How to Finance a Ducklings Franchise: Daycare Center Funding
By Anthony Cornella
A Ducklings franchise loan typically pays for a licensed early learning center: a facility suited to infant, toddler and preschool classrooms, the furniture and learning materials inside it, an outdoor play area and enough working capital to carry payroll while enrollment builds. Ducklings Early Learning Center is a family-founded daycare and preschool brand from southeastern Pennsylvania, and for most buyers the key financing decision is whether to lease a building or own the real estate.
US Professional Funding is not affiliated with, sponsored by or endorsed by Ducklings Early Learning Center; the name is used only to describe the business. Figures from the franchisor’s disclosure document and website can change, loan programs and terms vary by lender and borrower, and every loan is subject to review and approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Ducklings Franchise Loan at a Glance
- Founded: 1994 by Jody Thompson, a pre-K teacher, according to the company.
- Franchising: the first franchised center was purchased by a company employee in 2019, the company says.
- Concept: education-focused daycare and preschool built around a proprietary, discovery-based curriculum called Here We Grow!
- Growth markets: the company has named Pennsylvania west of Philadelphia, New Jersey, Delaware and Maryland as near-term targets.
- Fees and investment: the franchise fee, royalty, marketing contribution and estimated initial investment appear in Items 5, 6 and 7 of the current FDD.
- Owner requirements: confirm net worth and liquid capital requirements directly with the franchisor.
- SBA Franchise Directory: listed under code S3084, with a note about the lease assignment when real estate secures the loan.
What Is Ducklings Early Learning Center?
Ducklings was started in 1994 by Jody Thompson, a pre-K teacher who believed daycare should focus on education as well as nurturing care. The business grew as a family company, and several of the founder’s daughters work in it today, including in franchise development.
The company operated its own centers for years before franchising. According to the company, an employee bought the first franchise location in 2019, and new centers have opened each year since. Ducklings says its teachers are highly trained, that its centers often keep waitlists and that it is looking for motivated investors to expand across the Mid-Atlantic.
The curriculum. Classrooms follow Here We Grow!, the brand’s proprietary, play-based program designed to support each stage of early development.
How lenders see child care. A child care center combines real estate or a long lease, state licensing, high staffing costs and tuition revenue that builds as classrooms fill. Lenders like the recurring nature of tuition but study the ramp-up period closely, because payroll must meet required ratios from the first day, even when enrollment is light.
Ducklings Franchise Costs
We could not verify current cost figures from the Ducklings FDD, so use this section as a map of the categories to look for in Item 7 and confirm every number with the franchisor.
Initial franchise fee. Item 5 discloses the initial franchise fee, when it is paid and whether any portion is refundable. Ask about separate fees for site selection assistance or for opening additional centers.
Real estate and build-out. This is usually the largest variable. A leased building requires leasehold improvements to meet licensing, building and fire codes: classroom layouts, child-sized restrooms, diaper-changing areas, a kitchen or food-prep space, secure entry and a fenced playground. Buying land or an existing building and converting or constructing a center adds acquisition and construction costs.
Furniture, equipment and materials. Cribs, cots, tables, chairs, curriculum materials, playground structures, kitchen equipment, security cameras, check-in systems and office technology.
Opening costs and working capital. Licensing fees, insurance, staff recruiting and pre-opening training, grand-opening marketing and the funds needed to cover payroll and rent until tuition covers expenses.
Total investment. Item 7 of the current FDD gives the low and high estimates for the full initial investment and explains what each line covers. Expect it to include items like these:
- Initial franchise fee (Item 5)
- Lease deposits or real estate acquisition
- Construction or leasehold improvements
- Classroom furniture, learning materials and playground equipment
- Kitchen, security and technology systems
- Signage, licensing, insurance and professional fees
- Pre-opening staffing, training and marketing
- Additional funds for the initial operating period
Ongoing Fees and How They Affect Your Loan
Royalty and marketing. Item 6 lists the royalty, any brand or local marketing requirement, technology fees and other recurring charges. Percentage-based fees grow with tuition revenue.
Staffing. Teacher payroll is usually the largest operating cost in a child care center, and state ratio rules for infants and toddlers set a floor on labor.
Occupancy. Rent or a mortgage payment is fixed regardless of how full the classrooms are.
How lenders factor these costs in. Lenders start with tuition revenue by classroom and age group, subtract payroll, occupancy, royalties and marketing, and then test whether cash flow covers debt service. They pay particular attention to the months before the center reaches stable enrollment.
Franchisor Requirements for New Owners
We could not verify Ducklings’ current net worth or liquid capital requirements, so request them from the franchisor and confirm them in the FDD. The company has said it is seeking motivated investors, and child care franchisors generally look for owners who can hire and lead a qualified center director and teaching staff.
Approval and licensing. Expect an application, interviews, FDD review and a site approval process. Separately, the center must obtain a state child care license, which involves facility inspections and staff background checks. Build that timeline into your financing plan.
Ways to Own a Ducklings Center
A new center in a leased building. Leasing keeps up-front costs lower. The loan generally funds the fee, leasehold improvements, furnishings and working capital. See our educational center start-up financing page.
A center on owned real estate. Buying the property or building a new center creates a real estate asset and a larger loan. Our educational center real estate financing page explains how these projects are structured.
Buying an existing center. If a franchised center is offered for sale, a transfer requires franchisor approval and a new state license or license transfer process. A buyer steps into existing enrollment, staff and records. See our educational center acquisition loans and our article on licensing and inspections when buying a childcare center.
Financing Options for a Ducklings Franchise
SBA 7(a) loans. An SBA 7(a) loan can combine the franchise fee, improvements, equipment, working capital and, where appropriate, real estate in one loan.
SBA 504 loans. When the owner will occupy a building it buys or constructs, the SBA 504 program is designed for land, buildings and long-lived equipment. It is often paired with a separate loan for working capital.
Conventional loans. Experienced child care operators with strong collateral may use a conventional business loan, especially for a second center.
Equipment financing. Playground structures, classroom furniture, kitchen equipment, security systems and transport vans can be financed separately to preserve cash.
Working capital and lines of credit. A line of credit can carry payroll during the enrollment ramp and smooth uneven tuition collections or subsidy payments. See our educational center working capital options.
Seller financing on resales. In the purchase of an existing center, a seller may carry part of the price. A seller note must be acceptable to the senior lender, is typically subordinate to it and may be limited by program rules.
SBA Loans for Ducklings Franchisees
SBA lenders use the SBA Franchise Directory to confirm that a brand’s franchise documents have been reviewed for SBA eligibility. A listing does not approve any borrower.
The directory listing and its note. Ducklings Early Learning Center appears on the directory under code S3084 with this note: when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Collateral Assignment and Assumption of Lease may not be executed.
In plain English, the brand has a document that lets the franchisor take over a franchisee’s lease in certain situations. That makes sense when the center operates in a leased building. But when the borrower owns the property and pledges it as collateral for the SBA loan, there is no third-party lease to assign, and that document should not be signed as part of the deal. Your lender and attorney will handle this, but raise it early if you plan to own the real estate.
SBA application tips. The SBA 7(a) program maximum is currently $5 million (program rules can change), so a center with land and new construction may call for a 504 loan or a combined structure. Prepare a personal financial statement, tax returns, a resume, the franchise agreement, a lease or purchase contract, construction budgets and enrollment-based projections. Our SBA loan calculator can help with early planning; estimates are not an offer or approval. Read more about SBA loans for educational businesses.
How Lenders Evaluate a Ducklings Deal
Personal credit and financial history. Lenders review credit, tax returns and a personal financial statement, and usually require a personal guarantee.
Net worth and liquidity. Lenders want an equity contribution and reserves after closing to cover a slower-than-planned enrollment ramp.
Industry and management experience. Business management experience, education credentials or a qualified center director strengthen the request.
Business plan and projections. Build projections from licensed capacity by classroom, local tuition rates, the mix of infants, toddlers and preschoolers, staffing ratios and a realistic month-by-month enrollment ramp. Our guide to writing a franchise business plan for an SBA loan walks through the essentials.
The FDD and franchise agreement. Lenders review the term, renewal and transfer terms, territory rights, Item 10 for any franchisor financing and Item 19 to see whether the FDD includes financial performance representations.
Site, construction and licensing. Expect the lender to review the lease or purchase contract, construction budget and contractor, and the path to a state license.
Historical financials for resales. For an existing center, provide enrollment and tuition reports, profit and loss statements, tax returns and licensing inspection history.
Building a Licensed Early Learning Center
Child care facilities face more rules than a typical retail build-out. Classrooms must meet square-footage-per-child standards, restrooms and sinks must suit young children, and exits, alarms and sprinklers must satisfy fire codes. Outdoor play space needs fencing and safe surfacing. Each of these items affects the budget, so get the franchisor’s design standards and a licensing consultant’s review before finalizing construction costs. Ask the lender how construction draws will work and keep a contingency for inspection-driven changes.
Multi-Unit Growth and Development
Check the franchise agreement for territory rights and terms for additional centers. Once a first center reaches stable enrollment, its cash flow can support financing for a second. Lenders typically underwrite the combined business and look for a management team that can run both centers.
Real-World Scenarios
A career-changer leasing a new building. A former corporate manager signs a lease, finances the fee, improvements, furniture and working capital with an SBA 7(a) loan, and hires an experienced center director.
An investor buying land. A buyer purchases a site and builds a center with an SBA 504 loan, adds a working capital loan, and makes sure the lender addresses the directory note on the lease assignment.
A staff member buying a center. A long-time director buys an existing center from a retiring franchisee with franchisor approval, and the lender underwrites tuition history, with a subordinate seller note covering part of the price.
Common Mistakes to Avoid
- Building a budget before reading the current FDD’s Item 7 table
- Underestimating licensing timelines and inspection-driven changes
- Projecting full enrollment in the first months
- Ignoring infant and toddler staffing ratios
- Overlooking the SBA directory note when the loan will be secured by owned real estate
- Leaving too little working capital for the ramp-up period
For more pitfalls, read the educational business loan mistakes that cost owners the most.
Next Steps to Finance Your Ducklings Franchise
Step 1: Request the current FDD. Confirm fees, the investment range and owner requirements with the franchisor.
Step 2: Review it with advisors. Study Items 5, 6, 7, 10, 17 and 19 with a franchise attorney and accountant.
Step 3: Decide whether to lease or own. Compare how each path affects the investment, collateral and loan structure.
Step 4: Talk with a financing specialist. Discuss Ducklings franchise loan options, including SBA 7(a), 504 and working capital, before committing to a site.
Step 5: Build your loan package. Gather financial statements, tax returns, a resume, site documents, construction budgets and projections.
Step 6: Close, license and open. Coordinate construction draws, licensing, hiring and training so the center opens on schedule.
Ducklings Franchise Loan FAQs
How much does a Ducklings franchise cost?
The estimated initial investment appears in Item 7 of the current FDD. It depends heavily on whether you lease a building or own the real estate.
What are the franchise fee and royalty?
The franchise fee is disclosed in Item 5 of the FDD, and the royalty and marketing fees in Item 6.
Is a Ducklings franchise loan eligible for SBA financing?
Yes, subject to lender approval. The brand is on the SBA Franchise Directory under code S3084, with a note about the lease assignment when real estate secures the loan.
Can I own the building?
Owning the real estate is possible if the site meets the franchisor’s requirements, and SBA 504, 7(a) or conventional real estate loans can fund it.
Can I buy an existing Ducklings center?
Yes, if one is for sale and the franchisor approves the transfer. The buyer must also satisfy state licensing requirements.
Do I need child care experience?
Not always, but lenders and franchisors value management experience and a qualified center director.
Where is Ducklings expanding?
The company has named Pennsylvania west of Philadelphia, New Jersey, Delaware and Maryland as near-term markets.
Does Ducklings offer financing?
Check Item 10 of the current FDD, which discloses any franchisor financing. Most owners use SBA, conventional and equipment loans.
Can I open more than one center?
Yes, if the franchisor approves. Lenders usually want the first center stable before financing a second.
Does the FDD include financial performance information?
Review Item 19 of the current FDD to see whether it includes financial performance representations.
Final Thoughts
A Ducklings franchise loan is shaped by the building: leasing keeps the investment lower, while owning the real estate adds collateral, a larger loan and the SBA directory note on lease assignment. Buyers who get the current FDD, plan for licensing and a realistic enrollment ramp and speak with a financing specialist early are best positioned for a smooth opening.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, real estate and working capital. Learn more about our franchise financing and educational services financing solutions.
