INDUSTRY SPOTLIGHT: CHILDREN SERVICES

Franchising World

By Meme Moy, FRANdata

 

There are more than 166 active franchise brands in the children services industry, representing more than 10,100 units across the United States.

Children services include children’s educational programs (the largest sector) and childcare centers. Children’s education franchises represent a rapidly growing segment in franchising. Analyzing the 10-year trajectory of new children services franchise brands entering the market year over year demonstrates that even with some fluctuations due to the pandemic and economic headwinds, overall growth has remained consistent with a pronounced increase in 2022 (Refer to graph: New Children Service Franchise Brands US.). We see children’s services concentrated in well-populated states like Texas, California and Florida, as well as mostly on the eastern corridor of the United States (Refer to map: Geographic Distribution: Children’s Services.)

Children’s Educational Services Continue to Benefit from a Growing Competitive Environment Facing Students in the U.S. and Worldwide

The demand for early childhood education has rapidly increased and is projected to continue growing. This growth is driven by parents’ increasing focus on developing and enhancing their children’s learning and comprehension skills. Market leaders have recognized the potential of today’s generation of children, who possess strong abilities to grasp diverse knowledge and develop scientific perspectives. This awareness has prompted them to revamp courses and tools, driving the market’s expansion. Additionally, the industry has evolved with the changing needs of the postpandemic student, especially regarding technology. Case in point, after decades of offering paper-based worksheets, Kumon has moved to a digital format they call Kumon Connect. That being said, prospective students’ varying economic backgrounds still challenge the market’s growth.

Demand for Childcare Services Remain Strong

In recent years, there has been a noticeable surge in the adoption of franchising within the children’s services sector. The field of childcare, which focuses on meeting the unique needs of children, has experienced significant growth and transformation. This expansion can be attributed to the changing dynamics of families, evolving societal expectations, and a growing recognition of the critical role of early childhood education.

Consequently, the franchise segment within this industry has also undergone noteworthy advancements and progress.

The industry is highly competitive, with numerous major and minor players vying for market share. Market players employ vital strategies, such as introducing new early development and education programs and forming collaborations. As an illustration, in August 2022, Kinder Care launched a tuition benefit+ program to enable employers to provide affordable daycare services for working families. We also anticipate this sort of partnership to become adopted within the childcare franchise community.

A Harvard Business Review report found that 57 percent of working families in the U.S. spend over $10,000 on daycare annually. A U.S. Department of Health and Human Services survey showed that childcare expenses make up 20 percent of household income for over half of American families. These statistics highlight a strong demand for childcare services in the country.

Moreover, the market for childcare services is expected to receive support from favorable government funding. Each year, most children under five in the U.S. benefit from governmentfunded early care and education services. State governments nationwide are actively assisting families in affording daycare services and enhancing the market’s sustainability. An example is the Department of Social Services in California, which offers low-cost or even free childcare to eligible families, ensuring accessibility for those in need. We foresee this further bolstering the growth of this industry.

 

Meme Moy is the director of marketing at FRANdata. Meme is dedicated to enabling key audiences to understand how FRANdata’s data driven insights can grow their business in franchising. After 10 years with FRANdata, she still learns new things every day and finds franchising fascinating. For more information about IFA supplier member FRANdata, please visit franchise.org/suppliers/frandata.

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