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How to Start a Daycare Franchise in 2022 | The Ultimate Guide

Here's everything you need to know about starting a daycare franchise. Use the tips in this guide to help you decide if a franchise is right for you!

How to Start a Daycare Franchise | The Ultimate Guide

The Ultimate Guide to Starting a Daycare Franchise

Daycares play a crucial role in early childhood education and society. They equip children with essential skills like social-emotional and communication skills, sensory skills, pre-literacy, and basic mathematical skills. A Zippia study reveals the childcare industry in the United States (US) the U.S is currently valued at $54 billion. The study also shows that Americans with children spend at least 10% of their income on childcare.

Starting a daycare franchise is a convenient and less daunting way to step into the daycare industry since you don't have to start from scratch. It’s also less risky, especially when you join a franchise with an established brand. 

The best part is that some franchisors offer training, marketing, and business operation support so you won't incur most of the usual business costs.

But, franchising comes with a different set of challenges. If you’re considering joining a franchise, you need the right information to determine if franchising is the right fit for your childcare business. We’ve put together this guide to point you in the right direction. So, let’s get to it!

What is a daycare franchise?

A  franchise is a legal agreement between a company and an individual who wants to establish a business using the company’s brand, trademark, or business systems. 

McDonald’s is a great example of a franchise: individuals may own and manage a McDonald’s location, but McDonald’s owns the branding and helps to streamline each business so that it meets McDonald’s standards.

In the child care industry, franchises are a common business model. There are two parties to a daycare franchise - the franchisor and the franchisee. 

  • The franchisor is the daycare company that provides its services, brand, and business operating systems to the franchisee. 
  • The franchisee is the individual that starts the daycare with the franchisor’s brand. Franchisees often utilize support, business operations, and training from the franchisor.
 

Note: the term “‘franchise” legally refers to the contractual obligation between the brand and franchisee but is also commonly understood as the business using the brand.

Top 9 best child care franchise opportunities  

Franchise Name

Year Founded

Initial franchise Fee

Royalty Fee

1. Goddard Schools

1986

$135,000

7% and 4% Ad royalty fee

2. Creative World School

1970

$60,000

5-7%

3. Children’s Lighthouse

1996

$75,000

7% and a monthly and 0.5% advertising fee 

4. Primrose School

1982

$80,000

7% with a 2% ad royalty fee

5. Discovery Point

1986

$75,000

$4.7K-$6.5K/mo. and $1.9K/mo ad fees.

6. Kiddie Academy

1981

135,000

7% and a 2% brand-building fee

7. KLA Schools

2008

$78,500

6% and a 1.5% advertising fee

8. KidsPark

1988

$28,000

5% with a $250 per month advertising fee

9. LeafSpring Schools

1988

$87,500

6%

What to expect when buying into a daycare franchise 

Buying into a daycare franchise makes you a franchisee. You’ll be starting a branch of a child care company, using that company’s brand, training, and business operating systems. 

While the details of every franchise agreement are different, you can expect support from your franchisor as you create your branch of the daycare and work to meet their standards and practices appropriately.

Besides financial and business acumen mastery, you should possess other relevant skills varyand certifications to run a successful daycare franchise business. Certification requirements vary from state to state. For example, we’ll show you how to get one in Massachusetts.

Management skills are instrumental in running a daycare franchise business. A college degree in management can help you manage your responsibilities, but it’s not required. . Empathy, patience, and customer service skills are crucial for this type of business. Remember, you’re dealing with children at different stages of development. It’s important to handle them with care and grace.

More importantly, you should hire staff experienced in caring for children. According to Southern New Hampshire University, the best teacher is a good communicator, listens well, values collaboration, and is patient and empathetic. Also, they should be qualified to comply with your state regulations.

Lastly, customer service skills come in handy since you’ll be interacting with many parents. These skills empower you to resolve conflicts and can help you acquire more clients for your business.

How to get a daycare license  

We want to share with you the process for getting a license. This process will vary from state to state, but we will use the state of Massachusetts as an example. Check your state’s licensing agency for more information. 

To start a daycare facility in Massachusetts,  you have to comply with the Massachusetts Dept. of Early Education & Care (EEC) regulations to get a daycare license. 

Below is a step-by-step guide on how to get your Massachusetts daycare license:

children in daycare

Source

1. Attend online provider meetings. 

PPM 1 and PPM 2 are two crucial online meetings you should attend to familiarize yourself with EEC regulations and course requirements.

The first meeting is hosted on EEC online learning site StrongStart. Sign up for an account on StrongStart to attend the two-hour on-demand class and to prepare for the online training course. 

  • The second meeting (PPM2)  is conducted live on Zoom and hosted by

regional offices. Here’s how to contact your EEC regional office.

2. Complete online training courses.

There are 13 on-demand online training courses you must complete. They include;

  • Safe Sleeping Practices
  • Medication Administration – “The 5 Rights”
  • Transportation Safety – “Look Before You Lock”
  • Childhood Nutrition
  • Physical Premises Safety
  • First Aid and CPR
  • Child Growth and Development
  • Hazardous Materials
  • Neglect and Abuse
  • Emergency Response
  • Infectious Disease and Immunizations
  • Shaken Baby Syndrome
  • Food Related Risk and Response

3. Take a physical exam.

You’re required to pass a physical exam. Start by scheduling an appointment with a physician. Your physician will complete an EEC form that you’ll submit later. 

4. Proof of professional experience.

You need a minimum of one year of child care experience to get the license. If you’re a parent or you’ve professionally worked with children, you can include these experiences in your application. 

5. Register for Professional Qualifications Registry (PQR).

The EEC requires daycare providers to complete 10 hours of training annually. They use the PQR to track continuing education credits, so it’s crucial to sign up as soon as you can. 

6. Pass a pre-licensing inspection.

A licensor will visit your daycare facility for a pre-licensing inspection after you submit an application to the EEC. They’ll ensure your daycare facility is safe and ready for operations.

7. Pass background checks for Criminal Offender Record Information (CORI), Sex Offender Registry Information (SORI), and provide fingerprints.

You’re required to pass a background check evaluation. You’ll complete three forms for CORI, and SORI, and provide fingerprints. The ECC will provide information on how to complete and pass background checks after submitting your application.

The cost of buying into a daycare franchise 

Depending on the franchise agreement you buy into, there can be extra costs associated, including:

1. An initial franchise fee 

The franchise fee is a one-time payment that covers the costs of joining the franchise. These fees can start at  $10,000. 

2. Legal & accounting fees 

There are also legal and accounting fees that cater to the Franchise Disclosure Document (FDD), given to individuals interested in opening a franchise. 

It discloses information about the franchisor, fees, and the franchise agreement. Legal fees will vary, but you can expect to set aside at least $2000-$5000 for this.

3. Startup costs 

The franchisor may require you to have a specific type of sign, furniture, and inventory to open a franchise.

4. Royalty payments 

Along with initial startup costs, you’ll have to pay continuous royalty payments to the franchisor for using their branding. These are often percentage fees of your weekly or monthly income that range between 5-10%. 

These fees add up to the initial investment required to open your child care facility. Most franchises will have an initial investment minimum to ensure you can cover the costs of starting your daycare. 

The initial investment minimum will vary depending on if you’re leasing a franchise or purchasing a franchise.

Don't forget to consider all the startup costs that aren't associated with the franchisor but are an important investment in your business. This includes;

  • Real estate or rent
  • Licensing fees
  • Inspections
  • Daycare supplies
  • Anything else you need to purchase to prepare your center to open safely and successfully

Advantages and disadvantages of daycare franchises 

Any business venture involves some investment and level of risk. Some business owners prefer the stability and support that comes with franchising instead of striking out entirely on their own.  

However, franchise opportunities often involve a level of accountability and compliance with the franchisor's brand that doesn't appeal to more independent-minded business owners.  

We've outlined the pros and cons below to help you decide if buying into a daycare franchise is right for you. 

Advantages of joining a childcare franchise 

  • Instant name and brand recognition: When you start a franchise with an established brand name, you’ll immediately have a loyal customer base. This makes starting a franchise much less risky than starting a business from scratch.
  • A higher level of trust: Along with brand recognition, potential customers who have heard of the daycare company’s brand will have more trust in your business. 
  • Marketing support: Sometimes, the franchisor will have marketing materials and support for national and local campaigns, helping you bring customers to your child care center. 
  • Business operations support: While each franchising agreement will be different, more often than not, franchisors will support you with your business operations. They’ll let you in on trade secrets and internal business practices that work best with their brand to help establish your child care center. Remember that your success is also their success, so they want to see you do well!
  • Training: Some child care franchisors will give you access to staff and management training that aligns with their brand.

Disadvantages of joining a daycare franchise 

  • Cost: The initial franchise fee, legal fees, real estate fees, and other startup costs can be anywhere from tens of thousands to hundreds of thousands of dollars, making the initial investment of franchises much more expensive to start than other businesses. 
  • Royalty fees: You’ll have to factor weekly or monthly royalty fees into your budgets, as your income is divided between you and the franchisor. 
  • Less flexibility: Some franchisors have strict requirements and regulations for how you run your business, suppressing the amount of creativity and ownership you have over the day-to-day practices of your child care center.
  • Success is tied to the franchisor: Your business is tied to the franchisor, so you’ll want to ensure that the franchisor you choose has a good reputation and future plans.

What to look for before joining a daycare franchise 

Before buying into a daycare franchise, you should have a set of requirements to look for to ensure that you’re choosing the right franchise for you. 

Taking your time and doing your research upfront can save you from financial and legal headaches in the future. 

Make sure to evaluate multiple options, and don't commit to the first franchise opportunity that comes along until you're certain it's a great fit for your finances and your early education vision!

Children sitting at classroom table with teacher in daycare

Source

1. Cost of starting and running a daycare franchise 

Consider how much money you can put toward the initial investment. While you can and should be able to take out a loan, you want to ensure that you can provide part of the investment yourself.

2. Competitors in your surrounding areas 

You should keep track of different childcare centers and daycare franchises in your vicinity to see where there’s room to stand out. 

For example, if all childcare centers nearby offer a specific learning philosophy, you might want to explore franchising with a company that has a different philosophy. You could also look at potential differentiators such as price, classroom size, and quality of teaching. 

3. Recommendations and reviews 

Because your success is tied to the franchisor’s, you should research how the franchisor is regarded. While you should definitely look out for the strengths of the franchisor, also make sure to look out for weaknesses. Good reviews and plenty of recommendations for the franchisor are signs that the franchisor is well regarded. 

4. The franchisor’s growth 

You don’t want to invest in a company that isn’t likely to stay around, so you’ll also want to look for a franchisor that is consistently expanding its services or locations.

5. Contractual obligations 

Different franchises will have varying contractual obligations. Make sure to look out for how long the franchise agreement lasts and the conditions through which you can sell the franchise. Most franchise agreements last 10-20 years.

6. Level of flexibility and creativity 

Certain franchises will have strict rules for operating. You should look for a franchise that offers the level of flexibility you’re looking for. 

There can be parameters set for hours of operation, staff wages, software systems, and more. Ensure that you’re aligned with the franchisor before signing the franchise agreement. 

Child care franchise opportunities

To help provide you with some direction when looking for a daycare franchise, we’ve listed some of the biggest childcare franchise opportunities in the United States. 

These franchises are all well-regarded and are great starting points when first looking into which franchise you’d like to join. 

When determining which franchise is right for you, you should evaluate all of the options available in your area to find the best one for you.

1. The Goddard School

  • Founded: 1986
  • Initial Franchise Fee: $135,000
  • Royalty Fee: 7% and 4% Ad royalty fee
  • Daycare Centers: 575
  • Headquarters: King of Prussia, Pennsylvania.

The Goddard School provides both childcare and early childhood education for young children from six weeks to six years of age. Their philosophy stresses the importance of different learning styles for each child and learning outside the box. 

Goddard empowers teachers to adapt their teaching styles and lesson plans with their F.L.EX (fun learning experience) framework.

  1. 2. Creative World School 

  • Founded: 1970
  • Initial Franchise Fee: $60,000
  • Royalty Fee: 5-7% 
  • Daycare Centers: 23
  • Headquarters: Bonita Springs, FL

Curiosity is at the core of Creative World School. Educators teach children by encouraging questioning and thinking to inspire learning. 

Creative World School puts child-directed exploration at the heart of its learning curriculum and aims to supply open-ended materials for children to explore.

3. Children’s Lighthouse

  • Founded: 1996
  • Initial Franchise Fee: $75,000
  • Royalty Fee: 7% and a monthly 0.5% advertising fee 
  • Daycare Centers: 80+
  • Headquarters: Fort Worth, Texas

Children’s Lighthouse provides early childhood education and emphasizes learning with character values through their C.A.R.E.S curriculum. 

They aim to teach children to be people with values, to foster strong relationships, and to have high emotional intelligence throughout their lessons. Each month, lessons are centered around a specific trait, such as integrity or honesty.

4. Primrose School

  • Founded: 1982
  • Initial Franchise Fee: $80,000
  • Royalty Fee: 7% with a 2% ad royalty fee. 
  • Daycare Centers: 465+
  • Headquarters: Atlanta, Georgia

The Primrose School aims to instill a love for learning in infants through kindergarteners. Their balanced learning approach supports curiosity, creativity, confidence, and compassion through a curriculum that blends the early learning philosophies of Piaget, Montessori, Gesell, and Vygotsky.

Colorful playground equipment at daycare

Source

5. Discovery Point

  • Founded: 1986
  • Initial Franchise Fee: $75,000
  • Royalty Fee: $4.7K-$6.5K/mo. and $1.9K/mo ad fees.
  • Daycare Centers: 47
  • Headquarters: Florida

Discovery Point aims to nurture creative thinking and problem-solving in infants through school-aged children. They implement a research-based curriculum and child-centered approach in their child care facilities, ensuring that each child has the tools needed for the rest of their academic careers.

6. Kiddie Academy

  • Founded: 1981
  • Initial Franchise Fee: 135,000
  • Royalty Fee: 7% and a 2% brand-building fee 
  • Daycare Centers: 280
  • Headquarters: Abingdon, Maryland

Kiddie Academy cares for children between six weeks and twelve years of age. Educators bring out what makes each child unique and foster their talents and interests at their own pace. Exploration and preparation for future learning opportunities are core elements of Kiddie Academy’s learning philosophy.

7. KLA Schools

  • Founded: 2008
  • Initial Franchise Fee: $78,500
  • Royalty Fee: 6% and a 1.5% advertising fee 
  • Daycare Centers: 25
  • Headquarters: Miami, Florida

KLA schools are aligned with the Reggio Emilia approach to early childhood education, focusing on hands-on learning, discovery through sensory play, and independence. KLA encourages child-directed learning and for educators to learn alongside the children.

8. KidsPark

  • Founded: 1988
  • Initial Franchise Fee: $28,000
  • Royalty Fee: 5% with a $250 per month advertising fee 
  • Daycare Centers: 22
  • Headquarters: San Jose, California

KidsPark focuses on providing drop-in childcare and afterschool programs for children between 2 and 12 years old. They offer hourly, daily, evening, and weekend childcare for parents. KidsPark mixes child-initiated and teacher-led activities to foster lifelong skills in the children they care for.

9. LeafSpring Schools

  • Founded: 1988
  • Initial Franchise Fee: $87,500
  • Royalty Fee: 6% 
  • Daycare Centers: 13
  • Headquarters: Glen Allen, VA

Formerly known as Rainbow Station, LeafSpring Schools provides care and early childhood education for infants from six weeks of age through kindergarteners. They also offer after-school programs for children. 

They focus on building a community, celebrating diversity, and fostering their children's innovation, creativity, integrity, and leadership.

Daycare franchise frequently asked questions 

1. Is daycare a good business to start?

Starting a daycare business is an excellent opportunity to help children acquire crucial skills like social-emotional and communication skills. According to a Yahoo report, the global daycare industry is anticipated to grow to $295.99 billion in 2022 and $415.96 billion in 2026. This is based on a 9% compound annual growth rate (CAGR). 

2. What is the profit margin for daycares?

According to a Bloomberg article, most daycares make an average profit margin of 1%.

3. What is the most popular daycare?

The most popular daycare worldwide is KinderCare Education LLC, with over 1,300 locations. Next on the list are Bright Horizons Family Solutions with over 1000 locations, Learning Care Group with over 900 locations, Goodstart Early Learning with over 644 locations, and Primrose schools with over 465 locations.

Other popular daycares include KU Children’s Services, LeafSpring Schools, Goddard Schools, Creative World Schools, and Children’s Lighthouse. Discovery Point, Kiddie Academy, and KLA Schools.

Swings and sandbox at a daycare center Source

4. Do you need a degree to open a daycare?

You don’t need a degree to open a daycare if you’re the founder or owner. But, a  degree in early childhood or education is crucial if you’re doubling as the daycare’s director. Plus, all daycare staff must fulfill the minimum requirements according to state regulations.

Bottom line 

If franchising doesn’t seem like a great fit with your childcare center goals, we have plenty of resources to help you determine if opening your own childcare center is a better option. 

Check out our comprehensive guide to starting a childcare center or our list of daycare names to inspire you. No matter which option you choose, we’re so excited for your first steps into directing your own childcare center. Best wishes for the journey ahead!

 


Brightwheel is the complete solution for early education providers, enabling you to streamline your center’s operations and build a stand-out reputation. Brightwheel connects the most critical aspects of running your center—including sign in and out, parent communications, tuition billing, and licensing and compliance—in one easy-to-use tool, along with providing best-in-class customer support and coaching. Brightwheel is trusted by thousands of early education centers and millions of parents. Learn more at mybrightwheel.com.

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