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Ask Rhee Gold | March-April 2010

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AskRhee

 
Hi Rhee,
A parent signed her kid up for a 4:00 p.m. jazz class for 5- to 8-year-olds. We didn’t have enough children to run the class, so the secretary asked the parents if the children could move to the 4:45 p.m. jazz class and told me that all three moms said yes. I sent an email confirming the change before winter break, since we were ordering costumes. No one contacted me to say they were not interested in the change, so I ordered the costumes. After the break the class met, and one mom claimed her daughter left in tears and hated it (which didn’t happen because I was there to see how it went), and she wants a refund for her costume.

The woman claims that she had said that they would try the class but it isn’t working, so she wants a refund. I told her I was there and no one was crying, nor did anyone say that the class was not going to work when they were asked to make the change. She then went on about how driving home later was a traffic issue and her daughter can’t get her homework done. So I told her that the costume was already ordered and paid for. She signed a form that said “No refunds,” but she is complaining that the change in class is the issue.

I offered to ask the students’ parents if the class could move to an earlier time, but she said that wouldn’t work. Then I suggested that her daughter be a helper in the class and that the student teacher could spend some extra time with the girl so she would feel more comfortable, and she said it wasn’t going to work. She thanked me for all the suggestions but still wants a refund for her daughter’s costume. I don’t know what more to say to her. Can you help me? —Joan

Hello Joan,
It is obvious that this mom doesn’t want to abide by your policy on refunds, which you’ve made clear to her. My usual reaction to this kind of situation would be to explain that the costume payment has already been sent to the manufacturer and the only option is to mail the costume to the child when it arrives. However, in this case, the mom registered her daughter for a class on a certain day and time and you changed that commitment. You don’t have any confirmation in writing or verbally that this mom had agreed to the change, which could put you in a bind legally. I’m sure, if an attorney asked her why she wants a refund, her response would be that you made a change in the class time that does not work for her or her daughter.

For me, the mess of fighting the mom would not be worth the cost of the costume. I would try telling her that you’ll send the costume to her when it arrives, but if she argues, I would give her a refund and put the incident behind me. Then I would create a form that notifies parents of any changes in times or days of classes and states that in signing the form, the parents agree to the change.

We all learn through experience and this is one of those lessons you won’t forget. Good luck. —Rhee


Dear Rhee, 
I am in negotiations to purchase a dance studio where I have been employed for six years. I am nervous in this economy and feel their asking price is way too high. I have read articles in your magazine about being able to pay for your business purchase in three to five years. I would need to apply to take over the lease and there are many needed repairs. When purchasing the business, should income generated remain in the business account, or should the previous owners get to keep it? I don’t have the financial stability to support the business through the summer months, and the changeover would occur during the summer.

I also am curious about what is reasonable regarding a non-compete clause. The current owner has no desire to open another studio but wishes to continue to teach at various nursery school, churches, and YMCA-type programs. I feel that this is a conflict to the operation of a business I would be purchasing. —Concerned, Confused, and Eager

Dear Concerned,
I am not sure that you are in the financial place to purchase this business, especially if you think the asking price is too high and you don’t have the funds to get through the summer months. I also sense that you don’t trust the current owner and that you think she is trying to take advantage of you. Whether or not your perception is correct, that is not a good way to start these negotiations.

With that said, if I were planning to purchase a school and needed to get through the summer months, I would come up with a way to generate income during that time. My reasons would be twofold: to sustain the business through the summer and to increase fall enrollment by offering summer activities or classes that would bring in new students.

When you purchase a business, it’s not typical to receive the cash assets (cash in the business account), unless such a transfer is specified in the sales agreement.

As for the non-compete agreement, I would definitely put one in place that specifies that the former owner could not open a school or teach for another school within a certain time period and distance. However, I would not try to keep the teacher from working in places like nursery schools because her students would have to move on (perhaps to your school) if they want to continue with dance. If you maintain a good relationship with the previous owner, I would think that she would recommend your school to the children’s parents. As for the YMCA, church programs, or other options, you could include a clause that allows her to teach in those venues for a specified number of hours or if they are distant enough from your school.

Pursue professional legal advice and hire an accountant to help you evaluate this business and to offer you advice on the negotiations, value of the business, and any other concerns. Regarding the asking price being too high, you need to understand that the current owner has built this business and she is selling you her investment in time, money, and energy to make it what it is. You are purchasing her current student base as well as her goodwill within the community and among her clientele. Sometimes the value of the business isn’t measured only in the asking price; it also takes into account the potential for future income.

The school’s continued success also depends on the new owner being creative and attentive to what the clientele needs. You must make this purchase because you are enthusiastic about building the business and with the understanding that you, not the previous owner, will be responsible for its future. I wish you good luck! —Rhee


Hi Rhee,
I do a bunhead contest for all my ballet classes for 6-year-olds and up. If they wear a bun for 10 classes, they get a small prize like a tattoo or button. I’ve done this for the past six years.

Recently, a new student who has short hair went home crying, and her mom called to complain about the contest. What do I say to her? It’s not a short-hair contest, it’s ballet class. I want to encourage buns and pulled-back hair and the kids love the contest. Also, I don’t believe in giving everyone a prize just to be fair. Thanks! —Raquel

Hello Raquel,
I agree that students should wear their hair in a bun for ballet class; after all, that is one of the ways they learn the discipline of ballet, not to mention the lesson of respect. But in my mind, it should be a policy, not something students get rewarded for.

I also agree that it’s not good to give every child a prize just to be fair. So if you are going to have a contest, it should be something that every child can participate in. Your contest excludes children who have short hair, and you’ve already seen the kind of problems that creates. Hope that helps. —Rhee

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