NOVA English Teaching Corporation Faces Suspension!
The Ministry of Economy, Trade and Industry is set to order Nova Corp., Japan’s largest English-language school operator, to suspend part of its business for six months for having violated the law governing the industry, ministry sources said Wednesday.
Nova was found to have lied to consumers about its services when it was soliciting them to become its students, the sources said.
What does this mean for the future of NOVA? Ken Worsley of Trans-Pacific Radio suggests that they are horribly screwed:
If METI shuts down their sales division, I can’t see NOVA surviving for over 30 days without suddenly selling off a huge amount of their assets (which might make for a dirty, nasty bankruptcy settlement when some of that cash starts walking). If NOVA’s owners had an ace up their sleeve, they would have pulled it out over the last week. They didn’t pull it because they don’t have one.
If you think NOVA teachers live paycheck to paycheck, you should see the state of the company’s finances. It’s share price continues to clide into oblivion (click the chart on the right to view a full-size version), and sales and profit continue to dive while expenditures on paying off interest/servicing debt have nearly tripled in the past two years.
If you’re currently working for NOVA, I suggest that you start looking for another teaching job immediately.
Update 1: Interested in seeing NOVA’s current stock price? Check this link or this link (via LeonJP).
Update 2: Liberal Japan has pointed out that the Yomiuri Shinbun is reporting that NOVA is having its ability to make long term contracts suspended.
Update 3: The Asahi Shinbun offers some more details on the penalty:
Nova will be banned from soliciting, accepting or finalizing new contracts for long-term courses that last for over a year, the sources said.
The suspension order will not affect those who have already signed up for lessons, meaning that Nova’s more than 400,000 students can continue taking classes.
Still, the order could deal a serious blow to Nova’s operations because most of its contracts are for periods that exceed a year.
And an example of how NOVA ripped off its customers:
The company told potential students they would be able to book lessons for the times of their choice, but some of those time slots were, in fact, difficult to reserve, the sources said.
In addition, the ministry apparently concluded that Nova’s refund rules violated the law, which bans companies from unfairly refusing or delaying refund payments, sources said.
Under Nova’s system, students buy “points” in advance to pay for their lessons. The larger number of points they buy in bulk, the smaller the per-class fee.
But when students stopped midway through the course on grounds they could not make reservations as smoothly as promised, Nova calculated the points already used at a higher value, thereby slashing the refund for the remaining points.
Nova also acted in violation of a law that allows customers to cancel contracts within 8 days of signing them:
At Nova, potential students first register their name, address and other data before finalizing their contracts. An official application to the school is made several days later, after the details of the contract are decided upon.
However, Nova told students who wanted to quit that they could not use the cooling-off system, claiming that the day students registered their data was the first day of the contract, the sources said.
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The Yomiuri has reported that the part of the business being suspended is Nova’s ability to make long term contracts. And I believe all or part of their ability to solicit for new customers. That would be for six months.
I have posted the link to the Yomiuri at my blog. I am afraid to post it here because messages with links often get sucked into the spam filter.
I would also recommend looking for a new job, however, I would not follow Ken’s advice and not show up for work tomorrow. Although Nova going belly up almost immediately is possible, so are many other different things. For example, Nova might be able to sell it’s business … or they might muddle through somehow.
So yes, look for anew job, but keep working till you find it.
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You know, I hate the big three. But at the same time, it’s a pity that so many employees are going to lose their jobs, and so many students are going to lose a lot of money.
Of course, that means my non-profit school will get more students, which means I’ll get more hours.
I’m torn. Sorry Nova teachers.
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I’d be surprised if Nova were actually forced to do anything which put them out of business. It’s not the Japanese way to do something wholesale that puts a large company out of commission. My guess is that something will be negotiated to allow them to keep going and that a significant “slap on the wrist” will be the ultimate outcome and Nova may have to clean up its act quite a bit in terms of the way in which they attempt to sucker students into buying a huge wad of lesson tickets upfront.
I could be wrong, of course. Much as I dislike Nova, I wouldn’t be pleased to see them closed down entirely as it’d be disastrous for a lot of employees, particularly the Japanese ones who have built careers in the company.
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I don’t think that the suspended sales rights will directly kill Nova, but I do think that the loss in sales will. No one wants to give money to a company who has been proven by the government to have cheated its customers wholesale for years.
And I think this might actually be a good thing. A lot of people would lose jobs, yes, but it might clean up the English teaching world a bit. If only Nova, Geos, Interac, Aeon, and the others had been forced to follow some soft of educational standard this wouldn’t have happened.
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I totally want a job there! Then again, I’d take any job I could get teaching English in Japan…
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Good riddance, I say!
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Now would be a good time for NOVA employees to update their resume.
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More than anything else, I feel sorry for the sales staff. Working primarily on commission, they’re the ones who are going to be the most immediately hosed by the freeze on long-term contracts. First the company had the gall to apologize to students for the possibly-inadequate work that their sales people might have done earlier this year, and now they might be looking at living on peanuts for six months? Most of the sales folks I worked with in my time at Nova were fantastic people, and I hope the ones who still work there have something (better) to fall back on.
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Everyone at the bottom of the chain, and the students, will get the rough end of the stick. Ive always felt sorry for the staff…. long hours, low pay, pushed to do hard sells for very little incentive. Ive got no sympathy for many of the teachers, or instructors rather. Most of them are in Japan itinerantly anyway, so they can go on to whatever the next job is, wherever it might be. The few who actually love teaching, well, hopefully they wont have too difficult a time finding new jobs.
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I’d be more worried about the arrangements NOVA has with the different apartments and rental houses they use to house teachers – who knows if these properties will expect the company or the individual to finish out the lease, regarding of whether the company may be standing or not.
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There’s some new info on this. As I read it, the government is cutting off some kind of student assistance program. Not sure if I am reading that right or not. I’ve posted the info at my blog.
It was on the front page of the Asahi this morning.
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So, for all of those who do still work for the company, how did you feel when your salary wasn’t in your account first thing in the morning on payday last week? I wonder if that has any connection to all of the recent news…
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Dont feel sorry for staff and students !
The best thing that could have happened to Nova staff and teachers. there is life outside a company like Nova and im sure for those teachers who remain in Japan, they will find that there are opportunities for a decent salary, holidays and a good working environment in many other companies. Also students can find, if they are willing professional schools with qualified instructors !! I worked for a similar company who treated their staff like pond life and i have had 2 jobs since that time five years ago and what an eye opener ! the thought that i spent all that time slaving away for incompetent bosses and low pay ! by the way the company i worked for begins with S and ends in e . 5 letters ? big fat bastard boss ? maybe the Japanese government will investigate them too and bring about positive changes for teachers, Japanese staff and students. Lets face it these kind of companies would never have a licence to operate the way they do in a European union country. why do they get away with it in a democratic system like Japan !
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you smell me?
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My nephew went to Japan because he thinks it is a great and beautiful country and teaching will give him an inside view of all the marvellous things written and shown in books, movies, and cartoons (his favourites from early childhood).
Will Japan allow Nova to destroy his dreams?
How will Japan react as a host to its guests?
Being a mother myself, my heart goes out to my sister that thinks her son was cheated.
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