Let’s talk about daycare facilities. Did you know there are more than 634,000 daycare businesses in the United States? Many of these are franchises, and if you’re thinking about getting involved as a franchise location owner, that number may seem overwhelming.
Not to worry! We did the legwork for you and put together this list of the top-performing daycare franchises of 2022.
Despite the lingering challenges of the pandemic, the child care market is growing. In the United States, the market size was valued at $54.3 billion in 2019 and is projected to expand at a compound annual growth rate (CAGR) of 3.9 percent through 2027. This growth is propelled by an increasing societal focus on high-quality early childhood education, as well as a growing population of working parents. The increase in dual-income households has also helped generate more interest from employers in offering child care services as a workplace benefit.
Along with experiencing a period of growth, the market is seasonally stable and ripe with opportunity. While new enrollments in existing facilities typically occur in or around September, the demand for child care is consistent year-round. Working parents, for instance, still need high-quality child care options when school is out for summer vacation. Some may turn to home-based child care facilities, but these providers may not have professional management or educational content that’s up to the standards of most accreditation bodies.
Buying into any franchise is a substantial investment with long-term impacts, so due diligence is key. It’s critical to understand how a franchise will fit your life stage and financial circumstances. A good place to start is by reviewing the Financial Disclosure Documents (FDDs) provided by each franchisor, and discussing your thoughts with a franchise-savvy attorney, broker, or advisor.
When evaluating the FDDs, pay special attention to these six factors (unsurprisingly, these are the same criteria that FranShares uses when we source franchise investment opportunities):
When evaluating successful daycare franchise opportunities, we took a particular interest in each franchisor’s gross revenue and EBITDAR, which is “earnings before interest, taxes, depreciation, amortization, and restructuring/rent.” EBITDAR helps us understand each company’s core performance while minimizing variables that aren’t directly related to the business’s operations. With that said, here are our picks for the best daycare franchises in 2022.
Performance at a Glance:
Primrose was the first educational child care franchise system to receive the Cognia (formerly AdvancED) Corporation Systems Accreditation under its Standards for Quality Early Learning Schools. This is the highest accreditation an early learning school can receive, and Primrose has maintained this accreditation since 2012. Their programs focus on children from the age of six weeks to twelve years, and include full-time day school as well as child care. This includes Summer Learning Adventures, which run from June to August for kids up to age twelve, and Explorers Club, an after-school program for kids ages five to twelve available from September through May.
The original founders of The Learning Center (TLE), the Weissman family, have been developing businesses in the child care industry for 40 years. As of December 31, 2020, there were 263 open TLE centers and 191 centers under development. Each facility offers child care and educational-based preschool development programs for children aged six weeks to five years. TLE uses a proprietary curriculum that includes LEAP (Learning Experience Academic Program), as well as foreign language programs in either Spanish or Mandarin (chosen by the franchisee) for ages three and up. Franchisees may also offer summer programs, kindergarten, and after-school programs under the TLE umbrella.
LeafSpring Schools provide a wide variety of child care services, including nursery school, preschool, kindergarten, before- and after-school programs, summer school, and educational camps for school-age children. Their centers also feature a “Get Well Place” staffed with licensed nurses who can provide backup care for children with common ailments as well as daily care for kids with special needs. Accreditation is mandatory for each center through the National Association for the Education of Young Children and/or Cognia.
KLA Schools offer educational child care services for infants through school age children. Their curriculum is based on the Reggio Emilia educational philosophy, which emphasizes child-led learning. Activities are structured to include the children’s individual interests, as well as principles of science, technology, engineering, art, and mathematics (STEAM). Franchisees can choose from different degrees of investment, from a “Single School Program” to the “Area Development Program” for those who wish to develop multiple schools in a designated area.
Goddard schools are accredited by Cognia and Partnership for 21st Century Learning: A Network of Battelle for Kids. Educational programs and care are tailored to children from six weeks to ten years of age. Centers utilize the Goddard F.L.EX. (Fun Learning Experience) framework, which gives their teachers a unique level of flexibility in their lesson plans and teaching style to take advantage of organic teachable moments. Children are also given access to an exclusive social-emotional development curriculum known as Life Lesson Library, a unique program that uses the power of storytelling to help children develop communication, decision-making, and self-awareness skills. Once franchisees open a location, they have the option to add an Annex to their existing facility or open a separate Satellite Location.
Creative World schools are a unique combination of early childhood learning center, creative development school, child care facility, and daycare for children ages six to twelve years. Locations are characterized by their proprietary Exploratorium, a unique, open-floor plan learning environment that encourages small group STEAM exploration for preschool and kindergarten-age kids. Creative World Schools are accredited through Cognia, and all new schools must be accredited within one year of opening.
While reading through the specifics of these successful daycare franchises, you may have realized that opening a new school or daycare center location is no casual endeavor. Facilities must meet all local, state, and federal regulatory requirements, and the initial investment outlay for a single location can be substantial. New owners may find themselves working full time to get their franchise up and running.
However, what if there was a way to add franchising to your portfolio without it turning into another job? Would you be interested in investing in many of the best franchises available without high upfront costs?
Well… now you can.
For as little as $500, you can invest with FranShares. Doing so gives you access to a fractional fund of strong franchise brands with the ease of passive investment and the excellent returns of alternative assets.
Ready to learn more? Read about fractional investing here, or get on our waitlist so you’ll know when our next fund becomes available.
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(1) Portfolio IRR projections are calculated using all cash flows, including the initial investment of $25,000,000 of offering proceeds, annual earnings before interest, depreciation and amortization (“EBITDA”), less estimated corporate taxes, and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.
(2) Cash Yield projections are calculated as the arithmetic mean (average) of five years of annual cash flows (including EBITDA, less estimated corporate taxes) divided by the initial investment of $25,000,000 of offering proceeds.
(3) Equity IRR projections are calculated using the initial investment of $25,000,000 of offering proceeds and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.