With the children’s recreation market booming, your next big customer base may be small

With daycares and municipal kids’ programs stretched to the limit, big business is stepping in

Young boys doing an indoor soccer practice drill.

Little Kickers was designed to be big from the beginning (Little Kickers)

Christine Stanschus struggled to find daytime activities for her son when he was a toddler. With few professionally run programs available, Stanschus started her own soccer classes for her son and his peers. Word spread among parents, and she was soon putting together about 35 classes per week in London, U.K., where she lived at the time. Stanschus, who previously worked at JPMorgan Chase & Co., saw a business opportunity. In 2002, she started a company called Little Kickers to provide soccer lessons for kids. “Little Kickers was never set up with the intention of being a mom-and-pop shop business,” she says. “We realized early on that there was strong demand for a more professionally run program.” The company has since expanded to 16 countries (including Canada, where Stanschus now lives) and has amassed 250 franchisees.

The children’s recreation sector is typically thought of as a quaint one, populated by small businesses, non-profits and municipally run programs. But larger, more professionalized businesses are stepping into the space, too, and expanding through franchising or licensing. In addition to Little Kickers, there are companies like Monkeynastix, which offers physical activity programs at 10 locations in Ontario, and Kindermusik International, a North Carolina firm that teaches music in more than 70 countries. The child-care space is becoming more corporate, too. BrightPath Early Learning Inc., formed in 2010, operates more than 50 daycares in British Columbia, Alberta and Ontario. It’s also the only publicly traded company of its kind in Canada.

The sector is wide open for entrepreneurs in some respects. For starters, Canada invests the least in early childhood education as a percentage of GDP among comparable European and English-speaking countries, according to the OECD. Canada devoted less than 0.5% of GDP to the sector last year, behind the U.S., the U.K. and Scandinavian countries. “If you’re spending the least, you’re not going to get the best quality through what the government is paying for,” Stanschus says. Programs for kids and child-care spots fill up fast, particularly in large cities. Parents have been known to line up as early 2 a.m. to secure spots in a non-profit Toronto day camp called Art in the Park, for example. New and differentiated private services can help alleviate the demand, and prevent parents from camping out all night.

The preferences of parents are changing, too. “The millennial mom is a whole different animal,” says Ann-Marie Burton, the founder of Momstown, which offers art, music and science programs for kids in 22 cities in Canada. “She’s looking for professional and organized.” To expand, Burton implemented a licensing model, and each local Momstown chapter pays a monthly fee and an annual renewal fee. When she founded the company in 2007, Burton focused the branding on the company’s online publishing arm (its website features parenting articles, product reviews and contests) but later played up the programs and activities—that’s what parents were looking for.

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Parents also just want more options, especially when it comes to child care. That’s what led to the growth of Kids and Company, a private daycare headquartered in Toronto that was co-founded by Victoria Sopik. The firm partners with businesses to offer child care to their employees, and it has close to 60 locations in Canada and the U.S. today. Wait-lists to get into daycares in some parts of Canada are notoriously long, but Kids and Co. guarantees that employees at its partner companies will always get a spot for their kids. It also promises no late fees and offers flexibility for parents in terms of how often they drop off their kids.

Not everyone has welcomed the arrival of corporate child care. When BrightPath expanded to Ontario a few years ago, some childhood researchers decried the company as “big box” daycare and claimed that quality would be sacrificed for the sake of profit. These concerns haven’t slowed down the growth of BrightPath or other operators in this area. Stanschus, at Little Kickers, and Burton, at Momstown, say that not only is demand from parents strong, but so too is interest from potential franchisees and licensees. Both were approached by people who wanted to bring the companies’ offerings to their own cities, allowing for fairly quick expansion. “Child services certainly is not a new gold rush,” Stanschus says, “but there are still opportunities to develop new businesses.”