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  "docSlug": "0900eea60013",
  "documentTitle": "New Oriental Education & Technology Group (EDU)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2012-07-18 00:00:00",
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  "notes": "Includes direct quotes from franchise sources and specific financial terms (RMB 600k-1M license fees, RMB 80k training fees, RMB 100k deposit).",
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      "kind": "callout",
      "text": "EDU’s franchising terms seem designed to perpetuate the EDU myth by maximizing store base growth to justify breakneck reported revenue and profit growth.",
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      "kind": "list",
      "text": "The franchisee is responsible for capital expenditures, operating expenses, and staffing. This sharply calls into question the reported $49.1 million in capital expenditures...",
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      "kind": "list",
      "text": "The franchisee owns all of the tangible assets and is responsible for the liabilities of the business. Obviously, EDU does not own these stores.",
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      "kind": "list",
      "text": "The franchisee has the exclusive rights to own and operate POP Kids in a given city...",
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      "text": "The franchisee pays EDU several types of upfront fees and a security deposit. These fees are charged on a per-city basis...",
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      "kind": "list",
      "text": "The franchisee has rights to use the POP Kids and New Oriental trademarks subject to restrictions. Mr. Hsieh has talked about not franchising in order to protect EDU's brand.",
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      "text": "We viewed a POP Kids franchise agreement. EDU's franchising terms seem designed to perpetuate the EDU myth by maximizing store base growth to justify breakneck reported revenue and profit growth.",
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      "kind": "quote",
      "text": "“...This certainly is the difference between joining a franchise and building your own business. This part will grow and develop into a system...” — Unattributed source in franchise agreement",
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      "kind": "title",
      "text": "Material Franchise Terms",
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