirements

Sections 5, 10 and 13




Section 15

ITEMS 6, 7 and 8



Sections 3 and 11

ITEMS 6 and 11



Section 21



Owner's participation/management/ staffing

Section 13


-11 -


Section In The Franchise Agreement

ITEM In the

Offering Circular


Records and reports

Sections 3 and 12



Inspections and audits

Sections 6 and 12

ITEMS 6, 11 and




Section 18




Section 4



Post-termination obligations

Section 17



Non-competition covenants

Sections 7 and 17



Dispute resolution

Sections 22 and 23



We do not offer direct or indirect financing. We do not guarantee your lease or other obligations.


Except as listed below, we need not provide any assistance (o you under the Franchise Agreement. A.          Before The Franchised Center Opens

Before you open your Franchised Center, we will:

1.            if we have not already approved a site that you have selected prior to signing the Franchise Agreement, designate the area within which you will locate the Franchised Center, provide you with our criteria for site selection and approve the site you have selected for the location of the Franchised Center. (Sections 2.3 and 5.1)

Neither we nor any of our employees have special expertise in selecting sites for JEI Self-Learning Centers; we make no representations that your Franchised Center will be profitable or successful by being located at the Approved Location. Any approval is intended only to indicate that the proposed site meets our minimum criteria based upon our general business experience.

2.            review and approve your lease or purchase agreement for the site for the Approved Location of the Franchised Center. (Section 5.2)


Our review of your lease or purchase agreement and any advice or recommendations we may offer is not a representation or guarantee by us that you will succeed at the leased or purchased premises.

3.            provide you with standard plans and specifications for the build-out of the Franchised Center along with a list of required equipment and improvements which you are required to purchase and install. (Section 5.3)

4.            provide an initial training program lasting not more than 10 days. This training is described in detail later in this ITEM. (Section 8.1)

5.            provide to you on-site assistance and guidance for approximately 3 days to assist you with any questions you may have in operating the Franchised Center. (Section 8.2)

6.            provide to you, on loan, one copy of the JEI Self-Learning Systems, Inc. Operations Manual (the "Manual"). The Table of Contents of the Manual, along with number of pages devoted to each section, is included as Exhibit D to this Offering Circular. (Section 9.1)

B.          Other Assistance During the Operation of The Franchised Center

After the opening of the Franchised Center, we will:

1.            from time to time, advise and offer general guidance to you by telephone, e-mail, facsimile, newsletters and other methods. Our guidance is based on our and our franchisees' experience in operating JEI Self-Learning Centers. Such advice and guidance may consist of knowledge and experience relating to the authorized services or products, as well as operational methods, accounting procedures, and marketing and sales strategies. (Section 14.1)

2.            at our discretion, make periodic visits to the Franchised Center for the purposes of consultation, assistance and guidance in various aspects of the operation and management of the Franchised Center. We may prepare written reports outlining any suggested changes or improvements in the operations of the Franchised Center and detail any deficiencies that become evident as a result of any such visit. If we prepare a report, you may request a copy from us. (Section 14.2)

3.            make available to you operations assistance and ongoing training as we deem necessary. (Sections 8.2 and 8.5)

4.            make available to you changes and additions to the System as generally made available to all franchisees. (Section 14.3)

5.            periodically provide advertising and promotional materials including ad-slicks. brochures, fliers and other materials for your use. (Section 14.4)

6.            approve forms of advertising materials you will use for Local Advertising. Grand Opening Advertising and Cooperative Advertising. Our advertising programs are described below. (Section II)

7.            provide you with modifications to the Manual as they are made available to franchisees. (Section 9.2)

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C.          Advertising and Promotion

1.            During your first 3 months of operation, you must spend at least $1,000 on Grand Opening Advertising, including print or news media and/or direct mail advertising, dues for business organizations, event dues or other solicitation and promotional efforts. We will provide you with guidance for conducting Grand Opening Advertising, and we will review and approve the materials you use in your Grand Opening Advertising. (Section 11.1)

2.            During the first 2 years of the term of the franchise, you must spend the greater of $350 or 2% of your Gross Sales each month on advertising, promotions and public relations in the local area surrounding the Franchised Center. At the beginning of the 3' year of the term of the franchise, the Local Advertising expenditure will be 2% of Gross Sales. You will pay for your ads and promotions directly, but we will provide you with general marketing guidelines and we will review and approve your advertisements. (Section 11.2)

3.            We may develop a System-wide Marketing Fund, and if we do, you will be required to contribute up to 1 % of your Gross Sales to the fund. (Section 11.3) We will set the exact percentage that you must contribute and we may adjust the percentage from time to time. We will administer the Marketing Fund as follows:

(a)          We will control (he creative concepts and the materials and media to be used, and we will determine the placement and allocation of advertisements. We may use print, television, radio, Internet or other media for advertisements and promotions. We do not guarantee that any particular franchisee will benefit directly or in proportion to their contribution from the placement of advertising by the Marketing Fund.

(b)          We may use your contributions to meet any cost of producing, maintaining, administering and directing consumer advertising (including the cost of preparing and conducting television, radio, Internet, magazine, direct mail and newspaper advertising campaigns and other public relations activities; developing and/or hosting an Internet web page of similar activities; employing advertising agencies to assist therein; providing promotional brochures; conducting market research; and providing other marketing materials to franchisees). We plan to conduct some advertising in-house, but we may use a national or regional advertising agency. We will maintain your contributions in a separate account from our funds and we will not use them for any of our general operating expenses, except for our reasonable administrative costs and overhead related to the administration of the Marketing Fund. We will not use Marketing Fund Contributions for the direct solicitation of franchise sales.

(c)          We expect to use all contributions in the fiscal year they are made. We will use any interest or other earnings of the Marketing Fund before using current contributions. We intend for the Marketing Fund to be perpetual, but we have the right to terminate it if necessary. We will not terminate the Marketing Fund until all contributions and earnings have been used for advertising and promotional purposes or have been returned to our franchisees on a pro rata basis.

(d)          AH JEI Self-Learning Centers owned by us will make similar contributions to the Marketing Fund as required of franchisees.

(e)          We will have an accounting of the Marketing Fund prepared each year and we will provide you with a copy if you request it. We may require that the annual accounting be audited by an independent certified public accountant at the expense of the Marketing Fund.

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(f)           The Marketing Fund is not a trust and we assume no fiduciary duty in

administering the Marketing Fund.

4.             Although we are not obligated to do so, we may create a Cooperative Advertising program for the benefit of all JEI Self-Learning Centers located within a particular region. We have the right to (a) allocate any portion of the Marketing Fund to a Cooperative Advertising program; and (b) collect and designate all or a portion of the Local Advertising for a Cooperative Advertising program. We will determine the geographic territory and market areas for each Cooperative Advertising program. You must participate in any Cooperative Advertising program established in your region. If a Cooperative Advertising program is implemented in a particular region, we may establish an advertising council for franchisees in that region to self-administer the program. (Section 11.4)

5.             You must list the telephone number for the Franchised Center in your local telephone directory and advertise your Franchised Center in the "yellow pages" category that we specify. You must place the listings together with other JEI Self-Learning Centers operating within the distribution area of the directories. (Section 11.6)

D.            Compuler/Point-of Sale System

You must purchase and use the computer hardware and software programs that we designate. (Section 12.5) We do not require you to use a specific computer system, but your computer system should meet with the following minimum specifications:

■       Windows98: Pentium 550MHz, 65MB RAM, 256-color display card, 28.8-Kbps modem or Ethernet card

■       Microsoft Internet Explorer 5.5 or higher " Microsoft Office

■      High-Speed Internet Access

We may require you to update, modify or replace your system during the term of the franchise. (Section 10.2)

You are not required to enter into any ongoing maintenance or support agreements but you may find it advantageous to do so. You must update or upgrade computer hardware and software as we deem necessary but not more than one time per year.

We have the right to independently access all information you collect or compile at any time without first notifying you. (Section 12.6)

E.             Methods Used to Select the Location of the Franchised Center

If you have a potential site for the Franchised Center, you may propose the location for our consideration. We may consent to the site after we have evaluated it. If you do not have a proposed site, we will designate a geographic area within which you must locate the Franchised Center and we will furnish you with our general site selection criteria. You are solely responsible for locating and obtaining a site that meets our standards and criteria and that is acceptable to us. (Sections 2.3 and 5.1)

The general site selection and evaluation criteria which we consider in approving your site includes the condition of the premises, demographics of the surrounding area, proximity to other JEI Self-Learning Centers, lease requirements, traffic patterns, visibility, available parking and overall suitability. We will provide

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you with written notice of our approval or disapproval of any proposed site within a reasonable time after receiving all requested information. If you and we cannot agree on a suitable site for the Franchised Center, we may terminate the Franchise Agreement.

F.            Typical Length of Time Before Operation

We estimate thai the typical length of time between the signing of the Franchise Agreement and the opening of a JEI Self-Learning Center is 4 months. Factors that may affect your beginning operations include ability to secure permits, zoning and local ordinances, weather conditions and delays in installation of equipment and fixtures. You are required to open your Franchised Center and be operational within 10 months after signing the Franchise Agreement. (Section 5.4)

G.           Training

We will conduct an initial training program that the Director of the Franchised Center must attend and complete to our satisfaction. (Each franchisee must designate a Director of their Franchised Center who is responsible for day-to-day operations. If you are an individual, you must designate yourself as Director; if you are a business entity you must designate a Direclor; he or she does not need to have an ownership interest in the Franchise Center.) Our initial training program is mandatory for the Director. One additional assistant of your choosing may also attend. Training will take place at our training facility in Los Angeles, California, or at another location we designate, on an as needed basis as we may determine. The initial training program consists of no more than 10 days of training. Initial training covers all material aspects of the operation of a JEI Self-Learning Center, including such topics as the Self-Learning System: sales and markeling of courses offered; financial controls; maintenance of quality standards: customer service techniques, record keeping and reporting procedures, other operational issues and on-the-job iraining. If you replace your Director, your new Director must attend our training program. Although we do not charge for initial training, you may be charged fees for additional training of a new Direclor. You are responsible for training your own employees and other management personnel. This initial training is in addition lo the 3 days of on-site opening assistance we provide to you. (Section 8)












Dav 1

Training Manual (1)



Brian Moon / Dae Ha Kim

Introduction to JEI Corp.

Training Manual (1)



Justin Hong / Jieun Hong

Franchise Agreement Procedure

Training Manual (1)



Justin Hong / Jieun Hong

Mindset in Education Business

Training Manual (1)



Justin Hong /Jieun Hong

Self-Learning Sysiems


Training Manual (1)



Justin Hong / Jieun Hong

US Ed Trends

Training Manual (1)



Hanna Rhee / Taechum Jeong

Programmed Workbook Outline

Training Manual (2)



Justin Hong / Taehum Jeong


Day 3

Training Manual (2)



Jin Kim / Taehum Jeong


Training Manual (2)



Jin Kim / Taehum Jeong


Day 4

Training Manual (2)



Jin Kim / Taehum Jeong


Training Manual (2)



Elle Choi / Taehum Jeong

US Standardized Tests

Training Manual (1)



Elle Choi' Taehum Jeong













Evaluation System

Day 5

Training Manual (1)



Jin Kim / Jieun Hong

J El-Global

Training Manual (1)



Jin Kim / Jieun Hong

Class Operations Procedure

Day 6

Training Manual (1)



Justin Hong/Jieun Hong

Managing Instructors

Day 7

Training Manual (1)



Jin Kim/Jieun Hong

Material Request

Training Manual (1) Center Kit



Hanna Rhee/Jieun Hong

Franchise Reports

Day 8

Training Manual (1)

2 ■


Lomi Mun / Wonsook Lee

Parent Counseling

Training Manual (1)



J El Director

Sharing of Center Running Experience

Training Manual (1)



Justin Hong/Jieun Hong

Marketing ; Promotion

Day 9

Training Manual (1) Advertisement Kit



Justin Hong ■' Jieun Hong

Center Opening Procedure

Training Manual {1) CI Guide Book



Brian Moon / Jieun Hong

Business Plan

Training Manual (1)



Justin Hong/ Jieun Hong

Customer Service

Day 10

Training Manual (1)



Jin Kim / Jieun Hong

Children & Education

Training Manual (1)



Jin Kim / Jieun Hong

Pop Quiz




Jin Kim / Jieun Hong





Jin Kin / Jieun Hong

Dae Ha Kim, Brian Moon, Justin Hong, Jieun Hong and Jin Kim will provide training. Their qualifications are included in ITEM 2. Wonsook Lee, Lomi Mun, Taehum Jeong, Hanna Rhee and Elle Choi will also provide training. Their qualifications are as follows:

Wonsook Lee is one of our Administrators/Accounting and has been working at JEI since 1999 as an administrator, as well as an account clerk, while managing the mail study program.

Lomi Mun is one of our Administrators/Accounting and has been working at JEI since 2005 as an administrator, as well as an account clerk. She studied Business Economics from 1999 to 2002, and worked for Major Texiile as a Traffic Coordinator. She received a Bachelor of Arts in Psychology from the University of California, Los Angeles in March 2005.

Taehum Jeong has been working at JEI since February 2006 as a Franchise Coordinator. He attended the University of Albany in New York, and received a Bachelor of Science in May 2005. concentrating on Finance and Marketing. He also graduated from LaSalle Military Academy in Oakdale, New York in May 2001.

Hanna Rhee is one of our Franchise Coordinators and has been working at JEI since February 2006. She received a Bachelor of Science in Childhood Education from Nyack College in Nyack, New York in December 2005. From 2001 to 2005, she has been an active Coordinator and a Peer Advisor for various non-profit organizations.

Elle Choi is our Researcher and has been working at JEI since February 2006. She received a Bachelor of Arts in Art History from the University of California, Los Angeles in December 2005. She has served as an Instructor at an after school learning center as well as tutoring students from 2000 to 2003.


We retain the right to name additional individuals lo provide training.

From time to time we may require that previously trained and experienced franchisees, their managers, and/or employees attend refresher-training programs to be conducted at our headquarters. We may charge tuition for attendance at these programs. In addition, you are solely responsible for all of your costs and expenses to attend; however, we will not require you to attend more than one of these programs in any calendar year and these programs will not collectively exceed 3 days during any calendar year. (Section 8.5)


You must operate the Franchised Center only from the Approved Location listed in Section 2.2 of the Franchise Agreement. If the Approved Location has not already been determined when you sign the Franchise Agreement, you and we will agree upon a Designated Area within which you will locate the Franchised Center. Although we may assist you in selecting a location, you are solely responsible for selecting the Approved Location and negotiating Ihe terms of the lease. You may not relocate the Franchised Center without our consent.

The franchise granted to you is nonexclusive.

Also, we have the right to: (a) establish, own or operate, and to license others the right to establish or operate, JEI Self-Learning Centers at any location as we deem appropriate, except the Approved Location; (b) establish, own or operate, and to license others to establish or operate, other businesses offering the same or competitive products or services using the Marks or other trade names, trademarks or service marks without offering you any right; (c) establish, own or operate, and to license others to establish, own or operate other businesses using trade names, trademarks or service marks other than the Marks at any location; (d) sell or otherwise distribute products or provide services similar to or competitive with the products or services offered through the Franchised Center, whether using the Marks or other trade names, trademarks or service marks, through any alternate channel of distribution, including the Internet, under terms and conditions that we (in our sole discretion) deem appropriate; (d) use the Marks in other businesses that are not competitive with JEI Self-Learning Centers; (e) acquire businesses that are similar to or competitive with JEI Self-Learning Centers; and engage in any business or other activities not expressly prohibited in by the Franchise Agreement.

The lsl year of operations is a probationary period (the "Probation Period"). If you do not have students enrolled in at least 50 subjects, we may extend the Probation Period until you reach the minimum required subject enrollment level, or we may terminate the Franchise Agreement. Once you have completed the Probation Period, you are not required to complete it again during the ly year of a renewal term of the franchise.


We grant our franchisees the right to operate JEI Self-Learning Centers under the name "JEI SELF-LEARNING CENTERS," which is the principal Mark used to identify our System of operation. You may also use any other current or future Mark to operate your Franchised Center that we designate in writing, including the logo on the front of this Offering Circular and the trademarks listed below. By "Marks," we mean the trade names, trademarks, service marks and logos used to identify JEI Self-Learning Centers. Our Parent Company, JEI Corporation, has obtained a registration on the Principal Register of the United States Patent and Trademark Office ("USPTO") for the following service marks:

The original documents were scanned as an image. The original file can be downloaded at the link above.