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Children’s Franchise Industry Report

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Photo of daycare teacher with kids along with the title "Children’s Franchise Industry Report".

Child-related franchises cover a wide range of service areas, including:

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The market for children’s services and products is significant in Canada. Approximately 15.7% of Canadians are under the age of 15, according to the 2021 Census estimate by StatCan. That equates to nearly six million people. The youngest area by percentage is the territory of Nunavut, where nearly one-third of the population is aged 14 and younger.

Below is a discussion of key points for a few major segments of the industry. Those sections are followed by a look at some of the points of interest for those hoping to open a children’s franchise.

The Connection Between Child Care and the Labour Force

At the height of the pandemic, only nine percent of Canadian parents were using child care, according to a Statistics Canada (StatCan) survey. However, demand is expected to rebound as out-of-home work begins to return in earnest. Also, “an increase in provincial and federal government spending on child care services is expected [to] assist industry recovery,” according to market research company IBISWorld.

For background: The Canadian government has entered into agreements with nine provinces and two territories for early learning and child care. The plan is to provide Canadian parents with, on average, $10-a-day for regulated child care spaces for children under six years old over the next five years. The plan also includes a 50% reduction in average fees by the end of 2022.

The government’s goal for the plan is to “build a Canada-wide, community-based early learning and child care system [that] will create new jobs and growth, and get parents — especially mothers — into the workforce.”

Mother in business attire holding young son.
Reconciliation of family and work life: Attractive blond woman in business attire proudly carrying a small boy in her arm in office environment
killerbayer/Getty Images/iStockphoto

Studies have shown that the use of child care and the employment status of mothers are closely linked, with the gender gap in labour force participation being attributed partly to the availability of child care.

For instance, the overall reported use of child care was shown to be consistently higher for mothers who were employed full-time (78%) than those who were employed part-time (65%). The difference was “statistically significant” for mothers of school-aged children (six to 12 years) in the study. For mothers of children aged one to five years old, there was no significant difference in the percentage using child care between full-time and part-time working mothers.

What do these working parents look for in a child care facility? Given primary concerns are satisfied (i.e. trustworthiness, etc.), signs point to a child care facility with a strong education component.

One of the biggest trends in the child-related franchise industry is the continued intermingling of child care centres and early education programs.

Studies show young kids are capable of learning academics and other skills earlier than previously thought. As more becomes known about the development of the brain during childhood, expect the desire of parents to find quality child care that also gives their children a head start academically to continue.

Luckily, for future franchisees, combining care with education is an area franchises have been invested in for many years. There is no shortage of child care franchises that employ specialized curriculum that provides an educational experience that, as one franchise states, “fosters a solid foundation for lifelong success.”

Child Fitness Franchises Impact More Than Physical Well-Being

Within the past decade, one of the fastest growth areas for the fitness club industry has been youth memberships.

There are several reasons why. First off, parents want a healthier future for their kids, and having opportunities for safe and consistent exercise is vital for achieving that future. This, in turn, contributes to a steady market demand for anyone wanting to open a children’s fitness franchise.

Another factor in the growing demand for child fitness centres is school budget cuts to physical education programs. Thirdly, thanks to the Canada Revenue Agency’s Physical Activity Tax Credit, parents also have an up to $2,000 incentive for enrolling their children in (eligible) fitness programs.

Children’s fitness franchises aren’t just watered-down versions of their adult gym counterparts either. Many franchises incorporate educational elements with the knowledge gained over the years of how brain development occurs in children. Curriculum is commonly built around a play concept that incorporates teaching motor development, dance, and music in addition to fitness elements like soccer and gymnastics.

Group of boys doing soccer drills on a field.
Soccer Training - Warm Up and Slalom Drills. Boys Practicing European Soccer on the Grass School Field
matimix/Getty Images/iStockphoto

And on top of the purely fitness and other development aspects, the last couple of years have brought into sharp focus the importance of sport and recreation on general well-being.

“Children’s sports and recreation programs help children in so many ways, but above all else, I believe these programs provide children with a sense of purpose,” says Alexandra DeLory, co-director and instructor at a dance studio in Markham, Ontario.

“Recreational activities provide a sense of community, belonging and socialization,” she adds. “To our students and many other children, their sport and recreation centre is their second home and family, and several children are struggling deeply right now with the ongoing separation from these people and places.”

Fortunately, however, with restrictions beginning to lift, children’s franchises have a bright future to look forward to.

Resell Plays a Big Role in Children’s Retail

Children have a major impact in the retail franchise industry, particularly when it comes to clothing. Experts expect the children’s retail clothing market, specifically the children’s and infants’ clothing stores industry, to rebound strongly from pandemic impacts over the next five years.

Kids grow out of clothing, toys and accessories at a rapid pace, meaning parents are constantly getting rid of the old and buying the new. A large percentage of outgrown items are still in decent condition and able to be reused through consignment. This opens up plenty of opportunities in the resell retail segment.

In consignment, the original owner sells gently used items to a retailer who resells the item at a reduced price. The arrangement works out for all three parties involved: the original owner gets some money back from the original purchase; the new owner gets an item at a discounted price in similar condition to a brand new one; and the reseller makes a profit from the markup between the price they bought the item at and the resale price.

When it comes to franchising in this space, the market leader is Winmark Corporation. Winmark is the parent company of five franchise concepts, including four that cater to those under 18: Once Upon A Child (children’s clothing and toys), Plato’s Closet (teen and young adult clothing), Play It Again Sports (sports equipment), and Music Go Round (music instruments).

Check out our interview with Alan Majerko, vice president, franchise development at Winmark Corporation, for more on this impactful franchise area.

Woman shopping for kids clothes at a consignment shop.
Trying to save money
MachineHeadz/Getty Images/iStockphoto

Choosing a Child-Related Franchise

What attributes are well-suited for being a child franchise franchisee?Anyone who works with children should possess patience, enthusiasm, creativity and energy. These attributes need to fuse along with good management and organizational abilities to take care of back of the house responsibilities. Also on the business side, interpersonal skills to lead staff and deal with parents are equally important.

Do I Need Experience Going In?

As with virtually all franchises, previous experience in the franchise industry isn’t a necessity—just a passion for the area and the willingness to work hard.

Keeping Year-Round Revenue

Prospective children’s franchise owners will need to consider how the franchise system they are researching copes with busy and quieter periods, for example during school breaks or when children are in school.

Special Regulations

It is the franchisee’s responsibility to make sure he or she is in compliance with the franchisor’s requirements, as well as all applicable laws and regulations of his or her area.

Child care and educational services are regulated differently across provinces and territories. For instance, those wanting to open a child care centre in Ontario that provides “temporary care and guidance” to more than five children under the age of 13 years must be licensed by the Ministry of Education.

Additionally, depending on local zoning codes, a franchisee may experience additional requirements such as the need for water fountains, special exit doors equipped with panic bars, fire safety improvements, and accommodations for disabled persons. Prospective franchisees are strongly advised to research the special regulations required for their area. Your franchisor will also be of great assistance in helping you become compliant and in maintaining compliance with local regulations.

Large coin getting deposited in a store with other coins and stores surrounding. Concept of earning money with franchise business.
Coin in stores, Earning money with franchise business, 3d render
oatawa/Getty Images/iStockphoto

Initial Investment and Opening Costs for Children’s Franchises

The amount necessary to open a franchise varies depending on the unique business system and execution requirements. The initial investment required for a children’s services franchise can range from a low of around $10,000 to a high of several million dollars. It’s important to note, however, that children’s franchises that have opening costs in the hundreds of thousands or millions commonly involve a significant real estate purchase.

Our franchise profiles will present you with a basic range for the initial investment or minimum cash required to open a franchise. But when it comes to finding out the details of an initial investment, the Franchise Disclosure Document (FDD) is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.

Keep in mind these estimates are just that, though—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.

Ongoing Costs

Don’t forget about the additional costs required for nearly all franchise businesses. This includes expenses such as royalty fees, marketing fees, software fees, training fees, and more.

The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.

It’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.

Bottom Line

Child-related franchises require a great deal of responsibility on the part of those running the business and looking after the children in their care, but it is a truly rewarding industry.

There are many diverse franchise opportunities with a focus on children, giving rise to plenty of opportunities to work with children and make a difference in the community. Parents are the driving factor behind the child-related franchise industry. When parents want the best care, education, fitness, and clothing for their children, franchise businesses are there to offer their services at affordable prices.

Start your franchise search today by searching our listing of some top children's franchises.

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