Are KleuterZone’s promised returns of up to 62.4% too good to be true?

KleuterZone is a national preschool franchise brand that has shot to prominence over the past two years following aggressive marketing campaigns featuring many paid-for interviews on television channels and radio stations, social media campaigns, and advertorials on mainstream online media platforms.

These campaigns focus on attracting preschool learners to the network of 120 schools around the country, as well as the marketing of investment opportunities to members of the public offering returns of between 36% and 62.4%.

Through interactions with KleuterZone and the analysis of documents, it appears that KleuterZone may have attracted investments of between R200 million and R300 million.

This is based on KleuterZone’s website stating it has attracted 1 300 clients, and from marketing material stating that minimum investments amount to between R200 000 and R300 000.

Moneyweb’s investigation started after several prospective and a few existing investors expressed concerns about the sustainability of the advertised high returns.

However, KleuterZone founder and owner Anthonie Bougas said the schools “easily” generate the required profits to pay the advertised dividends. He also claimed that investors who had not received their full expected returns were invested in schools that were not operating at full operational capacity and were informed as such.

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Background and investment opportunities

Bougas, whose background is in entertainment rather than finance, founded KleuterZone in 2018.

The name originates from a popular children’s television show on the Afrikaans DStv channel kykNET.

The first school was in the Free State, and within 18 months an additional nine schools had opened their doors. KleuterZone then adopted a franchise model that grew the group to a currently claimed network of 120 schools.

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Investment options

KleuterZone offers two primary investment options to members of the public, with both options allowing investors to invest in individual schools.

The first allows investors to invest in established schools that are already operational and profitable. According to information KleuterZone made available to Moneyweb in a press release, these investments provide immediate monthly dividends.

If the school runs at full capacity, the projected returns are R3 200 per month per R100 000 investment. This represents a return on the investment of 38.4%.

The second option involves investing in newly established or recently acquired schools. These schools are typically not profitable at the time of investment, are only operating at around 70% capacity, and require a period to reach full operational capacity and financial stability. This is achieved through KleuterZone’s marketing campaigns.

Dividend payments from the newer schools are delayed until the school achieves breakeven, which Bougas claims takes around six months.

Due to this waiting period, the projected returns from these schools are higher than the first option.

Bougas stated that they are between R4 800 and R5 200 per month per R100 000 invested, translating to returns of 57.6% to 62.4% per year.

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Investor concerns and reported experiences

In their interaction with Moneyweb, two investors have reported discrepancies between expected and actual payouts.

One investor informed Moneyweb that he had invested in an established school after he was assured he would receive R16 000 a month.

However, the actual payments over the first five months averaged only R6 000.

This particular investor had also invested in two newly established schools but had not received the expected dividends when the initial six-month breakeven period ended. The investor subsequently demanded a refund, which was paid a month later.

Moneyweb also engaged with several prospective investors who engaged Bougas about possible investments. They contacted Moneyweb to confirm whether such returns are sustainable.

They all claimed KleuterZone did not provide detailed financial information about the financial performance of the schools when they were offered investment opportunities.

They claimed Bougas preferred to interact telephonically and that interactions mostly related to the projected investment returns.

Bougas denied the claims and said KleuterZone provides investors with detailed information regarding the number of children attending the school, the total capacity, the quantum of school fees and the nature of monthly running expenses.

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Income and expenses

Following interactions with the prospective and existing investors, Moneyweb approached Bougas and requested financial information to assess whether KleuterZone’s schools could generate consistent annual returns of between 38.4% and 62.4%.

Bougas sent a press release to Moneyweb containing claimed averaged financial data from the first 10 schools operational since at least 2018. The high-level document stated that the schools had, on average, 85 learners each and that school fees were around R3 500 a month.

Apart from tuition fees, revenues were further boosted by around R85 000 a month through special fundraising events such as golf days, concerts and family events, and extra-curricular activities such as Giggel Goggas, Koskabouters, and Robotics.

The document also reflected three main expense categories. As expected, salaries are the most significant expense, averaging around R100 000 monthly. Average rent (R19 000) and general operating expenses such as groceries, electricity and maintenance (R20 000) were the only other apparent expenses.

After deductions for tax and a 15% administration fee, an amount of R120 300, or 31.5% of the total revenue, is available to distribute to investors.

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‘Returns easily achieved’ and aggressive marketing

Bougas claimed in the press release that the average financial performance of the 10 schools shows that “an average investor shall earn an average monthly return of approximately R24 055.40 on a new school, operating at full capacity”.

He added that the revenues are “easily achieved” due to KleuterZone’s “phenomenal marketing platform”.

He states that KleuterZone spent nearly R14 million on advertising on Facebook in 2024 and additional marketing on radio, magazines, newspapers, billboards and television.

The media release reveals that KleuterZone spent nearly R1.1 million on television advertisements in January 2024.

In addition to external marketing, KleuterZone also employs a team of 14 staff members responsible for hosting “open days” at schools to allow the public to interact with staff members. According to the release, this results in around 250 enrolments a week.

Another “fundraising” team is tasked to generate additional annual income of R500 000 per school by means of various projects, which Bougas describes as “easily obtainable”.

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Doornpoort KleuterZone

Due to the limited financial information in KleuterZone’s first response, Moneyweb approached Bougas again and requested detailed audited or reviewed financial statements.

Moneyweb proposed, due to the potential confidential nature of such information, that KleuterZone provide audited or reviewed statements to a well-known auditing firm under a non-disclosure agreement to conduct an assessment. The firm would then compile a report with an opinion on whether it can pay the marketed dividends.

KleuterZone did not make use of this offer.

Instead, Bougas sent Moneyweb unaudited and unreviewed management accounts of Pretoria-based KleuterZone Doornpoort. The management accounts covered a period of nine months, from March 2024 to December 2024.

Given KleuterZone’s claim of 120 schools, it is notable that Bougas provided unaudited management accounts for a newly acquired school and not audited or reviewed financial statements of an established and best-performing school.

Bougas stated in the accompanying email that the accounts had paid “good dividends” within four months.

“KleuterZone is committed to the highest level of professionalism and integrity in all our financial and operational functions.”

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Moneyweb analysed the management accounts and sent Bougas a detailed set of questions regarding solvency and liquidity.

Bougas responded through a lawyer, Frederick van Zyl of Van Zyl Scheepers. He requested a delay in the publication of an article to allow KleuterZone to “conduct an internal investigation based on your averments”.

After more than a week, Moneyweb approached Van Zyl and queried why no response had been forthcoming.

Moneyweb also informed him that Moneyweb would publish an article in due course and could not wait indefinitely for KleuterZone to complete an investigation. However, Moneyweb afforded KleuterZone another two-day extension to offer answers to the questions.

Van Zyl responded that the management accounts were supplied to Moneyweb under strict confidentiality conditions. He added that this is not limited to the actual information but also to any opinions Moneyweb may have formed based on its analysis of the information.

Moneyweb has decided not to publish any opinions until KleuterZone responds to the questions. However, more than two weeks after sending questions regarding KleuterZone Doornpoort’s liquidity, solvency and ability to pay investors, no answers have been forthcoming.

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‘Witbank Select’

A KleuterZone school in Witbank is of particular interest.

A prospective investor provided Moneyweb with a proposed investment contract KleuterZone sent to him after he expressed interest in investing. The agreement, signed by Bougas but not the proposed investor, offered the investor a 5% interest in the school for R500 000.

Bougas has, on several occasions, stated that each school is registered in its own private company and that investors acquire their shareholding directly in the company.

However, upon close inspection, the contract does not specify in which school the investor would actually invest.

The school’s name is listed only as “Witbank Select”; no company registration number is provided. The seller is indicated as KleuterZone Holdings.

Moneyweb could not find a Companies and Intellectual Property Commission (CIPC) company registration for a company called Witbank Select on Windeed.

KleuterZone has one school in Witbank, KleuterZone Witbank, but in response to questions, Van Zyl denied that it was the entity the contract related to. He stated that: “Select schools are usually well-established institutions, they retain their unique names upon acquisition, whether through transfer to a new entity or the purchase of the existing entity.”

However, Van Zyl did not disclose the name of the Witbank Select holding company or explain why the name was not listed in the proposed contract.

* Moneyweb invites any KleuterZone investor to contact us. All information will remain strictly confidential. Email Ryk van Niekerk or Liesl Peyper.

This article was republished from Moneyweb. Read the original here.