Providing childcare without being registered with Ofsted is a criminal offence, and so is operating from premises Ofsted has not approved. Registration costs £220 and takes around 12 weeks. Everything that makes a nursery expensive sits elsewhere: the premises, the ratios and the staff who have to be in post before a single child arrives. What follows applies in England.
A nursery is regulated twice over. Ofsted registers the provider and approves each set of premises, and the Early Years Foundation Stage framework then governs how the setting runs, down to how many adults must be present for each age group. Those two things decide the economics. The ratios fix the staff cost per child before any commercial decision is taken, and the registration attaches to a legal entity and an address rather than to a brand, which changes what expansion and acquisition actually involve.
What is a nursery business?
A day nursery provides care and early education for children from birth to school age, on premises that are not someone’s home. Ofsted calls this childcare on non-domestic premises, and it is the category covering nurseries, pre-schools, playgroups and holiday clubs. Two registers exist. The Early Years Register covers children from birth to 31 August after their fifth birthday, and providers on it must meet the EYFS framework. The Childcare Register has a compulsory part for children aged five to eight and a voluntary part for children over eight. A full-day nursery normally joins the Early Years Register, and the Childcare Register is free to join at the same time.
How to open a nursery in the UK, step by step
Work out the capacity the ratios allow
The EYFS sets minimum staff-to-child ratios: one adult to three children under two, one to five for two-year-olds, and one to eight for three- and four-year-olds, or one to thirteen where a Level 6 qualified practitioner is working directly with the children. Those numbers, multiplied by the age mix a setting expects, produce the staffing bill before any other decision is made. Under the framework in force from 1 September 2026, ratios are assessed across the setting as a whole rather than room by room.
Find premises and check the planning position
In England a day nursery falls within Use Class E(f), which covers a creche, day nursery or day centre, so a move from another Class E use is not a material change. What is rarely straightforward is everything else the premises must satisfy: outdoor space, layout by age group, sanitary provision, fire safety and environmental health. Ofsted must approve the premises themselves, and operating from premises it has not approved is an offence in its own right.
Appoint the manager and the nominated individual
Two roles must be filled before applying. The manager should hold a minimum Level 3 childcare qualification. An organisation must also appoint a nominated individual, responsible for the registration and for dealing with Ofsted, who cannot be the appointed manager unless they also sit on the governing body. Both are paid before any fee income exists, which is the single largest pre-opening cost after the premises, and a clear case of the working capital that what it costs to open a franchise in the UK identifies as the cost prospective owners most often leave out of a total.
Choose a structure and register the business
A private company limited by shares is the usual structure, incorporated at Companies House, with directors carrying statutory duties under the Companies Act 2006 and now verifying their identity. Every partner, director, company secretary and governing body member counts as part of the registered person. Childcare supplied by a registered provider is exempt from VAT rather than zero-rated, so a nursery generally cannot recover VAT on its costs, which makes VAT a cost line rather than something passed on.
Complete the suitability checks
Everyone connected with the registration needs an enhanced DBS check with barred lists and must complete an EY2 form. At least one person looking after children must hold an appropriate first aid qualification. Ofsted will refuse registration outright where an applicant is barred from working with children, has previously been refused or had a registration cancelled, or lives with someone who is disqualified. Additional documentation is required from anyone who has lived abroad in the past five years.
Apply to Ofsted and allow for the timescale
Applications are made through the EYO form for the Early Years Register, and Ofsted aims to decide early years applications within 12 weeks, longer in some cases. A registration visit follows for Early Years Register applicants. Ofsted’s own guidance suggests allowing at least four months where a setting intends to open in September, because a new DBS certificate may be needed on top. No childcare may be provided until the certificate is issued.
Recruit, insure and open
Public liability insurance must be in place before children are looked after. Recruitment is the operational constraint, because a setting that cannot staff to ratio cannot take the child, however strong the waiting list. Once registered, changes to the manager, the nominated individual, the premises, the legal structure or anyone’s suitability must be reported to Ofsted within 14 days.
Types of nursery business
- Full day care nursery : the standard format, open roughly 7.30am to 6.30pm, taking children from a few months old, and the most capital-intensive
- Pre-school or playgroup : sessional provision for older pre-school children, lower staffing cost because the ratios are looser above age three
- Workplace or campus nursery : operated on an employer’s or institution’s site, often won by tender rather than opened speculatively
- Out-of-school and holiday club : registered on the Childcare Register rather than the Early Years Register where all children are over five
- Childminding and childcare on domestic premises : a separate registration category with its own ratios, and the lowest-capital route into the sector
How much does it cost to open a nursery in the UK?
No official UK average start-up cost exists, and there is no disclosure filing to consult, because the UK has none. What is published precisely is the regulator’s fee and the statutory cost base.
| Item | Published figure, England |
|---|---|
| Ofsted Early Years Register | £220 to join, with the Childcare Register free at the same time. The same amount is then payable annually on the anniversary of registration |
| Childcare Register only | £114, or a reduced Early Years Register fee of £35 for providers working under three hours a day, five days a week or 45 weeks a year |
| Additional settings | A separate approval and annual fee for each set of premises. There is no limit on the number that can be added |
| Business rates | Rateable value multiplied by the applicable multiplier: 38.2p small business, 43.2p standard for 2026/27, outside the retail, hospitality and leisure categories |
| Staff | National Living Wage £12.71 an hour from 1 April 2026 for those aged 21 and over, £10.85 for 18 to 20 year olds, plus employer National Insurance at 15% above £5,000 a year per employee less the £10,500 Employment Allowance |
| Total start-up | Not published: no official UK average, and no entry figures published by the nursery franchisors on their own sites |
The lines that move a start-up budget most are:
- The premises : rent or purchase, plus the conversion needed to meet layout, outdoor space, sanitary and fire requirements
- Pre-opening payroll : the manager and the nominated individual are in post months before the first child
- Staffing to ratio : the single largest running cost, fixed by statute rather than by the operator
- Checks and qualifications : enhanced DBS for everyone connected, first aid certification, and Level 3 qualification for the manager
- Equipment and resources : furniture, sleep provision, outdoor equipment and consumables
- Working capital : the months between opening and filling enough places to cover the ratio-driven staffing
Good to know
Buying an existing nursery does not transfer its registration. Ofsted registration attaches to a legal entity and to approved premises, so an acquirer cannot provide childcare on those premises until the new entity is registered or the premises are approved under an existing registration. Two consequences follow. The seller remains responsible for the childcare until they resign their registration, and if they resign before the buyer is registered, the setting must stop operating. And where a change of legal structure creates a new company number, a fresh application and fee are required for every affected setting. The published inspection history stays on Ofsted’s reports site for five years after a setting closes, so it follows the address as well as the operator.
Nursery franchise opportunities in the UK
Franchising in the UK is governed by general contract law. There is no franchise statute, no register and no statutory pre-contract disclosure requirement, and the British Franchise Association’s Code of Ethics binds its voluntary members rather than the market. Nursery franchising is established here, with Monkey Puzzle, Banana Moon and others operating networks of individually owned settings. None of them publishes entry terms on its own public pages, so any precise figure circulating for a nursery franchise comes from a third party rather than the brand.
What matters more in this sector than the fee is where the regulatory responsibility sits, and it does not sit with the franchisor:
- The franchisee is the registered person : registration, the nominated individual and the manager are all the franchisee’s, and the Ofsted grade attaches to their setting
- Expansion is gated on performance : Ofsted will always inspect a provider that applies to expand before its first inspection, and is likely to refuse approval where the provider has a grade of “needs attention” or worse, absent strong evidence of improvement
- Cancellation is collective : where Ofsted cancels a registration, including for non-payment of fees, the cancellation applies to all settings under that registration
For a multi-site operator that last point is the one to understand before signing anything. A brand cannot insulate a franchisee from it, because the registration is not the brand’s to hold.
Editor’s tip
Ask a nursery franchisor how the network’s settings are graded by Ofsted, and how many have been refused approval to expand. Inspection outcomes are published on Ofsted’s reports site, setting by setting, which makes this one of the few UK sectors where a prospective franchisee can verify network performance independently rather than relying on the franchisor’s own material. That public record is worth more than any projection, because nobody produced it for marketing purposes.
The practical difficulties operators report
- Ratios against wage rises : staffing levels are fixed by statute while the wage floor is set by government, so the sector cannot absorb pay increases by thinning cover
- Funded hours against actual cost : a large share of places is now delivered through government funding streams whose hourly rates are set by the funder, not the provider
- Level 3 recruitment : the qualification requirements for managers and for ratio-counted staff narrow the candidate pool considerably
- Registration timescales : 12 weeks for a decision, longer in some cases, while rent runs from the date the lease starts
- A published grade : the inspection outcome is public, stays online for five years after closure, and directly affects both enrolment and the ability to expand
The bottom line
A nursery is cheap to register and expensive to run. Ofsted charges £220 and takes about 12 weeks, but the manager, the premises and the staffing to ratio all have to be paid for before any of it earns. The statutory ratios set the cost per child, the funded hours set part of the price, and the published grade determines both enrolment and whether the business is allowed to grow. No official UK average start-up figure exists, and no nursery franchisor publishes one either, which leaves the UK franchise directory and the brands’ own pages as the only places terms appear at all. What is public, uniquely in this sector, is every setting’s inspection record.
Frequently asked questions about opening a nursery in the UK
Yes, in England. Providing childcare without being registered is an offence, and so is operating from premises Ofsted has not approved. A day nursery normally joins the Early Years Register, which requires meeting the EYFS framework. Registration attaches to the legal entity and to each set of premises, so buying an existing nursery does not transfer it.
It costs £220 to join the Early Years Register, with the Childcare Register free at the same time, and the same amount is payable annually on the anniversary of registration. Joining only the Childcare Register costs £114. A reduced Early Years Register fee of £35 applies to providers working under three hours a day, five days a week or 45 weeks a year. Each additional setting carries its own fee.
Ofsted’s guidance requires an appropriate and suitable manager holding a minimum Level 3 childcare qualification. The owner does not need a childcare qualification, but where the business is an organisation it must appoint a nominated individual who is accountable for the registration and who cannot be the appointed manager unless they also sit on the governing body. Staff qualification levels also determine who can be counted within the statutory ratios.
