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Beware of Karate Contracts!

How the dirty business side of things can effect your training!

One of the new students I got this past week told me "I chose your school because another one wanted $290 and a signed 18 month contract for me to start with them, and that was before giving me any chance on deciding whether or not I liked what they taught". He further added: "I asked them for a trial lesson, to see if I would like it and they said NO, so I walked out".

My first thought, he did the right thing due to the combination of cost, contract, and no trial lesson being offered! I've always felt if something doesn't feel right, walk away, and you'll see some more reasons why that sounded like the right decision!

But back to what the student told me, I couldn't help but ask: "How did that school arrive at $290 to start you in his program?" The student said: "$200 was for an Enrollment Fee and the other $90 was the monthly training fee". He then added: "They kept pressuring me to sign and it was a very uncomfortable experience, they kept saying…if money is an issue we have financing to help you." Financing??? He then added: "The unbelievable part was that the $90 monthly fee only gets you (1) day of training per week".

$90/month for 4 days of training/month and a Financing Plan for that?

Do some people fall for this? Have any of you heard of the MTV show/saying “You’ve just been Punked”? I think a more appropriate saying for those who get corralled into this sort of thing would be “You’ve just been McDojo’d!” For those that don’t know, McDojo is an actual term used amongst quality Karate school owners, when they refer to the questionable business practices of other schools. Another term used along the sames lines is “commercial schools (dojos)” whose primary goal is to make money, while often taking advantage of students, and/or offering low quality instruction.

That same student, at the end of the evening of his first FREE class asked me “How would you like me to pay you, check or cash?” I told him “Either is fine, but don’t worry about it, you still have another FREE class coming”. I guarantee you that is completely contradictory to the way the school mentioned above would’ve handled that students question! I have no doubt the other school would’ve stuck-their-hand-out and taken the money right then and there! Basic Sales 101 says if someone offers to pay for something you’re selling, you take it right then and there, so they don’t change their mind. Me, I’m not only a rebel when it come to rules like Sales 101, but I also know the way I’m teaching, and what I’m teaching, is 1000x better than most other schools. I’m 1000% confident that student WILL be back, and I’m not going to worry about it like the other school likely would!

Try Before You Buy !

First and foremost, I say one should always try-before-they-buy (or sign) any type of long-term committment, but if a school doesn't allow a trial program, and you are dead-set on considering them, then watch a couple of their classes. Specifically look for students that have been there 3 months, 6 months, 12 months, and longer. If you don't know who those students are, ask others or the instructor! After you've identified those type of students, and watched them for awhile, ask yourself "Is that the skill level I'd want to be at if I'd put-in that much time?" If the answer is No, then I suggest you Go!

Regarding a trial class or two prior to signing a contract, be very careful. Personally, I don't think a student really gets a good feel whether or not that instructor can make them great, after a few free trial lessons. Furthermore, I think it might take 1-3 months before a student gets any feel for that, or sees any results from their training. The danger zone is those school owners who combine (1) Free lesson, or (1) Free week, or (1) Free month, with their contracts. Why? Because they know you won't gain any real ability from how-and-what that instructor teaches, until 1-3 months with him, more specifically, AFTER your trial period is over and AFTER you've signed a contract with him. Do you see that gap-in-time in which the whole business side of things can benefit the McDojo's? And what if you don't see any results after you've signed that contract, and you want out of it, due to that instructors inability to make you skilled? Bottomline, you are now LEGALLY committed to pay him each month, whether you attend classes or not. Best thing, don't EVER sign a contract for martial arts training, and if you must, add your own handwritten clause that says "if I feel I'm not seeing results in a timely manner, I can be released from this contract". Or, even better stand firm and say "I'm not signing a contract, just in case you are unable to make me great at this." But there may be other ways out of a contract, if you are already in one, which I've heard others have used and I'll mention later in this article!

Instead of instructors allowing their training to stand-on-its-own, regarding its quality and a fair monthly tuition (what is fair?), many school owners use their school to GET RICH, and often to get filthy rich! Then will often resort to extremely inflated tuitions, various training “packages”, pre-payment “package” discounts, long-term contracts, upgrade deals before your existing “package” (contract) is up, and "only if you sign today" deals/discounts, to shackle their students into training with them. To them, you are no different than the way a Health Club treats its own members! And in case many of you didn't know, most Health Clubs don't really care whether-or-not you show up, its about getting money and signing-up as many people as they can!

Dallas School Owner Challenge: I dare you to set your students FREE !

You know what I say to those sort of business tactics? If the McDojo’s are 100% confident what they’re teaching is the best for each of their students, then I have a way for them to prove it! Immediately release all of your students from their contracts and give them the freedom to compare your way of teaching, and what you teach, with another school for a couple of months, and then let’s see how many of them return to your school! Like many things in life, each of us as individuals needs a certain amount of freedom to decide what’s best for us, yet most schools want to take that freedom away from you!. The only way you can find out what works best for you is to try different styles, or a mixed style that allows you to adapt to whatever does work for you! You don't need someone who is great at certain kicks because he's flexible and started at 8 yrs old, trying to painfully force a 40 yr old adult who has a very limited chance of flexibility, into doing the same kind of kicks at the same height! That's insane! Nor someone twisting your arm behind your back with a contract, because he thinks he can make everyone in this world, no matter what age, do jumping kicks 6 ft off-the-ground like he can! Yet how do you figure out what martial art style, or mix thereof, is best for you, especially if everywhere you look each place has a contract before you even start training? It's like the second you walk in the door they think they own your soul and have a right to it for eternity! Its as if they want you to give up all your rights, and take away your freedom to ever change-your-mind or try-something-else! The why's of that we'll look at later here. However, I feel school owners are wrong in their actions and intent, by hiding behind contracts and taking that right and freedom-of-choice away from students! Yet I fear 99% of school owners won’t take-up this challenge and release you from your contract, so you can figure out if what they're teaching is truly best for you. Such a thought would give most of them a “financial heart attack”! What deserves deeper thought is every possible consideration why a school owner wouldn’t do that, and deciding if those reasons are meant to benefit the student more, or the owner!

So what are some of the reasons school owners want to lock someone into a contract 20-30 minutes after you say “Hi, I’m interested in Karate”? Well, most I feel are purely self-serving ones (serving them)! There are those who say it’s a well-known statistic that if you walk-out after visiting a school, without having done something that commits you to returning, 90% of the time you won't return! There are 5 words school owners pray you won’t say, which are “Let me think about it”. School owners know that once you leave, there’s a 90% chance you are a lost opportunity (no money for them). Many actually pay lots of money to attend well-known “Karate Sales/Enrollment Seminars” about this, and how to counteract that, and every possible objection you might throw at them. Afterwards they return from these seminars and devise all sorts of devious ways to get your money today (mostly by having you sign something or providing a small payment), so that you'll come back tomorrow! The second reason for contracts relates directly to most schools huge overhead costs! Keeping you locked-into ongoing contracts is a schools best insurance policy that you'll help pay their huge expenses EVERY month! Third, if the schools owner is trying to make a fulltime living from teaching, your contract helps insure you will help pay the mortgage on his huge house each month, along with helping him and his family maintain a lifestyle he thinks you owe them! And last, that schools owner may also resort to contracts because they teach a style where 80-90% of student’s dropout within the first few months, because it takes many years to become good at what he teaches, he knows it, and thus a "contract" gives him a little added insurance you won't leave as easily. Schools have been known to say things like “signing today shows you’re serious about training and keeps you committed to it, just like we’re committed to being here in this building for you each month”. No matter what "sales spin" school owners put on it, contracts are ALWAYS meant to offer more benefit to those who hand them out, than those that sign them! Don't buy into their hype!

Next, I've always felt that students shouldn't judge a schools quality or value by how fancy the facility looks inside or outside, the monthly tuition they charge, nor by their big Yellow Page ads, nor size or location of their school, nor the instructors own ability or tournament wins! The only thing that should matter is how great your instructor can make you, and how quickly he can get that done! That is how you should judge a school! I've seen many great instructors around here who themselves won lots of trophies, yet couldn't make their own students get anywhere close to their own level of skill! Some I suspect were either extremely athletic, or were one of the rare types who stuck-it-out and stayed with it longer than those around them, until they got good!

My opinion, you should think of your instructor more as a coach, than someone whose physical skill you want to attain! You may never be able to do certain acrobatic things he can, no matter how hard you try! We are all made different, and a REALLY good instructor should realize that and work on what you can realistically do! Remember, an instructor won't be there to save you in the street, the only thing that matters is how good he can make you, and even more importantly - how quickly he can do it!



Back to how great an instructor is, and the thought of comparing that to his own students. Personally, I want every student I train to become better than I ever was or ever will be, and I mean that! Compare it to a parent wanting everything to be better for their child than it was for themselves! Yet there are countless teachers who hold-back and don't really share ALL their secrets nor provide students the individual attention it takes to make them great! You want to know another way to pick a great instructor? Look for lots of students he made great who border on or exceed his own ability/talent! That's the goal I'm striving to achieve, versus a huge bank account, as seems to be the MAIN goal of many other schools! I just started my school in late 2005, and I hope to quickly create those kind of students!

Did you know some Instructors withhold teaching you the "Good Stuff" !

I know of one highly talented local instructor who I once asked "Why aren't you teaching them the really good stuff?" I swear he literally said "If I show them everything I know, and I make them good quickly, then what would be their point in coming back after that?" Translation: he fears that's when they might stop coming to his school, meaning, they stop handing him checks. Again, whose interests are being served with that way of thinking? I know of another instructor who tells his students "Don't practice at home, only practice at the school so you don't develop bad habits". I asked that instructor about that one day and he said "If they practice at home, they get good quicker, and thus might leave the school sooner, meaning I won't get their check each month". Another is, "my students aren't allowed to train at another school". Translation - they don't want to risk their students finding out another instructor creates better students, thus, eventually losing their own because of that.

Are these the type of games alot of schools are playing with their students? Is it right to make-a-game of holding back your progress, or the good techniques that might help save your life? Personally, I think there are TONS of instructors like these running McDojo’s, making students go through the motions each day, dragging out their training and progress as long as they can by binding them to long-term contracts, just to get a check from them each month as long as they can!

From a business standpoint, and knowing the specific schools size-and-location this story is based on, I suspect his costs are only part of the reason why he resorts to contracts. The other likely being a high percentage of student dropouts after a few months!

Some say their overhead (rent, etc) is why the force contracts on their students? Well, how do you know what the reasons are unless the owner lets you see the books? And what percentage of school owners are going to let someone see their books? To dig a bit deeper, many business factors (money!) influence what a school does.

Lets back into the financial side of running a school !

A few months ago, when I first started to think about opening a school, I started looking into the business aspects of doing so. Meaning, the cost of retail space, advertising, electricity, etc:

RENT: Lets look at one of the most expensive considerations first, rent/location. Did you know that a Karate school is typically only operational from about 5PM-8PM Monday-Thursday. Friday nights typically have very few students, and many schools decide to be closed on Fridays, and few typically show-up for Saturday mornings! Kids are at school during the day M-F, and most parents/adults can't take classes while they are at work. And lets face it, most Karate schools aren't operating at 9-10PM at night! So there's really only about 3 hrs a day, 4 days a week, they see the bulk of their students. Adding that up, that's a paltry 12 hrs a week that most martial arts schools are conducting business! Yet landlords charge them rent as if they were running a 60 hr/wk productive retail business like all the other retail businesses surrounding them! In my opinion, the rent issue is what makes it so tough in a huge metropolitan area for a Karate school to have its own Prime Retail Location, and be able to afford it! FYI - some of the best karate schools I've seen over-the-years, are in the cheapest buildings, worst locations, or are many miles away from nice/expensive retail areas. Why? Because often these are the ones who money is secondary, they don't do contracts, and instead of business issues they constantly have to worry about (paying outrageous rent), they focus entirely on offering the BEST quality training they can to their students!

I'm convinced that any school owner who wants to try and make a fulltime living at this, and is in a nice "prime" retail location, has to play games with you (contracts, etc) to make sure he can pay huge rent costs each month. This is why you often see tuitions at one place that are 2-4x the cost of another place! You don't believe me? Try this, estimate the square footage of a particular school (length times width in feet), look in similar close-by shopping centers for a vacant retail space about the same size, find the posted Leasing Agents name for that space, call him up and ask him "How much is the monthly rent"? When you become shocked at the price, think about how many students it takes to cover that rent, times his monthly tuition, and keep in mind that's ONLY the rent! Hint - I checked on a small rundown location that was roughly 30ft x 50ft (1500 sq ft) and they wanted $2500 a month! Keep in mind 1500 sq ft is the entire facility, not counting dressing rooms, bathrooms, office, entrance/lobby, or watching area for parents! I know of different local schools that are 2-4 times that size. Thus imagine what a 2-4 time multiplier does to the rent price I mentioned above, and how your tuition has to be jacked-up to cover that!

ADVERTISING: Next cost consideration is advertising. Some schools spend as much on advertising as they do rent, and sometimes even more! I've personally felt huge amounts of money are more often spent on this when there exists a high percentage of student dropouts. That's a whole nother story (possibly article). Some schools get nearly all their business from simply having a prime location, throwing a sign up on the building, and that being their sole or major source of attracting students. Others sometimes elect for a "less than prime location", and make up for attracting students by dumping lots of money each month into their advertising budget.

Is 50% of my Student Tuition going towards attracting other students ?

In some schools, I think the answer is "yes". I personally know of some schools that have a 3-5 figure/month advertising budget! As a student, how would it make you feel, knowing that your tuition was jacked-up higher than it needed to be, just to attract other students via advertising, because your instructor wasn't teaching in a way that kept student attrition to a minimum, thus minimizing advertising costs being passed on to you? Lets face it, if you're in a school that does lots of costly advertising, who do you think is really paying for that? Is that fair to you?

I did a little checking. Did you know it can cost $5K-$10K/month to have a full page ad in a major cities Yellow Pages? Even a half page ad is very expensive! Who do you think really ends up paying for that ad (inflated student tuitions?). So what other forms of advertising are out there that cost less. Well, there's the internet, which if done the right way is more-or-less free.

Lets sum up the financial considerations in starting a school:

Rent: $3K-$10K/month for a retail location
Electricity: $100-$500/month
Advertising: $50-$10K/month
Self Employment Tax: almost near 50%, unless you incorporate
Full-Time Income for a person in Dallas: $50K-100K/yr
Staff Salaries?

Let’s take a medium number from above for a school that has its own location, and is trying to make a fulltime salary out of it, meaning about $8K/month total. Now, how many students does it take at $100/month to do $8K/month? 80 on the low end! But the question remains: "Is the student really getting $100/month worth of value in their training, or are they mostly helping to pay the rent and line the owners pockets?" And if you sign a contract, how long is it after signing, and after its too late to do anything about that, before a person figures that out??? Personally, I feel most schools aren't providing quality training, as I've personally seen the quality training provided at many schools, and the level of skill and ability of most students. Simply stated, I don't feel most students are getting their moneys worth, and I think school owners deep down know that and love everyone being on contracts that say "Too bad, now I've got you, and you can't go anywhere else, or do anything about it!"

Is there a way out of a contract if you're unhappy?

Well, you could of course try and talk to the school owner, tell him you're unhappy, and see if he'd release you, but good luck! That's like saying "Hey Mr. McDojo, do you mind if I stop handing you a check every month?" If it comes down to a McDojo's financial well being vs your happiness, be prepared for a bit of a battle! Often you'll get their B.S. "Customer Retention" speech they learned at an expensive weekend seminar, in which they say things to you like "Students often get to a frustration point where they think about quitting, that's part of the reason why our contract is meant to help you stay with us and reach your original goal, even if you become frustrated. Stick with it a little longer, and that feeling of frustration will pass." Then watch the instructor give you a little added attention for a few classes, to make you feel like he really cares, but more often he'll quickly go back to his old ways. Once again, the real goal is to make sure you don't stop handing them a check! If you are really bold, I guess you could just always be negative in class, or do something that breaks their rules (not illegal of course), until they realize you are such a thorn-in-their-side they have to let you loose of their contract for the sake of their business, and other students. However, there's often a clause that if you physically become "unable to participate any longer", or it's "detrimental to your health", they'll let you out of it. I've "heard" of some people spending $30 to go see their doctor, telling the doctor their knees hurt all-the-time and they think its due-to-kicking in karate. Then asking their doctor if he'll write a note saying "I recommend you discontinue karate immediately for the sake of your knees" so you can get out of the contract. I've "heard" people have easily and successfully done that and were released from their contract!!!

Someone once told me that if you didn't provide your social security number on the contract, then it's highly unlikely they'll try to enforce collection on it! Hint, never put your social security number on a contract, if you can keep from doing so! Do you really think a Karate school needs your social security number or drivers license number to give you lessons? I suggest leaving that blank, refuse to provide it, and if a contract is a must, only give a P.O. Box for an address, for a phone number a cell number you can easily have changed if things get messy later! Also, if you're going to try a place with contracts, and you want to keep your personal contact info as private as possible, only pay in cash! Think of what's on your checks!

Usually some harmful combination of rent, advertising, electricity, and high student attrition, makes it very hard for schools to keep the doors open! Add to that, anyone who wants to try and make a school their main source of income, and a respectable source, and it becomes even more difficult. Bottom line, every single dollar more than you think you should be charged for tuition is usually going towards paying the rent, electricity, using a percentage of that for some form of advertising to attract new students, then whatever is leftover gets a near 50% self-employment tax if the owner wants to put any of it into his pocket each month (unless he's incorporated).

Now getting back again to my thoughts of opening up a school a few months ago, I decided not to start with that kind of overhead, thus having to outrageously inflate my prices, nor lock students into contracts to pay a huge monthly "nut". It made more sense to me, noticing there are about 100 schools in Dallas, to go the opposite end of the spectrum, regarding what everyone else was doing.

My Criteria for starting a School !

1. Low overhead so I could offer...
2. Low-to-Moderate monthly cost for classes
3. No contracts
4. Focus on making students effective quickly, instead of dragging out their training for years!
5. Who would I offer this too and who could it provide the most value too?

One of the first things I noticed was that the Dallas marketplace mostly catered towards flashy-kids-type-karate-programs! In my assessment, practically no schools offered a thorough martial arts program for adults that was self defense specific, and was technique customizable down to each adults physical capabilities and limitations! It seems many schools focus on making students train for many years, getting money as long as they can, before certifying them as good! Owners actually have a saying "Kids pay the bills", which certainly seems to make them the majority in most Karate schools that involve lots of kicking. Let’s face it, hundred of kicks per day are hard on an adults body! Most school owners deep down know this, and that whatever they trained in as a child (especially a kicking art), becomes very difficult to attract adults too, or make them stick with (thus contracts?). I believe many realize they have to train kids, if they want to make a business out of a kicking art, and thus they settle on becoming a full fledged McDojo.

Mislabeling "Adult Self Defense" ?

For many years I've noticed alot of schools mislabel what they teach as "Adult Self Defense", yet what they are really doing is trying to force adults into an activity/style that's really best suited for kids (i.e. pure kicking arts)! And let's define "pure" as the ones that are 80-100% about kicking, jumping 4-6 ft off the ground, and only use hands about 0-20% of the time! Adults can typicaly get a good idea of the expectations in these places just by watching what the kids do, and then thinking as an adult "could I ever really jump in the air like that"? You'll notice in most "pure" kicking arts that not very many adults start as beginners, and if they do, they typically don't stay around very long. Compared to kids, adults dropout at a much higher pace/rate at those places! It takes a significant amount of effort for an adult to become good in acrobatic kicking versus a kid! Can an adult do kicking? Sure, if it's reasonable, realistic, and they train correctly and safely. But I personally don't think all that acrobatic leaping off the ground 4-6 feet is good for all adults past 30! Compare it to trying to take someone who is 30-50 yrs old, start them from scratch, and make them great at Gymnastics or Ballet! It's highly unlikely it would happen, and the same goes with most "pure" kicking arts that do more feet than hands, crazy acrobatic stuff, and the chance of an adult past 30 becoming great at that!

Seems to me that with nearly every school catering to Kids, the biggest market not being addressed is adults, and training them in something that isn’t too demanding on their bodies, and that can make them highly street effective! Thus I decided to focus on training adults in a mixture of techniques that allows them-and-me to customize techniques, based on what they can and can not do! This allows me to focus on their strengths and make them street effective quickly! Do I refuse to teach adults kicking? No, but I always emphasize to them the risks, and that they will likely have to put a considerable amount of effort, more than they could imagine, just to become good, and even more to become great!

It seems business costs and personal income goals often dictate what schools teach, who they teach, what they charge, and thus forces shrewd school owners to take a hard line stance on the way they do business, meaning contracts and expensive monthly tuitions. But are their huge expenses and income goals fair to you as a student, and do you really feel you are getting that much value out of that training each month? Worse, how do feel about signing contracts, that should you become unhappy and walk away from, without getting officially released, might end up getting messy for you?

Unfortunately, most schools treat you purely as a business. And what is the goal of a business"? Simply, to make a profit, and as much of a profit as they can! Let me ask you this, do you know your instructors home phone number? Do you feel comfortable calling and talking with him? Have you ever thought about asking him some crazy question, but you're to afraid too? I have an open door policy with my students!

If you are an adult in the Dallas area who is locked into a contract, training in something you now think isn't the right art/style for you, then you may want to consider your "options". Bottomline, I personally think many owners know what they start training adults in likely isn't a good fit for them, but they just want their money, and a contract that tries to enforce you'll keep giving it to them as long as possible. You don't have to completely give up on martial arts, you just need to find a style/school that's a good fit for you, which is hard to do when nearly everywhere you turn someone wants you to sign a contract!

Questions you should ask every school!
If you are over 30, its not too late!
Why you should never sign a Karate Contract!
How to choose a school/instructor!
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