Buy an Existing Preschool, Buy a Franchise, or Start From Scratch?

What are the three ways to own a preschool in Singapore?

You can buy an existing centre (independent or franchised), open a new centre under a franchise brand, or start your own brand from scratch, and the choice decides how quickly you have children, staff and a licence.

We have not put typical costs or timelines in the table, because they vary too much between sites and deals to be useful as a single figure.

What does buying an existing preschool give you?

It gives you a licensed centre with enrolled children, a working team and cash flow from the day you take over.

You can also see what you are buying. Enrolment, fees, staff and the lease can all be checked in due diligence, whereas a new centre's enrolment is a forecast. The trade-off is that you pay for that track record, and you take on the existing lease, reputation and, in a share purchase, the company's history.

Changes take time. On a transfer of licence, the new licensee takes over the existing fee structure and programmes (s3.3.7), and changes to the name, programme plan, curriculum and fees can only take place after the transfer (s3.3.8). Fee increases need written notice to parents and ECDA by 1 September of the year before they apply (s9.2.1). See current opportunities on the buying page and our guide on how to buy a childcare centre.

What changes when the centre you buy is a franchise?

You need the franchisor on side: most of the rules that matter sit in the franchise agreement, so read it before you make an offer.

• Consent to transfer: check whether the agreement requires the franchisor's consent to a sale, a new operator or a change in shareholders, and whether the franchisor must approve you as the incoming franchisee.
• Transfer conditions: look for transfer fees, training requirements or a requirement to sign the franchisor's current agreement.
• Remaining term and renewal: how long the agreement has left and on what terms it can be renewed.
• Territory: whether you are protected from another centre of the same brand opening nearby.
• Exit: what happens if you later want to leave the brand, including any restriction on operating a centre at the same site.

Make franchisor consent a condition of completion in the Sale and Purchase Agreement, and approach the franchisor early. This sits alongside, not instead of, the ECDA process. Our childcare due diligence checklist covers the licence, enrolment and premises checks that apply to any centre.

What are the benefits and drawbacks of a franchise?

A franchise trades some of your profit and autonomy for a recognised brand, a proven model and support.

Benefits

• Established brand: immediate recognition and trust with parents, which can help build enrolment faster than an unknown name.
• Proven business model: a system refined over years of operation, with training and ongoing support, which helps if you are new to childcare.
• Operational and marketing support: marketing materials, standard operating procedures and compliance help, which reduce the workload of running the centre.

Drawbacks

• Initial investment and ongoing fees: franchise fees and set-up costs upfront, then royalties or a share of revenue, which reduce profit.
• Limited autonomy: you follow the franchisor's guidelines, which limits how far you can adapt the curriculum, operations or marketing to your community.
• Internal competition: depending on the franchisor's expansion plans, another centre of the same brand may open nearby and dilute your enrolment.

What are the advantages and challenges of an independent brand?

An independent centre gives you full control and keeps all the profit, but you build the reputation and systems yourself.

Advantages

• Full control and flexibility: you design the curriculum and set your own standards, within ECDA's requirements, to suit the community you serve.
• No franchise fees or royalties: upfront costs are generally lower and profits stay in the business.
• Room to innovate: you can try new programmes and teaching approaches without a head office's approval, which can set your centre apart.

Challenges

• Building a brand from scratch: trust with parents takes time, especially in a competitive market.
• Higher risk: without a network behind you, success depends on your business plan, your read of local demand and your ability to manage the centre.
• No franchisor support: staffing, operations, marketing and compliance are all on you, which can be a lot for a first-time owner.

What does starting a preschool from scratch involve?

A new centre needs its own premises, the statutory approvals for those premises, and a new ECDA licence before it can open, advertise or take fees.

Finding a site. ECDA runs joint tenders with HDB and SLA for private operators. HDB offers sites in void decks and commercial malls, listed on HDB InfoWEB; SLA offers state properties, shown on its State Property Information Online service; and some Government Land Sale sites must provide early childhood centre space, which operators lease from the developers.

Approvals. ECDA's Guide to Setting Up an Early Childhood Development Centre lists the approvals to obtain before applying: the tenancy, approved use from HDB, SLA or URA, BCA's Temporary Occupation Permit or Certificate of Statutory Completion, and SCDF's Fire Safety Certificate or Temporary Fire Permit, with LTA and PUB clearances where needed. Floor plans approved for commercial schools or education centres are not accepted. Business 1 industrial premises need NEA approval and may take up to 3 more months to license.

Licence. The intended licensee applies through the GoBusiness Licensing Portal (s2.3.1). ECDA's service standard is 14 working days from a complete set of documents and all requirements being met at the site visit, whichever is later. Until the licence is granted, a centre must not advertise, start operating or accept payments.

Which route is right for you?

It depends on your experience, your capital and how much uncertainty you can carry.

• Buy an existing centre if you want income from day one and can pay for a proven business.
• Open a franchise centre if you value an established brand and system and accept royalties and rules in return.
• Start your own brand if you have a clear educational vision, operating experience and the runway to build enrolment.

Some operators combine routes: they buy an existing centre, learn the market, then open new sites under their own brand.

How Edugrow helps

Edugrow has advised on more than 70 education business transactions since 2014. If buying is the route for you, Edugrow can show you listed centres, introduce off-market opportunities that match your criteria, and help you structure an offer that fits the ECDA process and any franchisor consent. Register your buying criteria to be matched with suitable centres as they come up.