James Temple·October 11, 2022

How to Build a Franchising Empire | James Temple

James Temple is a former Air Force officer and Darden MBA who, after his father's sudden death, teamed up with his mother to acquire an underperforming Mathnasium franchise location in Virginia in 2009 for roughly $40k (with only $20k total out-of-pocket between them). Over 13 years he built a portfolio of 19 locations across Virginia and Maryland — nine via acquisition and ten opened from scratch — generating $7 million in annual revenue with 10-20% margins. The core strategy was using the first acquisition as a platform, mastering operations, and then systematically acquiring other underperforming locations cheaply, knowing exactly how to turn them around. A pivotal hire was Nikki, their CEO, who started as an instructor and ultimately took over running all operations, freeing James to shift into an investor mindset. The episode also serves as a deep dive into franchising strategy: evaluating franchisors, understanding royalty structures, navigating franchisor risk (Mathnasium was acquired by Rourke Capital PE), and why multi-unit franchise ownership can be a compelling acquisition entrepreneurship path.

Deal facts

purchase price: ~$40k (first location); multiple subsequent acquisitions totaling 9 acquisitions over 13 years
revenue: $7m portfolio revenue (2022); first location was under $100k revenue at acquisition
financing structure: Seller financed a portion; James and his mother each put in $10k equity ($20k total out-of-pocket for first deal)
notes: First acquisition: ~$30-40k purchase price, seller financed a portion, buyer equity ~$20k total. Business was at or below breakeven. 9 total acquisitions and 10 new locations opened from scratch across 13 years. Portfolio of 19 locations in Virginia and Maryland. Mathnasium franchise royalty: 10% of revenue + 2% marketing fee + $500/month per owner + $250/month per location marketing fee.

Why this business

James had studied and loved math in college, tutored math for fun, and saw Mathnasium in a magazine years before getting serious. After his father died suddenly while he was in business school, he felt life was short and decided to go into business with his mother, whose background was 30 years in early childhood education. Mathnasium's educational philosophy — teaching kids to understand math deeply and become problem solvers rather than just drill and memorize — resonated strongly with him. A franchisee who had been mentoring them offered to sell her underperforming location instead of them starting from scratch, and they took the opportunity.

What's working

Building a multi-unit platform on top of a franchise system, acquiring underperforming locations cheaply and turning them around using operational expertise built from prior locations
Hiring and developing strong internal operators: their CEO Nikki started as an instructor and worked her way up, now runs the entire business with district managers under her
Centralizing back-office functions (payroll, billing, marketing, HR) so center directors can focus entirely on parent relationships, community, and student outcomes — driving above-system-average revenue
Remote-first headquarters model, predating COVID, allowing talent recruitment from multiple geographies
Starting small and low-risk ($20k equity), retaining cash in the business to fund growth without additional capital injection
Mathnasium's curriculum and franchisor-provided systems (software, marketing, operational playbooks) provide infrastructure that would have been too expensive to build independently
The top location (their very first acquisition) became #1 in the US at over $1m revenue in 2021
Portfolio margins of 10-20%, improving as scale increases

What's hard

COVID forced an overnight pivot of 2,000 students to online instruction — a system not designed for that volume at once; emotionally and operationally taxing on the entire team
Revenue still hadn't fully recovered to pre-COVID levels for all individual locations as of 2022, though portfolio-wide revenue had recovered and grown
Wide performance variance across locations (from ~$200k to $1m+) driven heavily by who is running each center day-to-day — the people risk is the dominant risk
Franchisor risk: you are partnered with an entity that can change (Mathnasium was acquired by Rourke Capital PE firm); franchisees have limited control and must trust ownership transitions
Franchisor approval required for growth — underperforming franchisees are blocked from acquiring additional units
Early years required working two full-time jobs simultaneously (Target warehouse + running the Mathnasium) before the business could support full-time focus
Geographic expansion into a second market (McLean, DC Metro) created operational inefficiency from managing dispersed regions

Notable quotes

My mom and I each put ten thousand dollars into the business and that's what we have in the business today. While we've left a significant amount of cash in the business to grow, we haven't put any more capital in.

There can be tremendous opportunity in buying small especially in a franchise because there are so many opportunities to add on. So if you think about our first location or maybe just our district of Richmond as a platform we've been able to add on to that and in some cases find grossly underperforming locations and buy them with little capital and turn them around and create what is now a seven million dollar business.

Once you have one or six or whatever the number is you understand why what makes a location successful or not successful and that significantly decreases your risk. And if there are a thousand units across the U.S you have lots of opportunities to find these — you don't have to go find a new business underperforming business every time you want to grow, you have to go find more of what you're doing already that's underperforming.

I talk to people all the time who say they just don't have the money to buy a business and not only are there resources like the SBA but there are opportunities to buy small under the right conditions using whatever money you have.