With so many working parents, the demand for daycare is increasing. Childcare industry growth trends reveal that the global market is expected to reach $404.46 billion by 2034, making starting a daycare center a potentially lucrative career move.
There are various options for getting started, but a daycare franchise may be your best bet. A franchise offers an established name that will draw people to your facility. The organization also provides resources to help make your business successful.
Although a franchise may provide extra support, launching a new business is always challenging. This article reviews the advantages and pitfalls, providing all you need to start your franchise journey.
Table of Contents
Franchise organizations can offer support, but you will be even more prepared with our 100+ Templates, Marketing Guide, Automation Tips & Checklists. Fill out the online form to access our resources.
A daycare franchise involves a potential business owner paying a fee and royalties to use a well-established business's branding, name and operational system to launch their facility. The franchisor offers training, support, marketing materials and guidance on how to run a successful daycare to ensure the company's success.
Before you begin, remember that daycare must not be confused with preschool. A daycare facility is specifically set up for working parents of young children who need someone to watch them while they work. Preschool gets children ready for kindergarten.
Franchisors and franchisees typically have a contract or several contracts outlining the company's operations. Here are some typical clauses:
Business structures for franchises can vary, but the business format franchising structure is the only one that applies in a daycare setting. It involves the franchise providing a complete daycare business model for the franchisee. Other structures, such as product distribution and manufacturing franchising, are suitable for companies that sell products.
The internet is an excellent source of information, but it may also promote misconceptions about daycare franchises. This section separates fact from fiction.
Myth 1: Daycare Franchises Don't Encourage Creativity
Truth: Franchisors outline rules and regulations that must be followed, and some franchisees may feel these standards will limit the franchisee’s vision. However, they are encouraged to get creative while following their parent company’s roadmap.
Myth 2: Daycare Franchising Equals Guaranteed Success
Truth: Franchise owners benefit from the parent company's branding and guidelines. However, there is no guarantee of success. The owner must put in a lot of hard work to establish a profitable, reputable franchise.
Myth 3: You Don't Need Industry Experience to Be Successful
Truth: Although franchisors provide extensive guidance, a franchisee with industry insights will have greater chances of success. Additionally, some franchises will not enter an agreement with inexperienced parties.
Myth 4: You Should Choose the Most Well-Known Brand
Industry recognition can be beneficial, but consider other factors, like costs, operating hours and staffing requirements. Ultimately, you must look for the best daycare business models to suit your professional goals.
Childcare franchise opportunities offer undeniable benefits to new business owners, which should be considered when comparing a franchise vs. independent daycare. Here are some to think about.
Statistics show that 59% of consumers prefer brands they are familiar with. Therefore, marketing materials from a reputable, well-known brand can help you attract more families, potentially increasing signups.
Franchises have a proven business model and offer these types of practical support for childcare industry growth trends:
The support that franchisors offer is part of the reason why the survival rate for new businesses is about 6.3% higher than that of independent companies.
Navigating licensing requirements for daycare franchises can be complicated. One wrong move can lead to fines and penalties. A franchisor will guide you, ensuring you get the licensing you require and overseeing compliance regulations to limit the risk of penalties in other aspects of business. Some will even work with local authorities to expedite the process.
When comparing franchising vs. independent daycare, independent startups face their fair share of risks in licensing and compliance. Without guidance, they are also likely to make errors in training and operations. They may also lose money in marketing.
A franchisor shows franchisees how to run a successful daycare, minimizing these risks and leading to higher success rates. An Investopedia report reveals that 50% of independent startups fail in the first five years, compared to 4% of franchised companies, establishing lower risks in these business models.
Although childcare franchise opportunities can be beneficial, starting a daycare franchise can have its downsides. Here are some to consider.
Investing in a preschool franchise is often more expensive than starting a company from scratch. Although these investments typically pay for themselves, even considering lower risks, they can exceed many business owners' budgets. Here are the fees normally involved.
Startup expenses can add up. However, some franchisees may get breaks on the cost of daycare franchises, as some parent companies may get volume discounts on supplies, materials and insurance.
Franchisees have freedom in how they run their business. However, the parent company will require them to follow rules and regulations that can limit flexibility and creativity. Franchise owners are restricted from doing anything that may impact the brand image.
Franchisors earn money from franchisees through fees and profit sharing:
Have you decided a daycare franchise is right for you? Here are some tips that will help you get started.
First, choose the right childcare franchise opportunity based on the several factors:
Next, you must meet franchise requirements, including:
A daycare franchise is a significant expense. You can use these strategies to secure funding:
The next step involves finding the ideal location for your daycare facility. Here are some things to keep in mind:
Any daycare facility owner knows how essential teamwork is in any industry setting. That's why selecting the right staff is so important. Your staff will significantly impact your facility and customer satisfaction rates.
Post ads on the appropriate job websites to find the right team members. Here are some things to keep in mind during the hiring process:
The best daycare business models should provide the best tuition payment solutions for daycare and financial operations. These include billing and collecting payments, considering payment splits, fees and subsidies. Financial teams must also provide accurate reporting to present to their parent companies.
Managing finances can be challenging, but Vanco's childcare payment solutions can help. Our automated tools are accessible from anywhere and minimize common errors. They can handle all types of payment plans. The paperless system ensures you will never lose a document, and robust data security keeps sensitive information safe.
So, which organizations offer the best daycare franchise opportunities? Here's a list of some top choices.
Goddard is backed by over 35 years of experience in the daycare industry. The school is recognized as a top childcare franchise in the United States and has a proven business model that inspires family trust. They offer comprehensive training, support and guidance from seasoned professionals.
Franchisees can take advantage of operational support as franchise consultants make in-person visits to the school to assist in implementing high operational standards. The Standards team ensures a healthy and safe learning environment. Their Digital Marketing and Communications teams handle marketing to drive enrollment.
Getting started includes an initial conversation, reviewing the Franchise Disclosure Agreement (FDD), completing an application to share information about your history, and attending a virtual discovery day. Once approved, you can begin your ownership journey.
Primrose Schools offer more than 40 years of experience. They provide guidance through training, tools and resources. Their award-winning business model helps drive enrollments. As the daycare brand with the lowest SBA loan failure, you can feel confident in your success.
Primrose provides a comprehensive support system with over 150 hours of training provided by business and marketing experts. Franchisees can also gain insight from real estate, marketing, education, operations and finance specialists to improve their schools continually.
The path to opening the school includes scheduling a meeting, studying the FDD, getting financials together and conducting background checks. After approval, you may choose your location and begin classroom training.
The Learning Experience is one of the fastest-growing franchises in the country. The company has high success rates, with 45% of its franchisees owning two or more centers. They have a 4-star franchisee satisfaction rating year after year.
Franchisees get full support every step of the way. The organization guides you through construction, works with you on staffing, provides training and financial planning and provides a highly-trained operating team and high-level technology to ensure success.
Getting started involves contacting their team about your daycare franchise opportunities, then you apply, review the FDD, train and prepare to open your location.
Lightbridge Academy was established in 1997 and began its franchise system in 2011. It has refined its process to become an award-winning organization in the franchise space. The school focuses on a Circle of Care that embraces teachers, students and families.
Franchisees benefit from comprehensive support. The operations team provides the tools you need to build a thriving business. They also offer a week of virtual and in-person training so you learn everything you need to know.
The franchise process is simple. Submit an online form to schedule a meeting with a team member. Review the FDD and schedule a meeting to learn more about the company. If everything goes well, you will be approved and work with the team to find the ideal site.
Kiddie Academy brings over 40 years of experience to the table. The organization has grown with hundreds of franchisees. They offer comprehensive guidance on your daycare journey.
The organization offers construction, training, marketing, technology and ongoing support. They provide guidance in site selection, financing and construction. The team also helps franchisees grow with multi-unit opportunities.
They offer a simple process for ownership. Connect with their team, learn about their approach, attend orientation day, launch your academy and prepare for the grand opening.
These schools are impressive, ranking as the best daycare franchises in the country. But what can you expect regarding return on investment (ROI)? The following sections provide financial information to help you determine profit margins in daycare businesses.
The Goddard School offers an average annual EBITDA (earnings before interest, taxes, depreciation and amortization) of $498,015. The cost of daycare franchises varies by location within these ranges:
The cost of running a school varies depending on whether it is leased or purchased or whether you choose a site-first option, which involves build-to-suit development after the franchise agreement is in place.
Annual average EBITDA rates are about $393,000.
Opening a Learning Experience center requires a franchise fee of $60,000 and a total investment between $589,419 and $5,225,419. Annual EBITDA is about $306,000.
Franchisees who work with Lightbridge Academy can expect to pay these fees:
Annual EBITDA is $306,000.
The initial investment to start a franchise is:
Average annual EBITDA is $145,500.
Like any business, daycare owners must comply with legal and licensing requirements, which may be relatively strict, considering they are responsible for the care of children. Here are some requirements to be aware of.
Childcare facilities may have additional legal obligations such as:
Licensing requirements for daycare franchises vary from state to state. However, centers generally need a child care center (CCC) license (CCC) for commercial facilities or a family child care home (FCCH) license for home-based facilities. They may also be required to obtain an additional business license for the city or county.
Daycare centers must also purchase liability insurance, although requirements vary by state. These types of insurance may be helpful in a daycare setting:
Getting your daycare center off the ground is the first step. Once it’s established, you should look at proven parent engagement strategies for childcare businesses to market it and increase enrollment and generate revenue. Various marketing strategies will help you reach your goal.
Regarding marketing, franchisees have an advantage because they can use their corporate brand attributes to attract clients. Families will already be familiar with the brand name, making them more likely to trust your organization and sign up. However, franchisees must leverage this branding to support childcare industry growth trends.
Here are some ways you can make the most of what's available:
Daycare center franchisees should create parent engagement strategies for childcare businesses to attract families who may enroll in their program. There are several ways to make connections:
Digital marketing is a strategy that can't be ignored in your marketing efforts. Statistics show that Google, which is strongly connected to digital marketing, helps 34% of preschool families discover new schools. However, review sites and word of mouth are also helpful, accounting for 22% and 21% of new enrollment prospects.
Here are some ways you can attract enrollment through digital marketing:
Read our article, 21 Daycare Advertising Ideas That Work in 2025, for more inspiration.
Franchisees get a lot of assistance from their parent companies, but running a business is never easy. Vanco offers support with several tools.
Handling billing and tuition payment solutions for daycare can be tough. Parents may require specialized billing due to payment splits and subsidies. Finances must be handled accurately, as franchisors typically want regular reports to assess profit margins in daycare businesses.
Vanco helps with an all-in-one childcare platform and billing tools, specialized to handle various billing needs, including split payments, fees and subsidies. The next-level security protects sensitive information.
Finances are just one part of managing franchise operations. Childcare franchisees and their staff must handle additional tasks like tracking leads, building waitlists and creating financial reports. Our childcare management platform handles those tasks, plus white-glove service and support. It takes administrative stress off your shoulders so you can focus on developing your curriculum.
Watch this video to learn how it helped one client improve her childcare services.
Daycare franchise startup costs vary depending on where you open your franchise and whether you lease or own the facility. They generally range from $100,000 to $5,000,000. These expenses typically include support from the franchise company, such as assistance with training, marketing, branding and managing franchise operations. However, you may incur additional supplies and equipment costs.
According to the internet, the best daycare franchise opportunities to invest in include Goddard School, Primrose Schools, Kiddie Academy, The Learning Experience and Lightbridge Academy. These schools have excellent reputations that will encourage sign-ups, have been recognized as reputable franchisors and offer extensive support for franchisees. However, you should research which organization is appropriate for you.
Your decision should be based on fees, brand reputation, territory rights and organizational structure. Consider all options to ensure you make the right decision.
When comparing franchise vs. independent daycare, franchising offers several advantages. You can get off the ground with a reputable brand name that attracts people to your business. The parent company will assist with training and managing franchise operations, ensuring compliance.
However, there are some downsides. For example, you must follow the company's regulations limiting your freedom to operate your daycare as wholly your own. Initial fees and ongoing royalties can also get expensive.
No, franchise owners do not always need childcare experience. Some franchisors will require it or prioritize potential franchisees with relevant experience. For others, it may not factor in at all.
However, relevant experience can make your business more successful. It helps you solve problems easily, increasing client satisfaction. Families may also be more likely to sign up with a provider with experience working with children.
A daycare franchise must meet these legal requirements:
We've prepared something special for you - 100+ user-friendly templates to make your important work a little easier. Because the work you do with children matters so very much, and you deserve tools you need.
Step 1: Click button
Step 2: Download 100+ ready-to-use daycare templates
Step 3: Implement immediately
Step 4: Experience efficient childcare management