Why Now Is the Perfect Time to Join Children’s Lighthouse Franchise

Children’s Lighthouse has recently undergone significant improvements, including a brand refresh and operational enhancements that have given the preschool franchise a boost in the booming educational childcare industry. Financially, it’s impressive: revenue more than doubled from $60 million in 2020 to $130 million last year, and the number of franchises also increased significantly. 

With the large market of 14.4 million children, the need for child care services is higher than ever. “The demand is way bigger than supply right now,” said Matt Kelton, vice president of franchise development. “If people want to get involved in this and take advantage of it, really now is the time.”

Additionally, the franchise offers a balanced lifestyle with minimal weekly hours and substantial growth potential. Investing now taps into a flourishing sector with promising long-term gains.

Children’s Lighthouse is a standout investment opportunity due to its unique combination of strong family values and robust business metrics. The franchise, which has not only doubled its revenue, but also doubled the number of its locations in recent years, offers a supportive and family-oriented culture, setting it apart from competitors and private equity-driven franchises. With no SBA failures in its 27-year history, a low national advertising fund and an efficient franchise support system, it provides significant advantages. Now is a prime time to invest, as the franchise is expanding thoughtfully by targeting key markets while continuing to offer excellent unit economics and potential for long-term growth.

“We feel like this is a point where we can really start expanding in the near future,” said Michael Brown, president of Children’s Lighthouse Franchise Company. “With the support and infrastructure we have in place, I think we are going to see extensive growth over the next few years.”

The franchise has successfully established a robust system, integrating advanced technology and a director-led model that ensures operational excellence while allowing owners to focus on strategic leadership. With a high demand for quality child care and educational services, evidenced by strong pre-opening registrations and impressive revenue benchmarks, the opportunity is ripe. The franchise offers a supportive environment with proven systems and a focus on measured, sustainable growth. As the market expands, early investment in Children’s Lighthouse promises significant potential returns and community impact.

To watch the full video, click here. 

A transcript of Kelton and Brown’s interview with 1851 Franchise Founder and Publisher Nick Powills appears below. It has been edited for brevity, style and clarity.

Nick Powills: Michael, I’ll start with you. Could you give us an update on the brand? How are things going with the business? What are you excited about, and what are you looking forward to in the next 12 to 24 months?

Michael Brown: We’re in a really exciting period right now. Like many, we’ve faced challenges in the past, including COVID and its aftermath, but we’ve managed to implement a lot of new systems and recently completed a brand refresh. With a great team in place, we’re set for future growth and excited about what lies ahead.

Powills: Matt, you’ve been in franchising for some time. When you were considering taking on this role to lead development at Children’s Lighthouse, what excited you about the business opportunity? What did you see as the opportunity, both as an outsider and then as an insider once you joined?

Matt Kelton: A few things stood out. Firstly, the model is solid, with no SBA failures in 27 years, which is remarkable. The demand for child care is higher than ever, with 14.4 million children and two out of three in child care, creating a significant supply-demand imbalance. The company is well-capitalized and has doubled its revenue from $60 million to $130 million in the past few years while increasing the number of franchises. The potential to grow into a billion-dollar company in 10 years is rare and exciting.

Powills: As an outsider initially, and now that you’ve been involved, do you feel candidates understand the opportunity as clearly as you did? How have those conversations been?

Kelton: Most candidates don’t fully grasp the opportunity initially. They come in with a love for children and see the demand, often noting long waiting lists at our schools. However, once we walk them through the unit economics, they realize it’s not just a business but also a commercial real estate investment. Over time, they see the potential for wealth creation and the legacy they can build. Our average franchise revenue is $2 million annually, with top performers reaching $3 to $3.5 million. Additionally, the lifestyle benefits are significant — no nights or weekends, and reduced hours over time, which is rare in franchising.

Powills: Michael, Matt mentioned family and legacy as part of the brand’s magic. How do those concepts resonate with you and reflect what you’re trying to achieve with the business?

Brown: Family and legacy are central to our brand. Matt and I have discussed our vision and the company’s direction with our leadership team. We’ve grown slowly and steadily, focusing on building infrastructure and a strong team. My dad and uncle founded the company with a passion for education and a vision for growth. I’ve continued their legacy, maintaining a family-oriented culture. Our decisions are made based on what’s best for our franchisees and the long-term future of Children’s Lighthouse, not on quotas from shareholders or private equity boards. Our franchisees are part of our extended family, and we aim to support them and help them provide for their customers and children. This is a story we want people to know and see.

Powills: Michael, as you went through early adulthood and were considering whether to join the business, how did you fall in love with it? How did you process the decision to work with your dad and uncle, and ultimately, how did you fall in love with the business?

Brown: From day one, my dad expressed his desire for me and my two brothers to eventually take over the business, but he also emphasized that we should pursue what we are passionate about. Initially, I was not set on returning to Children’s Lighthouse, as I was pursuing a degree in finance and was involved in commercial real estate. However, I wanted to give it a chance because I knew it was important to my family. Despite hearing horror stories about working with family, I found that the incredible team and the culture at Children’s Lighthouse were unique and compelling. As I worked my way up from the ground level, learning every aspect of the business, I grew more passionate about what we were building. It became clear that this was the right place for me, and I am proud to continue the legacy my father and uncle created.

Powills: Michael, considering your family-owned business model, how does the emotional impact of working in a business that affects families’ lives compare to other types of franchises, like a painting franchise? Does the community impact of Children’s Lighthouse make it easier for you to stay emotionally connected to the business?

Brown: Absolutely. My dad and uncle were deeply passionate about making a difference in children’s lives. Initially, before having my own children, I recognized the value of our impact but didn’t fully grasp it. Having my own children gave me a deeper understanding of the importance of education and the service we provide. Seeing the direct impact on children’s development and the trust parents place in us makes the responsibility profound. It’s fulfilling to witness the tangible progress in children’s education and to see the difference we make in their lives. This emotional connection and the positive community impact are central to why I love this business.

Powills: Michael, you mentioned that your business decisions are guided by family values rather than the pressures of private equity. How does this impact the value proposition for potential franchisees, especially when compared to private equity-backed franchises?

Brown: Every franchisee has my personal cell phone number and access to our leadership team because we view them as part of the Children’s Lighthouse family. We provide extensive support to help them succeed, even if it means making long-term decisions that may not be the best short-term financially. My father and uncle started this business to help others create their own futures, and we continue to prioritize the success of our franchisees and the quality of support we provide. Our focus is on long-term growth and maintaining a strong foundation, which is different from private equity-backed franchises that may prioritize short-term gains and quick returns.

Powills: Matt, how does the private equity dynamic influence the sales process for Children’s Lighthouse? Does it contribute to why you are in this position, and how does it affect franchisee awareness and understanding of the brand’s benefits compared to competitors?

Kelton: Private equity often involves strict oversight and short-term goals, which can limit the level of support and flexibility a franchisee receives. At Children’s Lighthouse, we have a family-first culture and a lower national advertising fund compared to competitors, which results in significant cost savings for franchisees. Our support is more personalized, with lower franchise-to-coach ratios and more frequent visits. We focus on building strong relationships and providing high-value support. Many of our franchisees come back for additional locations, which validates our approach. While some franchisees may not always fully recognize how well they are supported compared to competitors, the strong performance and satisfaction levels are evident.

Powills: Is there an awareness challenge among potential franchisees about the benefits of joining Children’s Lighthouse, and do current franchisees fully understand the advantages compared to other brands?

Kelton: There might be an awareness challenge, as we don’t always compare ourselves directly to competitors. However, our franchisees generally appreciate the support and culture we offer. High marks in franchisee satisfaction and repeat investments from existing owners are strong indicators of the value we provide. We focus on clear communication and support during the sales process to ensure potential franchisees understand the benefits.

Powills: Is financial qualification a significant factor for future franchisees, and how do you ensure that candidates are both financially capable and a good fit for the system?

Kelton: Yes, financial qualifications are crucial. Opening a Children’s Lighthouse school involves a substantial investment, either through leasing or a build-to-suit project. Candidates need to be financially sound to cover both the initial investment and ongoing expenses. We also assess candidates to ensure they align with our values and have the potential to succeed in our system. We are selective in choosing franchisees who fit well with our company’s vision and can contribute positively to our brand.

Powills: Michael, can you elaborate on how you ensure that franchisees are aligned with your company’s vision and values?

Brown: We focus on maintaining strong core values and a clear mission. Our infrastructure and team are essential for our success, but having franchisees who share our vision is equally important. We are proud of our current group of franchisees who align with our values and have been successful. We aim to continue growing with franchisees who fit well with our company culture and vision.

Powills: Michael, given your success and groundedness, has this affected your sense of urgency? Are you feeling an urgency to grow, or has it allowed you to be patient with the process? How does your personal scorecard look?

Brown: From day one, we’ve been very measured in our approach to growth. We started with a few locations and weren’t even considering franchising until a group convinced us to start. Initially, it was a few franchises a year, but as we saw the potential, we decided to expand our brand across the nation. We wanted to share our successful system and brand while maintaining a focus on quality in both the system and the support we provide.

We’ve slowly grown and now, with a solid infrastructure and team in place, we’re at a focal point of growth. Our goal is to expand into more markets and seize opportunities, particularly given the high demand for quality childcare. Over the next few years, we anticipate significant growth, but it will be measured to ensure we can support it effectively.

Powills: Michael, what’s a good day for you? What makes you happy?

Brown: Hearing success stories from our franchisees is what makes me happiest. Whether it’s a franchisee achieving their personal goals or seeing a child who started with us as an infant grow into a young adult and graduate, it’s incredibly rewarding. For example, when a child at one of our schools published a book and the franchisee called to share the news, it was a memorable moment. The emotional stories from our franchisees, seeing the long-term impact on children, and the positive experiences of parents all contribute to the joy in this industry.

Powills: Matt, there’s a common misconception in franchising about absentee or semi-absentee ownership. How does this apply to Children’s Lighthouse?

Kelton: Our model is director-led. Before the school opens, we train someone from the industry who works alongside the owner. The owner’s role is more of a CEO, focusing on strategic aspects like attendance and revenue, while the director and assistant director handle daily operations. We’ve found that when owners are too involved in day-to-day operations, it can hinder performance.

Our systems, including proprietary curricula, support this model. Directors manage the schools, and owners are expected to manage from a higher level. This allows owners to handle multiple locations if desired, with an executive director overseeing the directors.

Powills: Michael, could you elaborate on the roles of the director and the franchisee?

Brown: The director handles daily operations and is in the school every day, while the franchisee takes on a more overhead role, setting goals and helping the team achieve them. We provide extensive training for both roles to ensure clear management and support.

Powills: Matt, what are some perceived roadblocks that potential candidates might see with Children’s Lighthouse?

Kelton: Some common concerns include whether prior experience is needed, the financial requirements, staffing issues and security. We look for individuals who love kids, are good business people and are willing to follow our system. Financial requirements might be underestimated and staffing is always a challenge, but we have systems in place to manage these issues.

Regarding security, we have extensive measures — including security cameras and AI systems — to ensure the safety of the children. Our support team is well-equipped to handle various situations, and these systems help manage potential concerns.

Powills: Matt, considering the time it takes from signing to opening, is there a general awareness issue about this business opportunity?

Kelton: Yes, there is an awareness issue. We are focusing on increasing our franchise marketing efforts to boost awareness. We aim to grow from selling five or eight franchises a year to 25 or 30. We’re working on new websites and videos to better communicate our story and showcase our unique value.

Powills: Michael, what are you most excited about in the upcoming months?

Brown: I’m thrilled with the progress we’ve made over the last five years. The new systems, technology and processes we’ve implemented are exciting. Our new technology board in schools has been well-received, and I’m excited about continuing to innovate while maintaining our family-focused culture.

Powills: Matt, what should a candidate know about the business opportunity at Children’s Lighthouse?

Kelton: We’ve seen significant demand, as evidenced by our recent openings in Austin and DFW markets, where we had waiting lists even before opening. The demand for quality child care exceeds supply, so now is a great time to get involved. We have funding options and national relationships to support new franchisees.

Powills: Michael, there’s a philosophical question about the demand for quality child care. Do you think this demand is due to a shift from traditional daycare to a more educational focus, especially given the teaching crises in some areas?

Brown: Yes, the demand has shifted from traditional daycare to a focus on educational and developmental child care. Parents now recognize the importance of quality early education for their children’s success. Our model addresses this need, and although starting a franchise can be challenging financially, it also reduces competition due to high barriers to entry. Our goal is to meet this demand and provide high-quality educational childcare.

Powills: Matt, two questions: What is the average annual income for a Children’s Lighthouse franchise owner, and what are the yearly revenue benchmarks for top performers?

Kelton: The average annual revenue for a Children’s Lighthouse franchise is around $2 million. Top performers typically generate between $3 million and $3.5 million in gross revenue.

To find out more information on costs to buy this franchise, please visit https://1851franchise.com/childrens-lighthouse.