The U.S. child care market generated roughly $65 billion in revenue in 2024 and is projected to reach $109 billion by 2033. With about 12.3 million children under five enrolled in regular care arrangements, the daycare sector remains one of the largest service-driven small business categories in the country. This guide walks through the licensing, costs, and operational steps that typically apply when opening a daycare in the United States.
Several factors explain why entrepreneurs continue to enter the daycare sector. Demand remains strong as more dual-income households and single parents require reliable childcare. According to Grand View Research, the U.S. childcare market is growing at around 6% annually. Center-based facilities generate about 58% of industry revenue, family childcare homes 24%, and nanny or in-home care 18%. Average daycare tuition in the U.S. reached about $321 per week for center-based care in 2025 (Care.com).
Can Anyone Open a Daycare?
Opening a daycare is not as simple as registering a business. Every state operates its own child care licensing system, and operators must meet specific minimum requirements before serving children. The exact threshold for licensing depends on the number of children cared for, the location (private home or commercial facility), and the operator’s qualifications.
Typical baseline requirements across states include:
- Minimum age of 18 to 21, depending on the state.
- High school diploma or equivalent, with additional early-childhood credentials required for centers.
- Successful completion of criminal background checks, including FBI fingerprinting, state criminal repositories, the National Sex Offender Registry, and state child abuse and neglect registries.
- Pre-service training in early childhood development, ranging from 6 to 90+ hours depending on the state and program type.
- Current CPR and First Aid certification.
- Compliance with health, safety, and fire codes for the facility.
How hard is it to open a daycare? The answer depends largely on the program type. A licensed family child care home in a private residence typically faces lighter requirements than a center-based daycare. How long does it take to open a daycare? A home daycare ranges from three to six months on average, while a commercial daycare center often takes 9 to 18 months from concept to opening day. Staff who care for children typically need to be certified in CPR and First Aid before the facility can open.
How to Open a Daycare: Step-by-Step Guide
The path from concept to opening day generally follows the eight steps below. State-specific requirements may add additional milestones, especially in jurisdictions like New York, California, and Texas with stricter licensing pathways.
Step 1. Decide the Daycare Type and Choose a Legal Business Structure
Operators typically choose among three common formats when planning to open a daycare center or home-based program: an in-home family child care (a daycare center at home), a center-based daycare facility, or a faith-based or community-affiliated program. The number of children allowed varies by state and by the legal classification of the program.
Common business structures used in this sector include:
- Sole proprietorship: simplest to set up, common for home-based programs.
- Limited Liability Company (LLC): separates personal and business liability, common across both home daycares and centers.
- S-Corporation or C-Corporation: typically used for larger center-based operations or multi-location plans.
- Nonprofit (501(c)(3)): used for faith-based or community-affiliated daycares seeking grant funding.
The IRS and the U.S. Small Business Administration publish detailed guidance on choosing a structure. Operators commonly obtain an Employer Identification Number (EIN) from the IRS before applying for state licensing.
Step 2. Research State Licensing Requirements and Secure Permits
This step is the most administratively complex. Each state’s department of human services, department of education, or dedicated child care licensing office sets the rules. The federal Office of Child Care maintains a public-facing index at childcare.gov, and the Administration for Children and Families publishes the National Database of Child Care Licensing Regulations.
Common steps in obtaining a license to open a daycare include:
- Submit an application to the state child care licensing agency.
- Pass criminal background checks for the operator and all staff.
- Complete the state-required pre-service training (early childhood education, safe sleep, mandated reporter, CPR/First Aid).
- Pass a facility inspection covering fire safety, sanitation, square footage per child, and outdoor space requirements.
- Maintain staff-to-child ratios. Typical infant ratios range from 1:3 to 1:5, preschool ratios from 1:8 to 1:12, and school-age ratios from 1:15 to 1:25.
- Secure local zoning approval, business license, and certificate of occupancy.
- Obtain general liability insurance and, for vehicle transport, commercial auto coverage.
Family child care homes generally face lighter inspection cycles than centers. State-specific home licensing rules are published by each state’s licensing agency. Renewal cycles, continuing education hours (typically 10 to 24 hours per year), and ratio enforcement vary by jurisdiction.
Step 3. Create a Business Plan
Creating a strong business plan documents the daycare’s concept, market positioning, financial projections, and operational structure. Lenders and grant programs typically require one before approving funding.
Standard components include an executive summary, market analysis, services and pricing, marketing strategy, operations plan, staffing plan, and three-year financial projections covering startup costs, monthly revenue, payroll, and projected break-even. The SBA publishes free templates and resources for child care business planning.
Step 4. Find a Location
Location requirements differ for home-based and center-based daycare programs. A home daycare uses an existing residence that meets state inspection standards. A center-based daycare requires a commercial space with specific square footage per child (commonly 35 square feet of indoor space per child), accessible outdoor play areas, and code-compliant kitchen and bathroom facilities.
Operators typically evaluate locations near residential neighborhoods, employment hubs, and major roads to minimize parent commute times. Some states require zoning approval before licensing, which can extend the timeline.
Step 5. Procure Equipment
Equipment lists vary by age group served. Common items for licensed child care facilities include cribs and napping mats, child-sized tables and chairs, age-appropriate toys and learning materials, art supplies, books, outdoor play equipment, and first-aid kits. Center-based operations also invest in commercial-grade kitchen equipment if meals are served on-site.
States typically require non-toxic materials, safe sleep equipment that meets Consumer Product Safety Commission (CPSC) standards, and child-proofed electrical outlets and cabinets. Many providers use child care management software for enrollment, billing, attendance tracking, and parent communication.
Step 6. Organize Operations and Hire Staff
Family child care homes are often operated solo or with one assistant, while center-based programs require teams of teachers, assistant teachers, and administrative staff. Staff qualifications are set by state regulation and commonly include early childhood credentials, background checks, and training hours.
Operators typically draft staff schedules, develop a written child care program with daily curriculum, prepare an emergency preparedness plan, and document policies on illness, discipline, and parent communication. The Bureau of Labor Statistics reports a median annual wage for child care workers of approximately $30,370 as of May 2023, with regional variation.
Step 7. Launch Marketing
Marketing for a daycare typically combines local and digital channels. Operators commonly list their facility on state-run child care resource and referral (CCR&R) databases, register on Google Business Profile, partner with local schools and pediatrician offices, and use social media to share daily activities and parent testimonials.
Enrollment campaigns often begin 60 to 90 days before opening. Open house events, referral incentives, and partnerships with local employers offering child care benefits are widely used to fill initial slots.
Step 8. Open the Daycare
Once the license is issued, the facility is inspected, and initial enrollments are confirmed, the daycare can open. Many operators run a soft opening with a smaller group of children for the first one to two weeks to refine routines and staff coordination.
State licensing agencies typically conduct an opening inspection and may follow up with periodic unannounced visits to verify ongoing compliance.
Is it Also Possible to Open a Daycare as a Franchise?
Yes, several well-established childcare franchise brands operate across the United States. Franchise concepts offer brand recognition, a documented operating model, curriculum frameworks, and corporate support, in exchange for an initial fee and ongoing royalties. In the U.S. childcare franchise systems include, e.g.,
- Primrose Schools: premium accredited preschool franchise. According to Entrepreneur’s Franchise 500 listing, initial investment ranges from approximately $704,000 to $8,514,000, with a franchise fee of about $135,000 and a 7% royalty.
- The Goddard School: large early childhood education franchise with locations across the U.S. Total initial investment typically ranges from approximately $700,000 to over $1 million, depending on facility size and real estate model.
- Kiddie Academy: educational child care franchise with approximately 345 locations across 39 states as of 2025. Initial investment ranges from about $405,000 to $6,950,000.
- The Learning Experience: rapidly expanding early childhood franchise with proprietary curriculum and characters, operating in dozens of states.
- Children’s Lighthouse: faith-friendly early learning franchise targeting families with children from six weeks to 12 years.
Prospective franchisees typically review the Franchise Disclosure Document (FDD) for each system, examining Item 5 (initial fees), Item 6 (royalty and ad fund), Item 7 (estimated initial investment), and Item 19 (financial performance representations). Most state franchise registration portals (California DFPI, Wisconsin DFI, Minnesota Commerce) provide access to current FDD filings.
How Much Will It Cost to Open a Daycare in 2026 ?
How much money is needed to open a daycare depends primarily on whether the program is run from a private home or a commercial facility. There is no single federally published number for total startup costs, so the table below itemizes the actual line items an individual operator typically faces. Each row indicates whether the value comes from a federal or state source, or whether it reflects an industry-typical range without a published national statistic.
Per-operator startup cost ranges for opening a daycare in the United States 2026
| Cost Item | Home-based family child care | Center-based daycare | Source / Note |
|---|---|---|---|
| State licensing application fee | $25 to $300 | $100 to $500 | State child care licensing agencies (varies by state) |
| FBI fingerprint background check (per person) | $25 to $75 | $25 to $75 | FBI Criminal Justice Information Services |
| Business registration (LLC formation) | $50 to $500 | $50 to $500 | Secretary of State, varies by state |
| Pre-service training and CPR/First Aid certification | $100 to $500 | $500 to $2,000 (per staff member) | State-mandated; industry-typical fee |
| General liability insurance (annual premium) | $500 to $1,500 | $1,500 to $5,000 | Industry-typical; no federal statistic |
| Buildout, renovation, code compliance | $0 to $5,000 | $25,000 to $500,000+ | Industry-typical; depends on facility condition |
| Equipment (cribs, furniture, toys, learning materials) | $2,000 to $10,000 | $30,000 to $200,000 | Industry-typical; CPSC standards required for cribs |
| Outdoor play structures | $1,000 to $5,000 | $10,000 to $50,000 | Industry-typical |
| Initial marketing and enrollment campaign | $500 to $3,000 | $5,000 to $20,000 | Industry-typical |
| Working capital (3 to 6 months of expenses) | $5,000 to $15,000 | $50,000 to $200,000+ | SBA business planning guidance |
| Approximate total startup investment | $10,000 to $40,000 | $125,000 to $1,000,000+ | Synthesis of line items above |
State and federal fees are sourced from the relevant agencies; equipment, insurance, and buildout figures are industry-typical ranges and not federally aggregated statistics.
For a home-based family child care, the total out-of-pocket investment for an individual operator typically falls in the low-five-figure range. For a center-based daycare, the figure runs from the high five figures for a small leased space to over a million dollars for a fully built-out, larger-capacity facility. Real estate (lease or purchase) is excluded from the table because it varies so widely by location that a single national range is not meaningful.
The franchise table below uses figures published directly in the FDDs of the largest U.S. childcare franchise systems and in Entrepreneur’s Franchise 500 audit listings. For independent (non-franchise) daycares, no aggregate published statistic exists, which is why a side-by-side independent column is not shown.
Investment figures for the three largest US daycare franchise systems
| Franchise Brand | Initial Franchise Fee | Total Initial Investment | Royalty | Primary Source |
|---|---|---|---|---|
| Primrose Schools | $135,000 | $704,000 to $8,514,000 | 7% of gross revenue | Entrepreneur Franchise 500 listing (audits FDD) |
| Kiddie Academy | ~$120,000 | $405,000 to $6,950,000 | 7% of gross revenue | Entrepreneur Franchise 500 listing (audits FDD) |
| The Goddard School | ~$135,000 | $700,000 to $1,070,000+ (typical) | 7% of gross revenue (plus 4% marketing fee) | goddardschoolfranchise.com (brand franchise dev site) |
FDD-audited or brand-published primary-source data. Ranges reflect facility size and whether real estate is leased or purchased. Smaller daycare franchises (The Learning Experience, Children’s Lighthouse) also operate in the US but with less publicly accessible primary-source financial data.
How to Get Funding to Open a Daycare
Several funding sources exist for prospective daycare operators in the United States. Federal, state, and private programs support both startup costs and operating expenses.
- SBA 7(a) loan: general-purpose small business loan guaranteed by the U.S. Small Business Administration, commonly used for working capital, equipment, and real estate. For-profit child care centers are standard SBA-eligible businesses.
- SBA 504 loan: long-term, fixed-rate financing of up to $5 million for fixed assets such as equipment and facilities.
- SBA Microloan: loans up to $50,000 for small businesses, including child care providers.
- USDA Rural Development Community Facilities Direct Loan & Grant Program: financing for rural daycare facility upgrades, renovations, or new construction.
- Child Care and Development Block Grant (CCDBG): federal program providing child care subsidies; FY2026 funding totals $8.83 billion per Congressional appropriations.
- Head Start and Early Head Start: federal grant programs supporting comprehensive early childhood services for low-income families, funded at $12.36 billion in FY2026.
- State-level grants and tax credits: many states operate dedicated child care expansion grant programs and small business tax credits.
Each program has eligibility rules tied to facility type, location, license status, and the population served. Detailed criteria for each program are published on SBA.gov, USDA.gov, the Office of Child Care, and state child care administrator websites.
Good to know:
Some operators of 24-hour daycare programs serving shift workers and healthcare staff have accessed additional state-level grants tied to workforce support. Eligibility for grants to open a daycare typically requires a state license, a documented business plan, and in many cases, agreement to serve children receiving CCDBG subsidies. The Office of Child Care publishes a state-by-state directory of administrators.
This content is provided for informational purposes only and does not constitute legal, tax, financial, or professional advice. Laws and regulations vary by state and individual circumstances and may change over time. Readers should consult a qualified attorney, tax professional, or other licensed professional regarding their specific situation. Nothing herein creates an attorney-client relationship.
