A franchise fee is the one-time payment you make to the franchisor to join the network and open your center. It covers the right to use the brand, curriculum, training, and launch support—it is not rent or a recurring charge. For an Algorithmics franchise, the entry fee starts at $8,500 and depends on your territory size. It's the smallest part of your total startup cost — see the full cost of opening a coding school. You pay it once at the beginning.

A royalty is the ongoing fee a franchisee pays the franchisor, usually as a percentage of revenue, in exchange for continued support, curriculum updates, the learning platform, and the right to keep using the brand. Unlike the one-time franchise fee, royalties are paid regularly for the life of the business. At Algorithmics, it is 12% of revenue, with no royalty charged during the first three months while the center is finding its feet.

The break-even point is the moment a business earns exactly enough to cover its costs — no profit, no loss. For a coding school, it's usually measured in students: the number of enrolled children whose fees cover the center's monthly rent, payroll, and marketing. Across the Algorithmics network, the median is about 68 students a month, ranging from around 60 in Latin America to 99 in Central and Eastern Europe. It's the number that decides how long you fund the business from your own pocket before it sustains itself.

The payback period is how long it takes to earn back your initial investment from the profit the business generates. For an education franchise, it's counted from opening until the accumulated profit equals what you put in to launch. For an Algorithmics center, the typical payback period is 9 to 18 months, depending on the market, enrollment pace, and local costs. It is not the same as reaching monthly profit, which usually happens earlier.

Unit economics for a coding school is the revenue and cost measured per single student — how much you earn from one child versus what that child costs to teach. It's the clearest way to see whether the model actually works, because a business that loses money on every student won't be saved by having more of them. In a typical Algorithmics center, a parent pays around $60 a month per student, while teaching costs are roughly $20 per student—so each child contributes a healthy margin once fixed costs are covered.

ROI, or return on investment, measures how much profit you earn relative to how much you put in, usually expressed as a percentage. For an education franchise, it answers the question, "For every dollar I invested to open, how much did the business return?" It compares a coding school against other uses of the same capital. ROI builds over time as the center matures—the first year funds the setup, and returns compound as the student base grows and stabilizes.

The initial investment is the total amount of money needed to open the business and keep it running until it can sustain itself — not just the franchise fee. For a coding school, it typically includes the franchise fee, fit-out and equipment, the first months of rent and salaries, and a marketing budget for launch. For an Algorithmics center, the total initial investment starts at around $15,000, and the franchise fee is only one part. Budgeting only for the fee and forgetting the working capital is the most common planning mistake new owners make.

Working capital is the cash a business needs to cover its day-to-day costs before its own revenue can pay for them. For a new coding school, it's the money that funds rent, salaries, and marketing during the first months, when enrollment is still building, and the center isn't yet profitable. Underestimating working capital is what sinks otherwise healthy centers: the model works, but the owner runs out of cash before it gets there. A sensible reserve is at least two to three months of fixed costs.

A cash flow gap is when a business doesn't have enough cash to make a required payment on a specific date—even though it's profitable overall. For a coding school, this is usually a summer problem: enrollment and revenue dip in July and August while fixed costs stay flat. It's a timing problem, not a loss, and it's invisible in a profit-and-loss statement — you only see it in a cash calendar. You can prevent it with a reserve, a renewal campaign that pulls cash forward, and summer products like camps.

Recurring revenue is income that repeats predictably over time, rather than coming from one-off sales. For a coding school, it's the heart of the model: a child enrolled in a multi-year track pays month after month, so each enrollment is worth far more than a single transaction. This is why retention and renewal matter so much — keeping a student for a second or third year costs almost nothing compared to acquiring a new one, and it's what turns a center into a stable, compounding business.

A franchise is a business model in which an established company (the franchisor) lets an independent operator (the franchisee) open and run a location using its brand, products, and systems in exchange for fees. The franchisee owns and runs their own business, but doesn't have to build the product, brand, or operating model from scratch. For a coding school, this means the partner supplies the curriculum, learning platform, teacher training, and marketing playbooks —and focuses on running the center locally.

The franchisor owns the brand and business system and grants franchisees the right to operate under it. Its job is to supply and maintain everything the partner runs on: in Algorithmics' case, the curriculum, the learning platform, teacher certification, product updates, and ongoing support. A good franchisor's incentives align with the partner's because it earns through royalties—it only does well when its franchisees do.

A franchisee — the term Algorithmics uses is "partner" — is the independent owner who opens and runs a location under the franchisor's brand and system. The partner invests the capital, hires and manages the local team, handles sales and marketing in their city, and runs day-to-day operations. What they don't do is build the product: the curriculum, platform, and methodology come from the franchisor. Most successful partners come from business, sales, or education backgrounds — not necessarily technical ones.

Territory is the geographic area where a franchisee has the right to operate, and exclusivity means the franchisor won't open—or let another partner open—a competing location within it. For an education franchise, this matters because a center depends on a local catchment of families. Before signing, clarify exactly how the territory is defined and whether the brand can sell online or through schools in your area, since that affects how protected your market really is.

A multi-unit franchise is when one partner owns and operates multiple locations. That's often where the real economics of a franchise show up: the hardest, most expensive learning happens with the first center, and each additional unit is cheaper to open and faster to fill because the systems, brand, and know-how already exist. A partner opening a second center is also one of the strongest signals that a model works — nobody opens a second one if the first didn't.

A master franchise is an arrangement in which a partner acquires the rights to develop an entire region or country, rather than a single location—usually with the right to open multiple units and/or sub-franchise to other operators. It's a larger commitment aimed at experienced operators who want to build a network, not run one center. Terms vary significantly and are negotiated case by case.

A franchise agreement is the legal contract between the franchisor and the franchisee that sets out both parties' rights and obligations: fees, territory, term length, renewal and exit conditions, brand standards, and the support the franchisor provides. It defines whether you own an asset you can eventually sell or a contract you're locked into, so the exit, renewal, and transfer terms deserve as much attention as the fees. Always read these sections closely before signing.