Established daycare franchise

January 24, 2026

by a searcher from The University of Texas at Dallas - Naveen Jindal School of Management in Texas, USA

I am looking at an established daycare business. Any thoughts on due diligence, APA and post acquisition operations are highly appreciated. I plan to let existing director continue to run the operations while I manage the backend.

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Jaideep, great question. I recommend the following items to look for: 1) Are they primarily self-pay or are students getting government subsidies? If getting government subsidies you need to understand the risk there. Also, there is usually a percentage the customer still needs to pay. You will want to verify they are paying their portion as well. 2) Are most payments current or do they have students past due? 3) What are the standard payment terms and collection? Are payments done weekly, bi-weekly, or monthly. Also, are funds collected via ACH, by check or by credit card? If by credit card, what are the credit card fees and how much is that eating into margins? 4) What is the tenure of the existing teachers and how likely are they to stick around? 5) How many staff members have the credentialing required to maintain state licensing? Most states require require a licensed director. 6) Are the student to teacher ratios being maintained in each classroom? How much room is there to expand student volumes based on existing teacher counts before you need to hire new teachers. 7) What is the centers total capacity and how many current students are there, and how does that compare with past years? 8) What does the market look like and are there newer centers in place of new ones opening up that could compete directly against this center? 9) Is current pricing within market and how does it compare to competitors in the market? 10) What do the online reviews look like for the school? I think these are key things to keep in mind. I might be missing some, but I hope this list helps. If you have questions you can reach me here or directly at redacted

Reply by an admin
from Massachusetts Institute of Technology in Portland, OR, USA

^redacted might be able to help with Daycare and/or Education.

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