How do I sell a daycare in Ontario?

Anyone who wants to sell a daycare in Ontario should start from one sentence in the provincial statute: a licence is not transferable. The licence does not pass to the buyer with the keys. The buyer is in practice applying for the right to operate, and that application, not your signature, decides when the sale can complete. This guide goes through what the Child Care and Early Years Act, 2014 and its regulation say that bears on a sale, and what to arrange with a buyer so the closing, the staff and the families are not caught out.

A licence is needed to operate, and it does not transfer

The Act says, subject to the exceptions in section 6, that no person shall operate a premises where child care is provided except under the authority of a licence to operate a child care centre. It also says a licence is not transferable. Read together, they mean the buyer cannot rely on yours. The Act adds that, subject to section 26, a licence holder is authorized to operate the centre only at the premises specified in the licence. Section 26 lets a director authorize a licensee in writing to operate at other premises only for a temporary period. Ask early whether the buyer intends to stay in the same premises.

The buyer needs to be ready to run it from day one

The regulation, O. Reg. 137/15, says every licensee of a child care centre shall employ a supervisor, who plans and directs the programme, is in charge of the children, oversees the staff and is responsible to the licensee. The supervisor must be a person described in section 53 of the regulation. The Ministry of Education’s Child Care Centre Licensing Manual states that the Act and the regulation contain requirements that licensees of child care centres must meet. Ask the buyer how they will fill the supervisor role, and whether your current supervisor is expected to stay.

If the licensee is a corporation

Where the licensee is a corporation, the Act requires it to notify a director, in writing, within 15 days of any change in the officers or directors of the corporation. Here the word director means a person the Minister appoints under the Act, not a company director. This matters because some owners hold the licence through a company and think of the sale as a transfer of shares. Whether a change of that kind is enough, or whether the buyer must apply separately, is a question for the Ministry’s licensing contacts and your lawyer. Do not assume it without asking.

Staff move on special terms

The Employment Standards Act, 2000 says that if an employer sells a business or part of a business and the purchaser employs an employee of the seller, the employment is deemed not to have been terminated or severed for the purposes of that Act, and the employee’s service with the seller counts as service with the purchaser when calculating length of employment. That rule does not apply if the purchaser hires the employee more than 13 weeks after the earlier of the employee’s last day with the seller and the day of the sale. If staff are hired by a buyer, tell them what to expect. If the buyer will not hire some of them, take advice on your own obligations before you announce.

Who is responsible while you still hold the licence

Under O. Reg. 137/15, subject to its exceptions, every licensee is responsible for the operation and management of each child care centre it operates, including the programme, financial and personnel administration. The regulation lets a licensee appoint a person who is responsible to the licensee for day-to-day operation and management. That does not make the appointee the licensee. While you hold the licence, the responsibility in the regulation is yours as the licensee. If a buyer wants to work in the centre before approval, ask the Ministry how that arrangement should be set up before you agree to it.

Expect the Ministry to look at the centre itself

The Licensing Manual explains that program advisors look for information showing that a licensee is meeting the requirements, and that they review documents such as the policies and procedures a licensee is required to have, along with files and records. The manual also says applicants for a licence must submit supporting documents, like floor plans, policies and procedures, and municipal approvals. Before listing, read your own policies and records as an advisor would, and fix gaps while the centre is still yours. The Ministry says licensees with questions about the Act or the manual can contact their program advisor or the licensed child care helpdesk.

A sequence that fits a licence-based sale

• Tell your licensing contact at the Ministry that a sale is planned, and ask what the buyer’s application will need from you.
• Make the purchase agreement conditional on the buyer being issued a licence for the premises, with a date by which they must apply.
• Ask what happens if the licence is delayed, including whether you can keep operating under your own licence in the meantime.
• Plan how and when you will tell parents about the sale.
• Check the lease for landlord consent to a change of tenant, since a licence authorizes operation only at the premises it specifies, subject to section 26.