IBISWorld - Child Education & Developmental Center Franchises in The US - 2018

WWW.IBISWORLD.
COM Child Education & Developmental Center Franchises in the USJuly 2018 1
Taking care: Increasing interest in early

education and strong marketing support growth
This report was provided to
Edeska (2129455405)
by IBISWorld on 16 October 2019 in accordance with their license agreement with IBISWorld
IBISWorld Industry Report OD5594

Child Education & Developmental
Center Franchises in the US
July 2018 Anna Miller
2 About this Industry 17 International Trade 30 Operating Conditions

2 Industry Definition 18 Business Locations 30 Capital Intensity
2 Main Activities 31 Technology & Systems
2 Similar Industries 20 Competitive Landscape 31 Revenue Volatility
3 Additional Resources 20 Market Share Concentration 32 Regulation & Policy
20 Key Success Factors 32 Industry Assistance
4 Industry at a Glance 20 Cost Structure Benchmarks
22 Basis of Competition 34 Key Statistics
5 Industry Performance 23 Barriers to Entry 34 Industry Data
5 Executive Summary 24 Industry Globalization 34 Annual Change
5 Key External Drivers 34 Key Ratios
7 Current Performance 25 Major Companies
9 Industry Outlook 25 Goddard Systems Inc. 35 Jargon & Glossary
11 Industry Life Cycle 26 Primrose School Franchising Company
27 Kiddie Academy Child Care Learning
Centers
13 Products & Markets
28 The Learning Experience
13 Supply Chain
29 Creative World School Franchising
13 Products & Services
Company
15 Demand Determinants
29 LeafSpring School
16 Major Markets
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

WWW.IBISWORLD.COM Child Education & Developmental Center Franchises in the USJuly 2018 2
About this Industry
Industry Definition This industry provides child care that is Reports in the Business Franchise collection
focused on education and development, focus solely on the operation of franchised
primarily for children under the age of six. outlets and exclude nonfranchise data.
Main Activities The primary activities of this industry are

Providing education-oriented child care for infants
Providing education-oriented preschool programs
Providing education-oriented kindergarten programs
The major products and services in this industry are

Child day care services, in-center only
Children and youth recreational programs
Pre-primary grade instructional programs
Other services
Similar Industries 62441 Day Care in the US

This industry provides child care services outside of the home. These establishments generally care for
preschool children, but may care for older children when they are not in school.
81411 Maids, Nannies & Gardeners in the US

This industry includes a range of household employees, such as nannies, maids, chefs and gardeners.
61111a Public Schools in the US

This industry supervises and educates school-age children. Many public schools also offer additional
child-care services outside of school hours.
61111b Private Schools in the US

This industry provides elementary and secondary school education. Many private schools also offer early
childhood education services.
Provided to: Edeska (2129455405) | 16 October 2019

About this Industry
Additional Resources For additional information on this industry

www.acei.org
Association for Childhood Education International
www.crocus.georgetown.edu
Center for Research on Children in the United States
www.childcareaware.org
Child Care Aware of America
www.naeyc.org
National Association for the Education of Young Children
www.nbcdi.org
National Black Child Development Institute
www.nces.ed.gov
National Center for Education Statistics
IBISWorld writes over 1000 US

industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com

WWW.IBISWORLD.COM Child Education & Developmental Center Franchises in the US July 2018 4
Industry at a Glance
Child Education & Developmental Center Franchises in the US in 2018
Key Statistics Revenue Annual Growth 13–18 Annual Growth 18–23

Snapshot
$2.7bn 3.7% 4.5%
Profit Wages Businesses
$339.4m $1.3bn 1,754

Market Share Revenue vs. employment growth Per capita disposable income
Goddard Systems
8 4
Inc.
22.4% 6 2
Primrose School
% change
% change
Franchising 4 0
Company
17.4% 2 -2
Kiddie Academy 0 -4
Child Care Year 10 12 14 16 18 20 22 24 Year 11 13 15 17 19 21 23
Learning Centers Revenue Employment
8.9% SOURCE: WWW.IBISWORLD.COM
Products and services segmentation (2018)

The Learning 2.5%
Experience Children and youth
8.5% 3.7% recreational

programs
Other services
p. 25
19.7%
Pre-primary grade
Key External Drivers instructional programs
Per capita disposable
income
Labor force participation
rate of women
Number of children
aged nine and younger
OD – External competition
National
unemployment rate
74.1%
p. 5
SOURCE: WWW.IBISWORLD.COM
Industry Structure Life Cycle Stage Growth Regulation Level Medium

Revenue Volatility Low Technology Change Low
Capital Intensity Low Barriers to Entry Medium
Industry Assistance Medium Industry Globalization Low
Concentration Level Medium Competition Level High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 34

Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive The Child Education and Developmental in large part, fueled by the long-term
Summary Center Franchises industry has posted shift in women’s workforce participation
strong growth over the past decade. An and a growing understanding of the
increasing body of research supporting the social and economic benefits of early
benefits of early childhood education has childhood development. The industry’s
fostered rising parental interest in largest players include The Goddard
education-based child care. Industry School and Primrose School, both of
franchises provide center-based child care which have expanded their franchise
primarily for children under the age of six, locations and market share over the
typically with a focus on promoting period. Overall, growing demand has
mathematics, literacy and language-based driven an estimated annualized 0.5%
skills. Increasing interest in early education increase in the number of industry
combined with strong marketing has led establishments, to 2,155 franchise
the industry to outperform the wider Day locations in 2018.
Care industry (IBISWorld report 62441) Over the five years to 2023, industry
revenue is forecast to rise at an annualized
rate of 4.5% to total $3.4 billion. The Child
Rising
interest in early education is growing Education and Developmental Center
Franchises industry will benefit from low
demand for the industry’s services unemployment and continued growth in
per capita disposable income, thus
over the past five years. Over the five years growing demand for industry operators
to 2018, industry revenue is expected to from working parents. Over the next five
grow at an annualized rate of 3.7% to reach years, industry franchisors are expected to
$2.7 billion, including a robust 5.4% continue to take extra care to develop and
increase in 2018 alone. market their curricula and approaches to
According to the latest information provide a well-rounded learning
from the US Census Bureau, there are environment that incorporate the latest in
nearly 20.0 million children under the child development research. Further,
age of five in the United States. As moving forward, legislation aimed at
two-parent working households become increasing the affordability of child care
more common, an increasing number of for parents is expected to grow and will
these children require child care while likely benefit industry operators by
their parents are at work. Therefore, increasing the amount of people who can
demand for industry operators has been, afford services, thus growing revenue.
Key External Drivers Per capita disposable income 2018, representing a potential
Trends in per capita disposable income opportunity for the industry.
are positively correlated with demand
for child education and development Labor force participation rate of women
centers. When per capita disposable The workforce participation rate of
income is rising strongly, a greater mothers is a major factor affecting
number of households are better able demand for child education and
to invest in education-focused child development centers. The participation
care, which is often priced at a rate itself is influenced by many factors,
premium. Per capita disposable including social values and expectations
income is anticipated to increase in relating to child care, the rate of growth

Key External Drivers in full- and part-time employment and caregivers, which are typically less
continued child care costs. When the female expensive options compared with center-
workforce participation rate rises, there based child care. According to the
is greater demand for day care services. National Center for Education Statistics,
The labor force participation rate of a large portion of children under five
women is anticipated to increase slightly years old received home-based care
in 2018. either through a parent, relative, nanny
or other home-based provider. External
Number of children aged competition is anticipated to pose an
nine and younger ongoing threat to industry operators,
Demand for child education and especially as the cost of day care services
development center franchises is positively continue to climb.
correlated with the number of children,
particularly those under the age of six. National unemployment rate
Changes in the industry’s target market Heightened unemployment has a twofold
affects demand, occupancy rates and the effect upon industry performance. With
profitability of industry centers. The high unemployment, households typically
number of children aged 9 and younger is have less disposable income to spend on
expected to remain stagnant in 2018. child care services. Moreover, with a
greater number of parents and family
OD – External competition members out of work, there is less
The industry contends with a high degree demand for industry services. The
of competition from providers of home- national unemployment rate is expected
based child care and unlicensed to decrease in 2018.
Per capita disposable income Labor force participation rate of women
4 0.6
0.3
2
0.0
% change
% change
0 -0.3
-0.6
-2
-0.9
-4 -1.2
Year 11 13 15 17 19 21 23 Year 11 13 15 17 19 21 23

Current Franchises in the Child Education and

Developmental Center Franchises Industry revenue
Performance industry provide center-based day care
8
and preschool and kindergarten
educational programs for infants and
6
children. Generally, industry
establishments care for preschool aged
% change
children, but may care for older children 4
when they are not in school. Over the last
decade, an increasing acknowledgment 2
and understanding of the benefits of high
quality early education has increased 0
demand for the industry. Additionally, Year 10 12 14 16 18 20 22 24
rising disposable income, an increase in
the number of births and rising child care SOURCE: WWW.IBISWORLD.COM
costs have supported industry revenue

growth. Over the five years to 2018, annualized 3.7% to $2.7 billion, with
industry revenue is estimated to grow an 5.4% growth in 2018 alone.
Increased demand for Over the past decade, an increasing Primrose School Franchising Company
quality early amount of research has demonstrated the follows their Balanced Learning
significant impact that high quality early approach, which focuses on language and
education
education programs have on the future literacy, social studies, math, science,
academic performance and success of creative arts, physical development and
children. According to a study published social and emotional aspects of childhood
by the National Institute for Early development. Goddard Schools provides
Education Research (NIEER), high a play-based learning program that is
quality early education programs have shaped by The Goddard School’s
been proven to promote greater Educational Advisory Board (EAB). The
improvement in early language, literacy EAB consists of educators, researchers
and math development. As a result, more and child development, early learning,
children are being enrolled in early technology integration, brain
education and development programs, development, and health and nutrition
which has driven demand for the Child experts. With such a focus on marketing
Education and Developmental Center themselves as providers of high quality
Franchises industry, especially for early education programs, industry
centers with an early education focus. franchise operators have been able to
Typically, franchise enterprises capitalize on increased demand for such
develop curricula rooted in a variety of programs and decreased external
educational focus areas or developmental competition posed by home day cares
philosophies that are implemented and unlicensed caregivers.
throughout all locations. With the Demand for the industry is also
increasing demand for high quality early dependent on the number of children
educational programs, industry operators under the age of 6 and the number of
have increasingly differentiated children who need after-school care,
themselves through their approach to women’s participation in the labor force
early childhood education. For example, and the overall unemployment rate. Over

Increased demand for the last decade, demand for industry age of 6. As the number of young children
quality early operators has also been fueled by the increases and more mothers participate
long-term shift in women’s participation in the workforce, demand for the Child
education continued
in the workforce. According to the most Education and Development Center
recent data from the Bureau of Labor Franchises industry increases because
Statistics (BLS), nearly 70.6% of women more families need care for their children
in the workforce have children under the during the workday.
Rising child care costs Despite strong demand for industry arrangements including center-based
services, the already high cost of child care alongside care by a parent, relative,
care has steadily risen, making it harder non-family caregiver or an unlicensed
for families to afford child care. provider. This effect is mitigated when
According to Child Care Aware, the disposable income grows since it
average cost of center-based infant care increases the relative affordability of
exceeds 27.0% of the median income for industry center-based care programs.
single parents in 2017. The high cost of Over the period, IBISWorld estimates
care is exacerbated by families with more that per capita disposable income has
than one child and for families living at increased at an annualized rate of 1.9%.
or below the poverty line. Despite the This has benefited industry operators as
high cost of industry services however, more families were able to afford the
the rising number of two-parent and high cost of industry services and
single-parent working families has made reduces the likelihood that they will
child care a necessary service. elect to pursue alternative caregiving
When families cannot afford the cost arrangements such as home day cares,
of legal or high-quality care, it is common relatives or other non-licensed, non-
for parents to use a combination of relative caregivers.
Industry landscape Increased demand for center-based child

and profit education and developmental programs As
demand for industry
has driven existing franchise expansion
and motivated more franchise enterprises
services has grown, more
to enter the industry. As demand for individuals have opted to
industry services has grown, more be franchisees
individuals, recognizing the opportunity,
have opted to be franchisees, which has
expanded the number of establishments Due to an increase in industry
operating in the industry. Over the employment, total wage expenditure has
five-year period, the number of industry outpaced growth in revenue. Over the five
establishments has increased an years to 2018, total industry wage
annualized 0.5% to 2,155 franchise expenditure has increased an annualized
locations in 2018. Subsequently, this has 5.5%, faster than annualized growth in
resulted in a need for more employees. industry revenue of 3.7%. As a result,
Over the five years to 2018, the number industry profit margins have declined
of industry employees has increased an slightly to an estimated 12.4% in 2018,
annualized 4.6% to 58,778 childcare staff. down from 13.1% in 2013. Growth in total

Industry landscape wage expenditure has been primarily annualized 0.9% over the period. Using
and profit continued driven by higher employment and not by data from the BLS, IBISWorld estimates
growth in the average wage, which is only that the average hourly wage for day care
estimated to have increased an workers is $11.66, hourly, in 2018.
Industry The Child Education and Developmental

Center Franchises industry is expected to
revenue gains of 5.4% in 2018 alone. The
Child Education and Developmental Center
Outlook continue its steady growth over the next five Franchises industry is anticipated to benefit
years as parents continue to invest in early from annualized growth in per capita
education efforts for their children. Over the disposable income, an increase in the
five years to 2023, industry revenue is number of children aged 9 and younger and
forecast to rise at an annualized rate of 4.5% sustained demand for high quality,
to $3.4 billion; this includes expected education-focused day care services.
Growth drivers Over the five years to 2023, the price of

child day care services is anticipated to Therising cost of child care
increase an annualized 3.0% which will is anticipated to continue
drive revenue growth for industry
operators. As a necessary cost for many driving revenue growth
working parents, increases in price
typically do not result in significant many franchisors have increasingly
declines in demand. Therefore, the rising promoted their day care centers as being
cost of child care is anticipated to highly focused on early education and
continue driving revenue growth for development. Therefore, industry
industry operators. In addition, rising operators will continue to differentiate
day care costs is expected to be at least themselves from other industry operators
partially mitigated by projected growth in and from external competition by
disposable income over the period, which establishing comprehensive curricula,
is anticipated to increase an annualized based in development research and
1.9% over the five years to 2023. An education philosophies, that are followed
increase in disposable income increases by all its locations under the brand.
the ability of parents to afford the cost of Strong continued demand for industry
services for their children. It also services and continued growth in access to
decreases the likelihood parents will credit is anticipated to underlie growth in
arrange care services from home- the number of franchisees over the outlook
daycares or relatives and other period. Over the five years to 2023,
unlicensed caregivers that pose an IBISWorld projects access to credit to
external threat to franchise operators. increase an annualized 3.4% which will
Growth for industry operators is also enable individuals to secure the financing
expected to be driven by the continued necessary to open new franchise centers
demand from parents for day care and capitalize on the continued demand for
services that provide high quality early industry services. As a result, the number
education programs and curriculums. of industry locations is anticipated to
Industry operators are expected to accelerate, growing an annualized 2.3% to
benefit from this growth in demand as 2,416 franchise locations in 2023.

Growth drivers Subsequently, this is anticipated to spur wage expenditure in 2023. As a result,
continued growth in industry employment and thus profit is expected to reverse its current
total wage expenditure. Over the five years, trend, increasing slightly over the outlook
wage expenditure is forecast to increase an period as revenue growth outpaces growth
annualized 4.1% to $1.6 billion in total in wages.
Affordability issues Over the outlook period, legislation is

spur legislation expected to be increasingly focused on the Increasedregulation is
quality and affordability of day care as
more parents struggle to afford quality
expected to carry more
care. As the price of day care services is benefits for operators than
anticipated to continue growing at a faster downsides
rate than per capita disposable income,
legislators will increasingly focus their
legislative efforts to make high quality care regulation for industry operators,
accessible to more families. This is including requirements associated with
expected to benefit the Child Education subsidies and quality and education
and Developmental Center Franchises qualifications. Ultimately, increased
industry because it will grow the pool of regulation is expected to carry more
families who can afford industry services. benefits for operators than downsides, as
While this is expected to increase revenue, increased accessibility will drive growth in
it will also likely result in an increase in demand, and thus, revenue.

Life Cycle Stage Industry value added is forecast to grow
faster than the economy as a whole
The number of franchise operators
is expanding steadily
Services and programs are continuously
being modified using the latest early
childhood development research

Industry Life Cycle The Child Education and Developmental According to the Center for Research on
Center Franchises industry is in the Children, children with access to high-
growth stage of its industry life cycle. The quality early childhood programs are
This industry industry value added, which measures more likely to earn higher test scores
is G
rowing the industry’s overall contribution to the throughout their K-12 career. Due to this
economy, for the Child Education and ongoing research focus, demand for
Development Center Franchises industry education-oriented child-care centers has
is forecast to rise at an annualized rate of experienced faster-than-average growth,
4.6% over the ten years to 2023. This providing significant opportunities for
significantly outpaces overall GDP industry franchisors and franchisees.
growth, which is projected to grow an Over the 10 years to 2023, the number of
annualized 2.2% over the same period. franchise operators is forecast to rise at
Consequently, the industry’s share of the an annualized rate of 1.5% to reach 1,952.
overall economy is expanding, a key Moreover, industry franchises are
indicator of its growing life cycle stage. increasingly diversifying their
The industry has benefited from an educational programs by incorporating
increasing body of research promoting different approaches and the latest in
the importance of early education. childhood development research.

Products & Markets

Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain KEY BUYING INDUSTRIES

54 Professional, Scientific and Technical Services in the US
This sector includes businesses often utilizing child-education services to assist working
parents.
62399 Orphanages & Group Homes in the US
This industry often utilizes child-education services to provide a stable routine for
disadvantaged children.
62419 Family Counseling & Crisis Intervention Services in the US
This industry includes institutions that assist disadvantaged families often utilizing child-
education services to assist parents.
62422 Community Housing & Homeless Shelters in the US
This industry includes homeless shelters that assist disadvantaged families often utilizing
child-education services to assist parents.
99 Consumers in the US
Households with children under the age of six are the primary users of industry services.
KEY SELLING INDUSTRIES

32223 Office Stationery Manufacturing in the US
This industry provides notebooks, drawing paper and other stationery to child education and
developmental centers.
33429 Alarm, Horn & Traffic Control Equipment Manufacturing in the US
This industry provides alarms and security systems to prevent accidents.
33993 Toy, Doll & Game Manufacturing in the US
This industry provides toys, dolls and other games to occupy children enrolled in child
education and developmental centers.
42441 Grocery Wholesaling in the US
Industry operators purchase groceries to prepare meals and snacks for children.
44312 Computer Stores in the US
This industry provides child education and developmental centers with computers to assist in
children’s entertainment and education.
44611 Pharmacies & Drug Stores in the US
This industry provides child education and developmental centers with medical supplies to
treat emergencies.
51113 Book Publishing in the US
This industry provides child education and developmental centers with different kinds of books
to educate children.
51121 Software Publishing in the US
This industry provides educational software which is becoming more prevalent in child
education and developmental centers.
Products & Services An estimated 11.0 million children under interviews. Franchises in the industry
age five are enrolled in some type of child earn revenue from membership dues,
care every week, according to the US royalty fees, admission fees, tuition
Census Bureau. Even with rising prices, services, camps and other services.
early child education centers still have Generally, the industry can be divided
long waiting lists, with some centers into groups based on types of facilities
requiring early applications and and activities provided; however, this

Products & Markets
Products & Services Products and services segmentation (2018)

continued
2.5%
Children and youth
recreational
3.7% programs
Other services
19.7%
Pre-primary grade instructional programs
74.1%
Total $2.7bn SOURCE: WWW.IBISWORLD.COM
breakdown varies depending on specific provide students with cognitive,

franchise operations. emotional, social and physical
development that focuses on teaching
Child day care services letters and words, math concepts and
General day care services, provided in a valuable social skills. Children are
center, is the primary service provided by encouraged by cooperative play and
industry operators. Day care services collaborative problem solving through
include care provided for infants, classroom-appropriate lesson plans.
preschoolers and school-aged kids after Centers also offer enrichment programs
school hours. This segment accounts for that incorporate music appreciation,
an expected 74.1% of industry revenue, foreign languages and world cultures in
the largest share of any service offering. addition to helping them develop
Before-school programs offer children an multitasking skills and hand-eye
opportunity to participate in small group coordination. IBISWorld estimates that
activities, such as building blocks, 19.7% of industry revenue is derived from
readings books, playing games, designing this segment.
artwork or solving math problems.
After-school activities can include Recreational programs
homework assistance, research help, Social assistance and recreational
computer proficiency and other programs offer preschool and school-age
enrichment programs. Children also get kids learning opportunities through fun,
to participate in games that focus on hands-on activities throughout the
endurance, strength and balance to summer weeks and are estimated to
promote the link between physical account for 2.5% of industry revenue.
activity and proper nutrition in creating Camps may feature different themes and
healthy lifestyle. corresponding activities that let campers
complete science experiments, learn
Preprimary programs sign language or create art projects.
Preschool and kindergarten programs are Program activities may also include
designed for children as young as two songs, stories, field trips, physical
and help them prepare for their activities and learning adventures. For
transition to school. These programs instance, The Goddard School offers the

Products & Markets
Products & Services Leap into Literature program, which programs include weeks of exploring
continued focuses on exploring several featured line, shape, color and texture, or
children’s books in fun new ways. Other learning about graffiti art and doodles.
Demand A shift toward early child education the age of 6, participating in the labor
Determinants began with a 2000 study by the National industry drives demand for industry
Research Council stating that the first services. When more women enter the
three years of life are crucial in a child’s labor force, this increases the number of
development. Attracted by the benefits of children who require care during the
preschool programs that will help workday. According to data from the US
children to better socialize with their Census Bureau in 2016, 70.6% of women
peers and develop verbal and motor in the workforce had children under the
skills, parents are fueling demand for age of 6 (latest available data).
early child education and developmental Household income, which
centers. The quality of child care has a determines the amount of money
long-lasting impact on a child’s households can spend on child care, is a
development, behavior and cognitive key factor determining demand for the
abilities. A report by the National industry’s services. Increases in
Institute of Child Health and Human household income will result in
Development (NICHD) found that even increased demand for child care.
10 years after children have left child Further, an increase in household
care, quality child care is correlated with income enable parents to afford higher-
higher academic performance. cost but high-quality child care
Demand for child education and programs, which also drives revenue
developmental center franchises is growth for industry operators.
primarily dependent on the number of Decreases in household income and
young children, women’s participation in steadily rising child care costs, makes it
the workforce, per capita disposable more likely that parents will elect to
income and the unemployment rate. An make substitute arrangements for child
increase in the population of children age care services that are not industry
six and younger and a heightened focus relevant, including with home-day care
on early childhood education will further providers, family caregivers and other
underpin demand for child education and non-licensed caregivers.
developmental centers. According to the Leisure time availability and the
most recent data from the US Census unemployment rate also influence
Bureau, there were 20.4 million children industry demand. A rise in
in the US aged five and younger in 2016, unemployment results in a higher
many of which required some type of number of parents staying home with
childcare, especially as the number of their children, decreasing their need for
two-parent working families has formal child education centers.
increased over the period. However, as parents and other informal
The workforce participation rate of caregivers (e.g. relatives and friends)
mothers is a major factor affecting return to the workforce, they will have
demand for child education and less leisure time available, increasing the
developmental centers. An increase in the likelihood that parents will turn to child
number of women, with children under education centers.

Products & Markets
Major Markets Major market segmentation (2018)

1.1%
Children aged
4.4% 12 to 14
Children aged 9 to 11 years years
15.5%
Children aged 5 to 8 years
33.0%
16.8%
Children less than 1 years old
29.2%
Total $2.7bn SOURCE: WWW.IBISWORLD.COM
According to the National Household providing services for infants is typically

Education Surveys Program of 2016, higher due to liability and insurance issues
among children in a weekly nonparental and the amount of attention required from
care arrangement, an estimated 59.0% caregivers. Therefore, the high cost of such
were attending a center-based care care increases the likelihood that parents
program. The survey also reported that will leave work to care for their infants or
higher percentages of parents with arrange alternative services such as care
children in center-based care with a family member.
arrangements reported learning activities
as very important in comparison to Children aged one to four
parents with children in other care Children aged one to four years old
arrangements. This indicates that constitute the largest demographic for
operators in the Child Education and child education and developmental
Developmental Center Franchises center franchises. In 2018, IBISWorld
industry cater to parents who are seeking estimates that children aged one to two
education and development focused care years old represent 29.2% of all children
programs. The following breakdown enrolled in center-based care. Further,
segments industry revenue according to children aged three to four years account
the age of children in care. for a similarly sized share, estimated to
be 33.0% in 2018. Ultimately, child care
Children less than one year old poses a significant cost. However, the
In 2018, children less than one year old cost of care for children in this market
are estimated to account for 16.8% segments is relatively lower compared
children enrolled in franchise day care with the cost of care for infants, making it
centers. This segment is one of the more likely that parents will enroll their
relatively smaller segments for a variety of children in center-based care at this age.
reasons. First, women are often given Further, children are more likely to be
maternity leave for a period ranging from enrolled in industry franchise centers at
several weeks to months following their this age as they get closer to attending
child’s birth, in which they are able to school and parents are seeking education
provide full-time care, reducing demand and preschool development programs
for day care services. Further, the cost of offered by industry operators.

Products & Markets
Major Markets Children aged five to eight Children aged nine and older
continued Children aged five to eight years old Children aged nine and older represent the
constitute a smaller, yet still significant smallest market segment for industry
market share for industry operators. In operators. In 2018, children aged nine to 11
2018, IBISWorld estimates that are estimated to account for 4.4% of
children between the ages of five and children enrolled in franchise centers.
eight represent 15.5% of children Further, children aged 12 to 14 are
enrolled in industry franchise centers. estimated to account for an even smaller
At this age, children are most likely portion, at 1.1% of all children enrolled in
enrolled in school, however might franchise centers. As children age, they do
require care afterschool or before not require as much direct supervision as
school. This includes care for children they develop better judgement and higher
after a full day of school in addition to levels of awareness and responsibility.
children enrolled in half-day Further, children in this age segment are at
kindergarten programs. At this age school for the whole day and are most
children still require direct supervision likely to be enrolled in after school activities
while not in school and while their which replace the need for after-school
parents are still at work. supervision from day care providers.
International Trade Due to its service-based nature, the industry operates solely within the
Child Education and domestic economy with no measurable
Developmental Center Franchises imports and exports.

Products & Markets
Business Locations 2018
West
AK
0.2 New
England
ME
Great Mid- 0.9
Lakes Atlantic 1 2
NY 3
WA MT ND 7.9
5 4
2.9 0.4 MN
Rocky
0.6 1.9
WI
OR Mountains SD
0.4
Plains 2.1 MI
2.3
PA
4.9
6
7
1.6 ID IA OH 9 8
0.5 WY 3.5
0.3
NE
1.1
IL IN WV VA
4.0 1.8 2.5
West NV
0.9 0.5
KY
UT MO
1.2 NC
0.4
0.6 CO KS 2.0 3.5
1.5 0.8 TN
SC
Southeast
1.7
CA 1.2
11.0
OK AR GA
1.3 0.9 AL 2.9
AZ MS 1.3
1.1 NM
0.5 Southwest 1.0
TX LA
1.3 FL
7.2 5.7
West
HI
0.4 Additional States (as marked on map) Establishments (%)
1 VT 2 NH 3 MA 4 RI Less than 3%
0.4 0.6 2.9 0.4 3% to less than 10%
10% to less than 20%
5 CT 6 NJ 7 DE 8 MD 9 DC
20% or more
1.2 3.2 0.4 2.0 0.3

Products & Markets
Business Locations The location of child education and

Distribution of establishments vs. population
developmental center franchises generally
follows the distribution of the population in
30
the United States. As a result, more heavily
populated regions constitute larger shares
of industry establishments. The Southeast 20
region holds an estimated 25.7% share of
the total population and holds an estimated
%
23.7% share of establishments in the Child 10
Education and Developmental Center
Franchises industry. Likewise, the Mid-
Atlantic region accounts for 15.2% of the 0
population and a similar share of industry
West
Great Lakes
Mid-Atlantic
New England
Plains
Rocky Mountains
Southeast
Southwest
establishments at 18.8%. Other notable
regions by share of industry establishments
include the West (16.5%), the Great Lakes
region (13.7%) and the Southwest (10.1%); Establishments
all of which hold shares consistent with Population
their share of the population. SOURCE: WWW.IBISWORLD.COM
At the state level, the largest state by

share of industry establishments is largest region by industry
California with an estimated 11.0% share establishments. Other notable states by
of establishments. This is consistent share of industry establishments include
with the state’s 12.1% share of the Texas (7.2%), Florida (5.6%) and
population. California’s large share of Pennsylvania (4.9%).
industry establishments contributes to The smallest regions my number of
the large share of establishments industry establishments are the Plains
contained within the West region. (7.4%), New England (6.3%) and the
Likewise, New York state, the second Rocky Mountains (3.6%). Not
largest state by number of industry surprisingly, these regions all hold the
establishments with an estimated 7.9% smallest shares of the country’s
of establishments contributes to the population, thus resulting in fewer
concentration of establishments within industry establishments due to lower
the Mid-Atlantic region, the second levels of demand.

Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share The Child Education and Developmental Primrose, another large industry
Concentration Center Franchises industry exhibits a operator, licenses 375 franchised schools
moderate level of market share throughout the United States and
concentration. In 2018, the combined commands a 17.4% market share.
Level
revenue of the top four franchise Although the market share concentration
Concentration in this operators accounted for an estimated for the industry has remained at a
industry is M
edium 57.2% market share. Goddard Systems medium level over the period, it has
Inc., the industry’s major player, alone increased from 47.5% in 2013 as the
captures an estimated 22.4% share of major companies have steadily increased
total industry revenue and currently their franchise locations, capturing an
licenses 482 franchised schools. increasing share of the market.
Key Success Factors Proximity to key markets flexible hours and able to cater to the
Providing services in convenient varied needs of working parents will be
locations (e.g. where density of working more appealing to consumers.
IBISWorld identifies parents is high) is key to the success of
250 Key Success industry establishments. Business expertise of operators
Factors for a The long-term success of the center
business. The most Recommendations/accreditation depends on the skill of the operator in
from authoritative source running a business profitably over time.
important for this
Accreditation promotes the center to
industry are: parents and potential employees. It can Having a loyal customer base
also assist in identifying and correcting A satisfied client base will encourage
any areas that could compromise care. repeat customers and word-of-mouth
recommendations, which will help
Ability to vary services to minimize revenue fluctuations.
suit different needs
Operators that develop a range of basic Must comply with government regulations
and specialty services and expertise Compliance with government regulations
reduce the effects of price-based is essential to maintaining a center’s
competition. Further, centers with operating license.
Cost Structure The Child Education and Developmental Profit

Benchmarks Center Franchises industry’s cost Operating profit for the average company
structure is mostly composed of labor in the industry, measured by earnings
costs because operators provide services before interest and taxes, is estimated to
to consumers. However, like most account for 12.4% of industry revenue in
industries, cost structure varies 2018. High demand for industry services
depending on the size, location, scale of has led to an expansion of franchise
operations and popularity of a franchise’s locations and spurred an increase in
brand. For instance, larger franchises in industry employment. As a result, this
the industry can typically afford to spend has driven an increase in total wage
more on marketing expenses, while small expenditure for the industry. Over the
industry franchises often rely on word-of- five years to 2018, total industry wage
mouth recommendations. expenditure is estimated to have

Cost Structure increased an annualized 5.5%, faster than levels of education (e.g. college and
Benchmarks estimated revenue growth of 3.7%. As a graduate degrees), to satisfy demand for
result, industry profit is estimated to higher quality staff and programs likely
continued
have declined marginally over the period. have higher wage costs.
Wages Rent and utilities

Due to the nature of industry services, Following wages, rent and utilities costs
which require a high level of interaction also represent a significant cost for
and communication between a caregivers, industry operators. In 2018, lease,
parents and children, labor costs make up rental and utilities payments are
the largest expense for a company, estimated to account for 8.7% total
accounting for an estimated 48.1% of revenue for the average industry
industry revenue. Employees are required operator. Franchisees generally receive
for childcare, education and support from the franchisor when
administration purposes. For larger locating a building space to rent or
operators, effective employment of own. It is not uncommon for states or
part-time workers can lead to efficient franchisors to require a certain amount
management of labor expenses. The ratio of square feet per child to increase the
of employees to children is often a quality of care given. As a result, rent
company’s largest selling point. Therefore, and utilities costs generally remain a
large agencies generally hire more staff to significant expense for industry
keep the employees-to-children ratio high. operators as the number of children
Companies that hire teachers with higher they enroll grows. According to the
Sector vs. Industry Costs
Average Costs of
all Industries in Industry Costs
sector (2018) (2018)
100 n Profit
11.4 12.4 n Wages
n Purchases
80 n Depreciation
n Marketing
39.9 n Rent & Utilities
48.1 n Other
Percentage of revenue
60
40 15.1 2.9
3.3 0.5 2.4
3.4 0.5 8.7
20
26.0 25.0
0

Cost Structure National Education Surveys Program of equipment, mats and outdoor toys, which
Benchmarks 2016, the most common location for can be very expensive.
center-based care programs is in a
continued
building of its own. Other costs
Other expenses include marketing,
Purchases depreciation, legal, insurance,
Purchases are another significant cost for administrative, recruiting and other related
the industry, representing an estimated expenses. Insurance costs in the industry
2.9% of revenue. Purchases are anything have been increasing over the past five years
that is bought on a daily basis to keep the because the size of payouts in civil
center running. These expenses include negligence cases has increased. This factor
the cost of food, beverages, furniture, has increased the risk for insurers and,
toys, books, computers and other therefore, increased insurance premiums.
supplies. To keep children active, Other costs, such as repair and maintenance
operators also purchase playground fees have remained relatively stable.
Basis of Competition The Child Education and Developmental Major industry operators have created
Center Franchises industry’s level of their own brand names and spent
competition has increased over the past significant amounts on marketing to
Level & Trend five years. Adding to the level of attract enrollments. A successful
ompetition
C in competition, many companies with large marketing campaign can improve
this industry is amounts of capital have entered the perceived standards or override poorly
Highand the trend industry, and existing regional and national perceived notions held by potential
operators have expanded their operations. customers. Parents increasingly demand
is I ncreasing
child-care arrangements that will adapt
Internal competition to their own schedules, particularly as
Companies in the industry differentiate working shifts away from traditional
themselves based on superior staff, business hours. Marketing to this
educational programs, staff-to-child segment will create competitive
ratios, the level and quality of facilities advantages for operators in this industry.
and aesthetic surroundings. Price is one Location is another important point of
of the major competitive advantages an difference for child education providers.
industry player can boast. Despite rising Parents want to be able to drop their
child-care and education costs, many children off at a center and pick them up
parents are willing to pay a premium for after work. However, this factor is not as
industry programs that promote important in determining the basis of
linguistic development, language skills competition as quality. Most families that
and mathematics-oriented activities. seek high-quality child education will
Larger industry players can also take their children to organizations that
compete on price by using economies of will be able to provide them with best
scale. The standardization of service and services. In addition, reputation can be
numerous locations can enable a large pivotal in attracting initial interest from
company to lower prices. However, prospective clients. A good reputation is
parents may want a more personalized an excellent way of standing out among
approach, and therefore, businesses competing institutions, but one high-
must balance prices with the quality of profile case of incompetence can be a
child education services. serious problem. It is often extremely

Basis of Competition difficult to rebuild a positive public image expensive in comparison to center-based
continued after these incidents. care. Therefore, when disposable income
declines the external threat posed by
External competition home-day care providers and other
Industry operators contends with external unlicensed caregivers increases, as they
competition from home-day care providers, pose low-cost alternatives to the high cost
non-franchise day care centers and other of center-based care. This is especially the
unlicensed caregivers including family case, as the price of industry services has
members, parents and other adults. steadily increased, making it difficult to
Typically, home-based care is less afford for an increasing number of families.
Barriers to Entry Overall, the Child Education and

Developmental Center Franchises Barriers to Entry checklist
Level & Trend industry has moderate barriers to entry. Competition High
Although there is not a significant capital Concentration Medium
arriers to Entry
B investment involved in building a new Life Cycle Stage Growth
in this industry are establishment, hiring enough people to Capital Intensity Low
Mediumand S teady care for children will be a major expense. Technology Change Low
Additionally, the industry is highly Regulation & Policy Medium
regulated and, as a result, a new operator Industry Assistance Medium
must obtain permits and comply with
other rules to operate. One of the large SOURCE: WWW.IBISWORLD.COM
barriers for new entrants is regulation: a

license ensuring that the child education crucial to hire people who are passionate
and developmental center is safe for about helping children develop. The costs
children to occupy is required. to attract staff are a large portion of a
Additionally, regulation ensures that the new entrant’s expenses; therefore, these
employees working in the center pass a costs may deter new operators from
strict background check. entering the industry.
Labor is also a potential barrier to Start-up costs vary depending on the
entry. Child education centers are scale of operations. Typically, franchisees
mandated to maintain a specific child-to- have an initial franchise fee that ranges
staff ratio, which varies depending on the from $29,000 to $135,000. Franchises are
state. On average, for children six months required to spend a specified amount in
and younger, there must be one staff initial capital equipment (e.g. purchasing
member per four children. For children or leasing a building) and marketing
over four years old, one staff member is expenses. Potential entrants are also
required per 10 children, according to required to have a certain amount in
Child Care Aware of America. Moreover, liquid cash and a net worth, in addition to
because this is an industry focused on paying an ongoing royalty fee, which
caring for and educating children, it is typically constitutes 7.0% of total revenue.

Industry There is a low level of globalization in this

Globalization industry. Most operators operate locally,
are domestically owned and predominantly
Level & Trend provide services to US residents.
lobalization
G in this
industry is L owand
the trend is S teady

Major Companies
Goddard Systems Inc. | Primrose School Franchising Company
Kiddie Academy Child Care Learning Centers | The Learning Experience | Other Companies
Major players Primrose School Franchising Company 17.4%

(Market share) The Learning Experience 8.5%
42.8%
Other
Kiddie Academy Child Care Learning Centers 8.9%
Goddard Systems Inc. 22.4%
Player Performance Goddard Systems Inc. (GSI), founded in assists franchisees with real estate and site
1988, is the franchisor of the Goddard development, operations, information
School franchises. Headquartered in King of technology, marketing, quality assurance
Goddard Systems Prussia, PA, Goddard Systems currently and training. GSI also facilitates an online
Inc. licenses 482 franchised schools throughout community for franchises to communicate
Market share: 22.4% the country. The Goddard School franchises and share ideas with each other.
provide comprehensive early childhood
development services, with a variety of Financial performance
programs that range from infant care to GSI, alongside most other companies in
child care for school-age children. Each this industry, is privately held. Financial
school is a licensed child care facility with an performance is estimated using data from
onsite owner, an education director and a franchise disclosure documents, which
faculty trained in early childhood education provide average results of all franchises.
or childhood development. GSI provides In 2018, IBISWorld estimates that The
continuing education for all teachers as well Goddard School franchises will generate
as a quality assurance program. $612.2 million in revenue, accounting for
To open a Goddard School franchise, the largest market share out of all
each franchisee must pay $135,000 in industry franchises. Revenue is expected
franchise fees and an ongoing royalty fee of to grow at an annualized rate of 7.0%
7.0%. Additionally, franchisees are required over the period, mostly due to the
to have at least $150,000 in liquid cash and company’s steady growth in its total
a minimum net worth of $750,000. GSI number of franchises.
The Goddard Schools (US industry-specific segment) - financial

performance*
Revenue Operating Income
Year ($ million) (% change) ($ million) (% change)
2013 435.5 N/C 57.1 N/C
2014 476.4 9.4 64.8 13.5
2015 510.3 7.1 70.4 8.6
2016 545.0 6.8 71.4 1.4
2017 563.8 3.4 69.7 -2.4
2018 612.2 8.6 76.0 9.0
*Estimates
SOURCE: IBISWORLD

Major Companies
Player Performance The first Primrose School educational $480,562 in liquid capital; total initial
child care facility was founded in 1992 in investment is estimated to range from
Atlanta, GA. Currently, the Primrose $716,680 to $5.8 million. The franchising
Primrose School School Franchising Company (Primrose) company has also created the Primrose
Franchising licenses 375 franchised schools Development Incentive Royalty Program,
Company throughout the United States. Primrose which reduces royalty fees to 2.0% of
Schools offer academic programs for revenue for the first 12 months for new
Market share: 17.4%
infants to pre-kindergarteners. locations in targeted markets. These
Additionally, Primrose centers offer markets include Illinois, Maryland,
private kindergarten and after-school Washington and Pennsylvania.
programs for older kids. Primrose’s
Balanced Learning curriculum is focused Financial performance
on literacy, hands-on learning, Primrose Schools Franchising Company is
mathematics and the integration of privately held; financial performance is
technology. Primrose has an education estimated using data from franchise
team that develops the curriculum, as disclosure documents. Over the five years
well as an education advisory board that to 2018, IBISWorld estimates that revenue
provides advice and recommendations for Primrose School franchises will
for educational improvements. increase at an annualized rate of 9.9% to
Prospective franchisees are required to reach $476.3 million. Over the past five
pay an initial franchise fee of $75,000, an years, revenue growth has been mostly
ongoing royalty fee of 7.0% and bolstered by growth in the company’s
marketing fee of 2.0%. Additionally, franchise locations, which increased from
franchisees are required to have at least 273 in 2013 to 375 in 2018.
Primrose Schools (US industry-specific segment) - financial performance*

2013 297.2 N/C 38.9 N/C
2014 318.0 7.0 43.3 11.3
2015 349.1 9.8 48.2 11.3
2016 392.4 12.4 51.4 6.6
2017 428.9 9.3 53.0 3.1
2018 476.3 11.1 59.1 11.5
*Estimates
SOURCE: IBISWORLD

Major Companies
Player Performance The first Kiddie Academy was opened in Franchises are also required to hire a
Baltimore County, MD in 1981. According state-qualified director and abide by a set
to the latest available data, Kiddie of education, training, business
Kiddie Academy Academy Child Care Learning Centers management, quality assurance and
Child Care Learning (Kiddie Academy) now operates 187 marketing standards. In return, the
Centers franchise locations. Franchises provide franchisor provides a full spectrum of
programs from infant day care to support to its franchises, including site
Market share: 8.9%
prekindergarten programs for kids under selection and academy design and
five. In addition, Kiddie Academy offers development services. These also include
programs for school-age children, regulatory approval for building, zoning
summer camps and special programs in and child care licensing throughout the
sign language and Spanish. Kiddie construction process.
Academy emphasizes a child-led learning
style, where children are encouraged to Financial performance
learn at their own pace. The company Kiddie Academy’s more stringent
seeks to provide degreed teachers for requirements and higher franchise fees
child care centers and staff members are compared with other industry players
required to participate in ongoing have resulted in faster growth over the
professional development programs. past five years. Over the five years to
New franchises must pay an initial 2018, IBISWorld estimates that total
franchise fee of $135,000 and an ongoing franchise revenue will increase at an
royalty fee of 7.0%. Owners must have annualized rate of 13.9% to reach $244.2
liquid cash of at least $200,000 and a net million. Growth for the company has
worth of $550,000 or greater. Total been a result of steady growth in the
initial investment is estimated to range number of franchise locations, having
from $459,300 to $4.3 million. grown from 117 locations in 2013.
Kiddie Academy (US industry-specific segment) - financial performance*

2013 127.4 N/C 16.7 N/C
2014 136.0 6.8 18.5 10.8
2015 150.6 10.7 20.8 12.4
2016 190.1 26.2 24.9 19.7
2017 227.2 19.5 28.1 12.9
2018 244.2 7.5 30.3 7.8
*Estimates
SOURCE: IBISWORLD

Major Companies
Player Performance In 2001, the Weissman family opened net worth of $500,000. Estimated total
The Learning Experience (TLE) child investment ranges from $493,549 to $3.6
education center. The owners have million. TLE offers turnkey (ready-to-go)
The Learning significant experience in the child care franchises, providing site selection,
Experience business, having founded the Tutor Time construction management, permits and
Market share: 8.5% franchises in 1980. In 1999, Tutor Time licenses, training, marketing budgeting
was sold to Childtime Learning Centers. and expense control. TLE also offers
Today, TLE has designed a curriculum absentee owner/franchisee options for
for the six stages of development that the individuals interested in investing in the
company has defined as: infant, toddler, child care business.
twaddler, prepper, preschooler and
kindergartner. The curriculum includes Financial performance
academic education, sign language, Similar to other industry players, TLE is
Spanish, etiquette and physical fitness. In private and releases minimal financial
addition, TLE offers special programs in information. The company’s market
music, performing arts, science, math, share has increased over the period,
dance and yoga. primarily driven by growth in the number
Currently, TLE licenses 179 franchises of franchise locations. Over the period
throughout the country, including 20 that the company’s franchise locations have
are company owned. To open a TLE grown from 131 in 2013. IBISWorld
franchise, prospective franchisees need to estimates that total franchise revenue will
pay an initial franchise fee of $60,000 match this upward trend over the same
and an ongoing royalty fee of 7.0%. period, increasing at an annualized rate
Owners are required to have liquidity and of 10.4% to reach $233.7 million in 2018.
The Learning Experience (US industry-specific segment) - financial

performance*
2013 142.6 N/C 18.7 N/C
2014 146.1 2.5 19.9 6.4
2015 167.0 14.3 23.0 15.6
2016 209.5 25.4 27.5 19.6
2017 217.5 3.8 26.9 -2.2
2018 233.7 7.4 29.0 7.8
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD

Major Companies
Other Company The first Creative World School was Florida, Illinois, Missouri, Texas and
Performance opened in 1970 and Creative World Virginia, where the company is
School Franchising Company has been headquartered. Initial investment to
franchising since 2000. Creative World open a franchise location ranges from
Creative World Schools provide specific age-appropriate $2.4 to $5.2 million, one of the highest
School Franchising curriculum to infants, toddlers, two-year amounts among the major and other
Company old’s, preschoolers and pre-K children, companies. IBISWorld estimates, based
and school age children. According to the on the latest available data, that industry-
Market share: 1.0%
latest available data in 2017, the company relevant revenue for the company was
operates 23 franchises all located in $27.9 million in 2017.
Other Company The first LeafSpring school was company operates 12 locations, one being
Performance established in 1989 as “Rainbow Station” company owned, in Virginia, Indiana,
and LeafSpring School (LeafSpring) has North Carolina and Texas. In addition,
been franchising since 1999. LeafSpring the company has recently begun
LeafSpring School provides nursery school, preschool, expanding franchise operations
Market share: 1.0% private kindergarten and after school internationally, with the first
care programs. In addition, the company international franchise opened in 2013 in
also offers Camp Little Cloud and Camp China. As of 2018, the company operates
Blue Sky during the summer. Broadly, a total of 9 franchise locations outside of
the company calls its curriculum the United States and has plans for an
Playworks and is rooted in providing additional 110 units in China. IBISWorld
learning and exploration opportunities estimates industry-relevant revenue for
through intentional play. Today the the company to be $27.1 million in 2018.

Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensity The Child Education and developmental

Center Franchise industry has a low Capital intensity
Capital units per labor unit
level of capital intensity. IBISWorld
Level
estimates that for every $1.00 spent on 0.5
The levelof capital wages, industry operators will spend
intensity is L ow $0.05 on capital investments. The 0.4
largest capital costs incurred by industry 0.3

operators is the cost of maintaining the
franchise location. Over the past five 0.2
years, capital intensity remained flat. 0.1

The industry requires a high level of
personal care and interaction; thus, 0.0
Economy Healthcare Child Education &
wages constitute the largest expense for and Social Developmental
Assistance Center Franchises
industry operators. Since the ratio of Dotted line shows a high level of capital intensity
employees to children is often a SOURCE: WWW.IBISWORLD.COM
company’s largest selling point, large

businesses generally hire more staff to involved in finding people who are
keep the employee-to-child ratio high. suitable for child education. As parents
In addition, there are significant costs look to provide their children with the

Capital Intensity best educational opportunities, increase enrollment. IBISWorld expects

continued companies are hiring more teachers with capital intensity to remain low through
some college or graduate degree to 2023 while labor intensity remains high.
Technology & Systems The Child Education and Developmental in various aspects of child care. For
Center Franchises industry has a low instance, some centers have implemented
Level level of technological change. Some child streaming cameras to permit parents who
education centers are introducing have a secure access code to see their
The level
of computer-based educational tools for child; however, this remains rare as many
Technology children. According to the National providers have rejected such technology
Change is L ow Association for the Education of Young due to liability and security issues.
Children, these include the use of digital Additionally, several large franchise
cameras, computer exercises and the operators have instituted virtual private
internet as interactive learning tools. networks and company-wide
More child education and developmental management information systems to
centers are also incorporating technology decrease administration costs.
Revenue Volatility The Child Education and Developmental education are a necessary expense, a
Center Franchises industry has a low factor that minimizes revenue volatility
level of revenue volatility. Demand for for the industry. Government funding
Level
services in the industry is primarily and tax measures (which reduce price
The level of driven by the number of women in the and bolster demand) also tend to reduce
Volatility is L ow workforce, per capita disposable income volatility with more parents interested in
and the unemployment rate. However, placing their children in child education
for most families, child care and and developmental centers.

Regulation & Policy Child education and developmental state and information on starting up a
centers are subject to numerous child-education center.
regulations and licensing The National Association for the
Level & Trend requirements. Government agencies Education of Young Children (NAEYC) has
he level of
T regularly review the safety of established comprehensive criteria for
Regulation is buildings, educational qualifications providing quality early childhood education
Mediumand the and training of teachers, the dietary and care. NAEYC accreditation criteria cover
programs, the daily curriculum and a wide range of quantitative and qualitative
trend is I ncreasing
hiring practices. Licenses must be factors including, among other things,
renewed periodically and employee teacher qualifications and development,
background checks are conducted. staffing ratios, health and safety and
Repeated failures to comply with physical environment. The criteria of
regulations can be subject to sanctions, accreditation are generally more stringent
including fines and even suspension of than state regulatory requirements.
the operator’s license to operate. The National Child Care Association
In some states, child education and represents private licensed child-
developmental centers affiliated with education providers. Also, the National
religious institutions are exempt from Association of Family Child Care is a
child-education licensing regulations. national membership organization
The National Child Care Information working with more than 400 state and
Center, within the US Department of local family child-care provider
Health and Human Services, provides associations across the United States and
detailed information on regulations by has developed accreditation programs.
Industry Assistance In the United States, parents largely bear Most of the funding for child care
the cost of child care, which is comes from the Child Care and
supplemented by more than $10.0 billion Development Block Grant (CCDBG), the
Level & Trend in government money that states spend Temporary Assistance for Needy Families
he level of Industry
T on child care annually. However, there is (TANF) program and the Social Services
Assistance is some financial assistance provided to Block Grant (SSBG or Title XX). States
Mediumand the families who use child day-care services. use these funds to subsidize the monthly
For instance, the IRS provides a child cost of child care for low-income families.
trend is I ncreasing
and dependent care federal tax credit In addition, state and local governments
ranging from 20.0% to 35.0% of certain pay for a variety of child care programs,
child day care expenses. The amount of including pre-school initiatives.
child care expenses is limited to $3,000 Due to the nature of these funds that
for one child and $6,000 for two or more are issued as block grants, states have
children. The government also provides wide discretion over fund disbursement.
incentives for employers to offset costs CCDBG is the primary source of federal
related to employer-provided child care funds for child care, but requirements are
facilities. Costs related to acquiring or subject to broad interpretation. As a
constructing property used as a qualified result, each state establishes its own
child care center, operating an existing standards and oversight policies.
child care center or contracting with an However, according to the US Department
independent child care operator to care of Health and Human Services (HHS),
for children of the employees, will qualify only about 17.0% of eligible children
for a tax credit. receive fee assistance. In reality, many

Industry Assistance states have low subsidy rates with most The Child Nutrition and WIC
continued low-income families not being able to Reauthorization Act of 2004 permitted
afford the difference between the monthly for-profit child care centers to participate
subsidy they receive and the cost of child in the Child and Adult Care Food Program
care in their community. when 25.0% of the centers enrollment or
About 41 states use Title XX funds to licensed capacity receive either Title XX or
help meet demand for child care assistance. are eligible for free or reduced-price meals.

Key Statistics
Industry Data Industry Per capita dis-
Revenue Value Added Establish- Wages Domestic posable income
($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand ($)
2009 1,914.6 1,051.1 2,089 1,674 40,974 -- -- 825.2 N/A 35,620.0
2010 2,028.3 1,137.8 2,102 1,676 42,189 -- -- 874.1 N/A 35,684.0
2011 2,104.0 1,197.1 2,090 1,662 44,137 -- -- 906.8 N/A 36,299.0
2012 2,217.2 1,294.2 2,106 1,676 45,865 -- -- 941.7 N/A 37,163.0
2013 2,283.1 1,357.1 2,097 1,675 46,876 -- -- 1,005.5 N/A 36,369.0
2014 2,343.9 1,402.5 2,086 1,669 48,238 -- -- 1,027.5 N/A 37,432.0
2015 2,449.7 1,440.2 2,098 1,681 50,341 -- -- 1,043.4 N/A 38,702.0
2016 2,572.4 1,572.1 2,124 1,701 53,553 -- -- 1,176.0 N/A 38,956.0
2017 2,597.7 1,637.5 2,138 1,715 56,072 -- -- 1,253.9 N/A 39,156.0
2018 2,737.2 1,720.9 2,155 1,754 58,778 -- -- 1,315.8 N/A 40,030.0
2019 2,877.2 1,802.5 2,206 1,792 61,314 -- -- 1,374.6 N/A 40,964.0
2020 3,020.8 1,888.4 2,261 1,834 64,047 -- -- 1,437.4 N/A 41,742.0
2021 3,199.2 1,990.3 2,323 1,880 67,087 -- -- 1,508.9 N/A 42,619.0
2022 3,385.6 2,099.1 2,394 1,934 70,408 -- -- 1,586.3 N/A 43,386.0
2023 3,418.2 2,124.7 2,416 1,952 71,463 -- -- 1,608.3 N/A 43,977.0
Annual Change Industry Establish- Domestic Per capita dis-

Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand posable income
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2010 5.9 8.2 0.6 0.1 3.0 N/A N/A 5.9 N/A 0.2
2011 3.7 5.2 -0.6 -0.8 4.6 N/A N/A 3.7 N/A 1.7
2012 5.4 8.1 0.8 0.8 3.9 N/A N/A 3.8 N/A 2.4
2013 3.0 4.9 -0.4 -0.1 2.2 N/A N/A 6.8 N/A -2.1
2014 2.7 3.3 -0.5 -0.4 2.9 N/A N/A 2.2 N/A 2.9
2015 4.5 2.7 0.6 0.7 4.4 N/A N/A 1.5 N/A 3.4
2016 5.0 9.2 1.2 1.2 6.4 N/A N/A 12.7 N/A 0.7
2017 1.0 4.2 0.7 0.8 4.7 N/A N/A 6.6 N/A 0.5
2018 5.4 5.1 0.8 2.3 4.8 N/A N/A 4.9 N/A 2.2
2019 5.1 4.7 2.4 2.2 4.3 N/A N/A 4.5 N/A 2.3
2020 5.0 4.8 2.5 2.3 4.5 N/A N/A 4.6 N/A 1.9
2021 5.9 5.4 2.7 2.5 4.7 N/A N/A 5.0 N/A 2.1
2022 5.8 5.5 3.1 2.9 5.0 N/A N/A 5.1 N/A 1.8
2023 1.0 1.2 0.9 0.9 1.5 N/A N/A 1.4 N/A 1.4
Key Ratios Imports/ Exports/ Revenue per Share of the

IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2009 54.90 N/A N/A 46.73 43.10 19.61 20,139.60 0.01
2010 56.10 N/A N/A 48.08 43.10 20.07 20,718.67 0.01
2011 56.90 N/A N/A 47.67 43.10 21.12 20,545.12 0.01
2012 58.37 N/A N/A 48.34 42.47 21.78 20,532.00 0.01
2013 59.44 N/A N/A 48.71 44.04 22.35 21,450.21 0.01
2014 59.84 N/A N/A 48.59 43.84 23.12 21,300.63 0.01
2015 58.79 N/A N/A 48.66 42.59 23.99 20,726.64 0.01
2016 61.11 N/A N/A 48.03 45.72 25.21 21,959.55 0.01
2017 63.04 N/A N/A 46.33 48.27 26.23 22,362.32 0.01
2018 62.87 N/A N/A 46.57 48.07 27.28 22,385.93 0.01
2019 62.65 N/A N/A 46.93 47.78 27.79 22,419.02 0.01
2020 62.51 N/A N/A 47.17 47.58 28.33 22,442.89 0.01
2021 62.21 N/A N/A 47.69 47.16 28.88 22,491.69 0.01
2022 62.00 N/A N/A 48.09 46.85 29.41 22,530.11 0.01
2023 62.16 N/A N/A 47.83 47.05 29.58 22,505.35 0.01
Figures are in inflation-adjusted 2018 dollars. SOURCE: WWW.IBISWORLD.COM

Jargon & Glossary
Industry Jargon EMPLOYER-BASED DAY CAREA service that a STAFF-TO-CHILD RATIOLegal ratio mandated under
company provides its workers through a contract with a state law for child-care centers for the maximum
local child-care center or facility. number of children per staff member.
OCCUPANCY RATEThe rate of available spots at a
child-care center that are filled
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY REVENUEThe total sales of industry goods
new companies struggle to enter an industry, while low and services (exclusive of excise and sales tax); subsidies
barriers mean it is easy for new companies to enter an on production; all other operating income from outside
industry. the firm (such as commission income, repair and service
CAPITAL INTENSITYCompares the amount of money income, and rent, leasing and hiring income); and
spent on capital (plant, machinery and equipment) with capital work done by rental or lease. Receipts from
that spent on labor. IBISWorld uses the ratio of interest royalties, dividends and the sale of fixed
depreciation to wages as a proxy for capital intensity. High tangible assets are excluded.
capital intensity is more than $0.333 of capital to $1 of INDUSTRY VALUE ADDED (IVA)The market value of
labor; medium is $0.125 to $0.333 of capital to $1 of labor; goods and services produced by the industry minus the
low is less than $0.125 of capital for every $1 of labor. cost of goods and services used in production. IVA is
CONSTANT PRICESThe dollar figures in the Key Statistics also described as the industry’s contribution to GDP, or
table, including forecasts, are adjusted for inflation using profit plus wages and depreciation.
the current year (i.e. year published) as the base year. This INTERNATIONAL TRADEThe level of international
removes the impact of changes in the purchasing power of trade is determined by ratios of exports to revenue and
the dollar, leaving only the “real” growth or decline in imports to domestic demand. For exports/revenue: low is
industry metrics. The inflation adjustments in IBISWorld’s less than 5%, medium is 5% to 20%, and high is more
reports are made using the US Bureau of Economic than 20%. Imports/domestic demand: low is less than
Analysis’ implicit GDP price deflator. 5%, medium is 5% to 35%, and high is more than
DOMESTIC DEMANDSpending on industry goods and 35%.
services within the United States, regardless of their LIFE CYCLEAll industries go through periods of growth,
country of origin. It is derived by adding imports to maturity and decline. IBISWorld determines an
industry revenue, and then subtracting exports. industry’s life cycle by considering its growth rate
EMPLOYMENTThe number of permanent, part-time, (measured by IVA) compared with GDP; the growth rate
temporary and seasonal employees, working proprietors, of the number of establishments; the amount of change
partners, managers and executives within the industry. the industry’s products are undergoing; the rate of
technological change; and the level of customer
ENTERPRISEA division that is separately managed and
acceptance of industry products and services.
keeps management accounts. Each enterprise consists
of one or more establishments that are under common NONEMPLOYING ESTABLISHMENTBusinesses with
ownership or control. no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
ESTABLISHMENTThe smallest type of accounting unit
individuals.
within an enterprise, an establishment is a single
physical location where business is conducted or where PROFITIBISWorld uses earnings before interest and tax
services or industrial operations are performed. Multiple (EBIT) as an indicator of a company’s profitability. It is
establishments under common control make up an calculated as revenue minus expenses, excluding
enterprise. interest and tax.
EXPORTSTotal value of industry goods and services sold VOLATILITYThe level of volatility is determined by
by US companies to customers abroad. averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
IMPORTSTotal value of industry goods and services
±20%; high volatility is ±10% to ±20%; moderate
brought in from foreign countries to be sold in the
volatility is ±3% to ±10%; and low volatility is less than
United States.
±3%.
INDUSTRY CONCENTRATIONAn indicator of the
WAGESThe gross total wages and salaries of all
dominance of the top four players in an industry.
employees in the industry. The cost of benefits is also
Concentration is considered high if the top players
included in this figure.
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.

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IBISWorld - Child Education & Developmental Center Franchises in The US - 2018

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Taking care: Increasing interest in early

IBISWorld Industry Report OD5594

2 About this Industry 17 International Trade 30 Operating Conditions

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

About this Industry

Main Activities The primary activities of this industry are

The major products and services in this industry are

Similar Industries 62441 Day Care in the US

81411 Maids, Nannies & Gardeners in the US

61111a Public Schools in the US

61111b Private Schools in the US

Provided to: Edeska (2129455405) | 16 October 2019

About this Industry

Additional Resources For additional information on this industry

IBISWorld writes over 1000 US

Provided to: Edeska (2129455405) | 16 October 2019

Key Statistics Revenue Annual Growth 13–18 Annual Growth 18–23

$339.4m $1.3bn 1,754

Learning Centers Revenue Employment

8.9% SOURCE: WWW.IBISWORLD.COM

Products and services segmentation (2018)

8.5% 3.7% recreational

Industry Structure Life Cycle Stage Growth Regulation Level Medium

Provided to: Edeska (2129455405) | 16 October 2019

Provided to: Edeska (2129455405) | 16 October 2019

Per capita disposable income Labor force participation rate of women

Provided to: Edeska (2129455405) | 16 October 2019

Current Franchises in the Child Education and

costs have supported industry revenue

Provided to: Edeska (2129455405) | 16 October 2019

Industry landscape Increased demand for center-based child

Provided to: Edeska (2129455405) | 16 October 2019

Industry The Child Education and Developmental

Growth drivers Over the five years to 2023, the price of

Provided to: Edeska (2129455405) | 16 October 2019

Affordability issues Over the outlook period, legislation is

Provided to: Edeska (2129455405) | 16 October 2019

Provided to: Edeska (2129455405) | 16 October 2019

Provided to: Edeska (2129455405) | 16 October 2019

Products & Markets

Supply Chain KEY BUYING INDUSTRIES

KEY SELLING INDUSTRIES

Provided to: Edeska (2129455405) | 16 October 2019

Products & Markets

Products & Services Products and services segmentation (2018)

Total $2.7bn SOURCE: WWW.IBISWORLD.COM

breakdown varies depending on specific provide students with cognitive,

Provided to: Edeska (2129455405) | 16 October 2019

Products & Markets

Provided to: Edeska (2129455405) | 16 October 2019

Products & Markets

Major Markets Major market segmentation (2018)

According to the National Household providing services for infants is typically

Provided to: Edeska (2129455405) | 16 October 2019

Products & Markets

Provided to: Edeska (2129455405) | 16 October 2019

Products & Markets

Business Locations 2018

Provided to: Edeska (2129455405) | 16 October 2019

Products & Markets

Business Locations The location of child education and

At the state level, the largest state by