Is A Preschool Franchise Profitable?

In today's market, starting a preschool is one of many profitable business ventures. Due to its recession-free nature, the education sector remains unaffected by fluctuations in business cycles. With the growing number of millennials having children, the demand for preschools will only increase, making an investment in this sector very profitable. 

For those who are willing to take the risk, owning your own preschool is rewarding and thrilling. Let's take a look at what makes a preschool profitable and the challenges you will face as an owner. 

What Makes Preschool Profitable?


It is essential for kids and toddlers to receive a basic education because it is the foundation for them to succeed in their lives. With no short supply of children, education is a sector where demand is never likely to decrease. Everyone wants their children to have a good education.

Job Security: 

As we have discussed above, the demand for education is only on the rise and is unaffected by fluctuations in the market. This makes education a secure business to invest in for the long term.

Initial Investment:  How much money you invest in your business will also determine your profitability. The price of rent, taxes, and utilities must be considered when choosing your own permanent location. Initial costs can range from $2,326,000 to $3,701,459. However, investment into a preexisting preschool space can save you a significant amount of money and can range from $419,000 to $777,429. At Neighborhood Kids, we provide faith-based early childhood education through partnerships with established local churches. This makes franchising more affordable for potential owners.


The profitability of your school will also depend on location, location, location. Be sure to do research on the demographics of your area in order to determine the best spot to open your business. 


Also important when choosing a location is studying the competition. When looking for a suitable site you should look into:

  • What other preschools are operating in your area?
  • Are other preschools doing well?
  • How much do other preschools in the area charge?
  • Is there enough demand in the area for more than one preschool?


When operating any business you will inevitably run into obstacles that you must overcome. You will need to be prepared for these challenges as they come at you so you can react to them accordingly and keep your school profitable. From being buried in paperwork to dealing with parents, there’s no shortage of problems that preschool owners have to overcome.

Licenses and Permits

Before you are able to open your doors, you must ensure that you have all the required licenses and permits. Depending on your state or county, this process can be relatively complicated and lengthy. Consider hiring a lawyer or consultant to assist you with the paperwork and ensure everything is in order.

Hiring Qualified Staff

Opening a daycare also involves hiring qualified staff. It's important to find individuals who have a passion for teaching children and who meet a particular set of standards. Starting with job boards or online classifieds is a great way to advertise the positions. College campuses and universities are always full of eager students interested in gaining experience working in childcare and education.

Finding the Right Location

As we mentioned before, the right location can determine the profitability of your school. But choosing the right location is not an easy task. Ideally, you want a location that’s easily accessible, has enough space, and is in a safe neighborhood. Start by searching online for commercial properties for sale in your area. Visit a couple locations in person to get a better feel of the space and the surrounding area.

Supplies and Equipment

Purchasing supplies and equipment is another challenge when starting a daycare. It can be quite exciting when buying supplies for your new preschool but it’s important not to go overboard. You can save money by purchasing used supplies and equipment at yard sales, online classifieds, or second-hand stores. Additionally, local businesses may be willing to donate items to your daycare such as libraries and churches. 

Late Payments on Tuition

Tuition payments are the lifeblood of your business. Without it, you don’t have a business. It can be uncomfortable to remind parents to pay their bills but you have to remember you are running a business, not a charity. You need to be firm about when parents need to pay and be sure they pay it on time. Being relaxed with parents paying their bills will lead to other parents taking advantage of you and ultimately it will affect your bottom line. 

Partner With Neighborhood Kids

Starting a successful child care franchise takes hard work, determination, and investment. When you decide to partner with Neighborhood Kids, we provide Franchise Owners with on-site training and ongoing support and guidance to help you develop and grow your business while becoming an active part of your community. Contact Neighborhood Kids today for more information on how you can get started with your own franchise. 

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