Buying a Daycare in Ontario: The Licence Does Not Transfer

Last updated 12 September 2026. Written by Jatin Dua, Broker of Record at RE/MAX Quantum Realty, 799 The Queensway, Etobicoke · Commercial & business purchases · 16 min read

Five words in the statute decide how you buy this business

Most business purchases let you argue about structure. Asset or shares becomes a negotiation between two accountants, and either answer works. A licensed child care centre is not that kind of business.

Section 6(1) of the Child Care and Early Years Act, 2014 says “No person shall operate a premises where child care is provided except under the authority of a licence to operate a child care centre.” Section 20(5) says “A licence is not transferable.” Read those two together and the whole transaction falls out of them. Somebody has to hold a licence on the morning after closing. If the entity holding it changes, that somebody is you, and you are starting from the beginning.

The Ministry of Education spells out the consequence in Appendix C of its Child Care Centre Licensing Manual, the appendix that deals specifically with sales of assets and sales of shares. On an asset sale, “the licence issued by the Ministry of Education is not an asset that can be sold or transferred.” The purchaser goes through the full licensing process as a new applicant. On a share sale, no new licence is required, because “the legal entity responsible for the operation and management of the child care centre does not change.”

What an asset purchase actually commits you to

If you buy the equipment, the goodwill, the name and the leasehold, you have bought a child care business and no permission to run one. You apply as though the centre did not exist. The Ministry’s public process page puts it plainly: “The process to get a child care licence takes approximately 4 to 6 months,” and a site inspection is scheduled “to check that you are in compliance with all requirements.” Licence fees are modest — $200 to $450 for a new licence depending on capacity, $100 to $230 on renewal — which tells you the money is never in the fee. It is in the calendar.

Four to six months from the Ministry is not four to six months from the day you sign. It runs from a complete application. Assembling it means the premises evidence, your corporate documents, your screening and your program plans. A buyer who signs a firm, short closing on an asset basis has built a closing they cannot perform.

What a share purchase avoids, and what it does not

Buying the shares of the licensee corporation leaves the licence undisturbed, because the licensee is the same legal person before and after. That is genuinely the fast path, and on most daycare files it is why the deal is structured as a share purchase at all.

It is not a free pass. Corporations may hold licences, and their controlling persons are screened — s. 23(1)(a) lets a director of the Ministry refuse a licence on the basis of the people behind the corporation. Section 9(2) deems all the directors of a corporation operating a child care premises to be operating the premises themselves. And s. 20(6) is explicit: “Where the licensee is a corporation, the licensee shall notify a director in writing within 15 days of any change in the officers or directors of the corporation.” Your share purchase will change the officers and directors on closing day. That notice obligation lands on the corporation you just bought, and the clock is fifteen days, not thirty.

You also inherit everything else a share purchase brings: the corporation’s liabilities, its tax history, its employment claims, its lease defaults. A share purchase is faster on the licence and heavier on the diligence.

The fork, side by side

Issue	Asset purchase	Share purchase
Child care licence	Not transferable. Buyer applies as a new applicant and the Ministry states approximately 4 to 6 months	No new licence. The legal entity operating the centre does not change
Ministry notice	Current licensee gives written notice to their program advisor at least 30 days before the tentative closing date	Same 30-day advance notice, plus notice of the change in officers or directors within 15 days under s. 20(6)
Ontario Land Transfer Tax on the real estate	Payable on a registered conveyance of the land under s. 2(1) of the Land Transfer Tax Act	“The transfer of shares of a corporation which holds land in its own right does not ordinarily attract tax under the Act” — Ministry of Finance
Employees	Service with the seller flows through to you under s. 9(1) of the Employment Standards Act, 2000	Employment is undisturbed. Same employer, same service
Corporate liabilities	Only what you expressly assume	All of them, subject to your representations and indemnities

Thirty days’ notice to the program advisor, and a Ministry caveat worth reading twice

Appendix C requires the current licensee to give written advance notice to their program advisor “at least 30 days before the tentative closing date.” That is the seller’s obligation, not yours, which is exactly why it gets missed. Put it in the agreement as a vendor covenant with a date attached.

Then read the Ministry’s own caveat in the same appendix: “there is no guarantee that the proposed future licensee will continue be licensed.” The Ministry is telling you, in advance and in writing, that giving notice of a proposed sale is not an approval of it. Nobody at the Ministry has pre-cleared your purchase because a form was filed.

Who is even allowed to apply

An applicant may be an individual or a corporation. It may not be a partnership. Section 20(4)(b) permits refusal where “the applicant is under 18 years old, is a partnership or is an association of persons.” If your investor group was planning to hold this through a limited partnership, that plan ends here for the licensee entity. Talk to counsel about what structure actually works before anyone signs a letter of intent.

The licence is also site-specific and says so. Section 6(2): “a person who holds a licence to operate a child care centre is authorized to operate the centre only at the premises specified in the licence.” You cannot buy a licence at one address and open at another. And s. 23(1)(f) allows refusal where the local service system manager’s advice shows that a licence would be inconsistent with the manager’s plan as to the demand for child care and the capacity and locations of existing centres. That is a discretion sitting over any new application, including yours.

A two-year maximum term is shorter than most buyers assume

Under s. 85.2 of O. Reg. 137/15, a director may issue or renew a licence “for a maximum period of two years.” So when a seller tells you the centre is licensed, ask for the licence and look at the expiry date. If you are buying shares in June and the licence expires in September, you have bought a renewal file, not a stable permission, and the renewal will be assessed against the centre’s compliance history — which by then is your compliance history.

Ask for the full history: the licence, every inspection summary, every non-compliance finding and what was done about it. On a share purchase that record follows the corporation into your hands.

What I would actually put in the conditions

I read the lease before the offer goes out, and on a daycare I read the licence at the same time. The conditions that matter on this file are not generic. They are:

On an asset purchase — a condition that the buyer obtain its own licence to operate at the premises, with a closing date set by reference to issuance rather than a fixed day in the calendar, and a mechanism for what happens if the Ministry takes longer than anyone expected. On a share purchase — a condition on satisfactory review of the corporation’s licence, term, compliance history and any outstanding directions, plus the usual corporate and tax diligence.

On either — a lease review condition, because the premises permission is as important as the licence. A properly drafted lease review condition gives you time to read the assignment clause, the use clause, the term remaining and the renewal rights. Section 23(1) of the Commercial Tenancies Act deems a consent requirement to carry a proviso that consent “is not to be unreasonably withheld” — but only “unless the lease contains an express provision to the contrary.” Plenty of commercial leases contain exactly that provision. Read the clause; do not assume a reasonableness standard. The clauses that decide this are worth understanding before you negotiate price.

HST, and the election that is not automatic

On an asset purchase of a going concern, the Excise Tax Act offers a joint election at s. 167 that can relieve HST on the assets where the buyer is acquiring “all or substantially all of the property that can reasonably be regarded as being necessary for the recipient to be capable of carrying on the business.” CRA’s Memorandum 14-4 reads “all or substantially all” as generally 90% or more of the fair market value of the necessary property. It is filed on Form GST44, and if the supplier is a registrant the recipient must also be a registrant.

Three things survive the election, and one of them is the trap in any deal where you buy the business and the building together: tax still applies to a taxable sale of real property where the recipient is not a registrant. If your purchasing entity is not registered for GST/HST, HST on the real property is payable notwithstanding the election. Register the right entity, early.

Separately, and usefully, HST does not apply to the portion of the price reasonably attributed to goodwill where the s. 167.1 conditions are met — and CRA confirms in Memorandum 14-4 that this holds whether or not the s. 167 election is filed. None of that is tax advice from me. Your accountant and your lawyer decide the allocation and the filings, and the HST clauses in the agreement need to say who does what.

The staff come with the business on an asset sale

Buyers who choose an asset purchase to leave liabilities behind are often surprised here. Section 9(1) of the Employment Standards Act, 2000 is direct: “If an employer sells a business or a part of a business and the purchaser employs an employee of the seller, the employment of the employee shall be deemed not to have been terminated or severed for the purposes of this Act and his or her employment with the seller shall be deemed to have been employment with the purchaser for the purpose of any subsequent calculation of the employee’s length or period of employment.”

So the ECE who has been at that centre for nine years arrives with nine years of service attached. Terminate her after closing and notice under s. 57 is calculated on that full period — eight weeks at eight years or more. Severance under s. 64 becomes payable at five years or more of employment where the employer has a payroll of $2.5 million or more, or where fifty or more employees are severed within six months because of a permanent discontinuance, and s. 65(5) caps it at twenty-six weeks’ regular wages. Section 9(2) gives one narrow exception: the flow-through does not apply if the purchaser hires the employee more than thirteen weeks after the earlier of the employee’s last day with the seller and the day of the sale. Those are ESA minimums. Common law is a separate and generally larger question for your employment counsel.

In a child care centre this is not a side issue. Your licensed capacity depends on qualified staff being in the rooms. The people are the business.

What a daycare sells for, honestly

There is no published Ontario figure for what a licensed child care centre sells for. Innovation, Science and Economic Development Canada publishes operating benchmarks for NAICS 62441, Child day-care services — average revenues, expenses and profit margins by quartile for 2024, Canada-wide, with no Ontario breakdown and no sale prices or multiples at all. If a broker quotes you a multiple of earnings for an Ontario daycare, they are quoting their own book, not a source. Price this the way you would price any other business with a regulatory permission attached to it: on the numbers you verify, the lease you read, and the licence you can actually obtain.

One more structural point. The Bulk Sales Act was repealed on 22 March 2017, so the old creditor-notice procedure on a sale of stock in bulk no longer exists in Ontario. Buyers now protect themselves by contract — representations, indemnities, holdbacks — and by searches. That is your lawyer’s department, and this is part of what they are for.

How I would sequence it

Structure first, because the licence dictates it. Then the premises, because the licence is tied to the address and the Ministry has to approve child care plans before a building permit can issue for a new or altered centre. Then the lease. Then price. Then the closing date — last, not first, because on an asset purchase the date is a function of the Ministry’s timeline and not of your mortgage commitment.

The premises rules are their own subject, with real numbers in them: floor space per child, outdoor play space, fencing heights, washroom fixture ratios. Those decide whether the centre can hold the capacity the seller is charging you for.

Frequently asked questions

Can I take over the seller’s child care licence if the Ministry approves it?

No. Section 20(5) of the Child Care and Early Years Act, 2014 says “A licence is not transferable,” and the Ministry’s licensing manual states that the licence “is not an asset that can be sold or transferred.” There is no approval process for transferring one. If the licensee entity changes, the new entity applies for its own licence as a new applicant. That is the whole reason daycare deals are so often structured as share purchases.

How long does a new child care licence take?

The Ministry of Education’s published figure is approximately four to six months, and it schedules a site inspection to check compliance with all requirements. That runs from a complete application, not from the day you sign an offer. Treat it as the governing constraint on an asset purchase closing date. There is no published expedited route, so do not build a deal on the assumption of one.

Does a share purchase mean I skip the Ministry entirely?

No. No new licence is required, because the legal entity operating the centre does not change. But the current licensee still must give written notice to their program advisor at least 30 days before the tentative closing date, and s. 20(6) requires the corporation to notify a director in writing within 15 days of any change in its officers or directors. Controlling persons are screened under s. 23(1)(a). You are visible to the Ministry either way.

Can my holding partnership be the licensee?

No. Section 20(4)(b) permits refusal of a licence where the applicant “is under 18 years old, is a partnership or is an association of persons.” An applicant may be an individual or a corporation. If your investor group intended to hold through a limited partnership, the licensee entity has to be something else, and how you layer ownership above it is a question for your lawyer and accountant before anyone signs.

How long does a child care licence last?

Section 85.2 of O. Reg. 137/15 allows a director to issue or renew a licence for a maximum period of two years. So ask for the licence document and check the expiry date before you price the deal. Buying shares three months before a renewal means you own the renewal, and the renewal is assessed against a compliance history you did not create but now carry.

If I buy the assets, do I have to keep the staff?

The ESA does not force you to hire anyone. But if you do employ the seller’s employees, s. 9(1) deems their service with the seller to be service with you for any later calculation of length of employment — so notice under s. 57 and severance under s. 64 are computed on the whole period. The only relief is s. 9(2): the rule does not apply if you hire more than thirteen weeks after the earlier of their last day with the seller and the day of the sale. Get employment counsel before you make offers.

Will I pay Land Transfer Tax on a daycare purchase?

It depends on whether land changes hands. Tax under s. 2(1) of the Land Transfer Tax Act is payable by a person who tenders a conveyance of land for registration, so an asset purchase that includes the real estate attracts it. The Ministry of Finance states that “the transfer of shares of a corporation which holds land in its own right does not ordinarily attract tax under the Act.” In the City of Toronto, Municipal Land Transfer Tax applies to all properties in addition to the provincial tax. Your lawyer calculates it.

What is a licensed daycare in the GTA worth?

There is no published figure, and I will not invent one. ISED’s Canadian Industry Statistics for NAICS 62441 publish operating benchmarks only — revenues, expenses and margins by quartile for 2024, Canada-wide — with no sale prices and no multiples. Any multiple you are quoted is somebody’s opinion of their own inventory. Price from verified financials, the lease, the licensed capacity the premises can actually support, and the structure the licence rules force on you.

Sources

• Ontario e-Laws — Child Care and Early Years Act, 2014, S.O. 2014, c. 11, Sched. 1
• Ontario e-Laws — O. Reg. 137/15 (General) under the Child Care and Early Years Act, 2014
• Ministry of Education — Child Care Centre Licensing Manual, Appendix C: Sales of assets / shares of a corporation
• Government of Ontario — Apply for or renew a child care licence
• Canada Revenue Agency — GST/HST Memorandum 14-4, Sale of a Business or Part of a Business
• Ontario e-Laws — Employment Standards Act, 2000, S.O. 2000, c. 41
• Ontario Ministry of Finance — Land Transfer Tax and the Treatment of Unregistered Dispositions of a Beneficial Interest in Land
• Innovation, Science and Economic Development Canada — Canadian Industry Statistics, NAICS 62441 Child day-care services

This is general professional commentary from a Broker of Record on commercial and business acquisitions in Ontario. It is not legal, tax or accounting advice, and it does not create any professional relationship. Whether a licence transfers, how a purchase should be structured, what tax applies and what a regulator will require on your particular file are questions for your lawyer, your accountant and the regulator itself. Rules, fees and published requirements change — verify anything you intend to rely on against the primary source on the day you rely on it.