What should I check before buying a daycare?

A childcare business is a licence attached to a building, staffed by qualified people, operating under ratios that are not negotiable. Revenue capacity is set by the licence rather than by demand, which makes the licence the first thing to read and the last thing to assume.

Licensed capacity caps the revenue

The licence states how many children may attend and in which age groupings, and the physical space determines those numbers. A buyer modelling growth needs to know whether the licence permits it — expanding capacity means a variation application, premises work and inspection, not simply enrolling more families.

Licences are premises-specific and do not transfer automatically

Provincial regimes treat a change of licensee as requiring application or approval, with the new operator assessed on its own account. Establish early what your province requires, because a buyer who completes before the licensing position is resolved may own a centre it cannot lawfully operate.

Ratios and qualifications are the operating constraint

Staff-to-child ratios and the proportion of qualified educators are set by regulation. A centre operating at the minimum has no slack: one resignation can force a reduction in attendance, which reduces revenue immediately. Check current staffing against the requirement rather than against the payroll, and ask what the centre does when someone is absent.

Read the compliance history and the lease together

Inspection findings, any conditions attached to the licence and outstanding remediation all pass to you in substance. So does the premises problem if the lease runs out before you have recovered the investment — and a childcare licence tied to a building you may have to leave is a licence with a deadline on it.