Childcare centres have become popular with Chinese and Asian families and investors. Unlike a restaurant or shop, whether a centre can keep operating depends on government approvals passing to the new owner. If the contract and settlement are not aligned with those approvals, a buyer can pay in full and then find they cannot lawfully run the centre.
Three key approvals
- Provider approval: the buyer must first be approved as a provider, and the regulator looks at its capacity and fitness to operate.
- Service approval transfer: the centre's service approval has to be transferred from the seller to the buyer, with the regulator's consent.
- Child Care Subsidy approval: subsidy approval does not transfer with the business; the new operator must apply separately, and early.
What the contract should cover
- Make the approvals contract conditions, and say what happens to the deposit if they are not granted
- Line up the settlement date with the date the transfer takes effect
- Handover of staff, enrolments, waitlists and records
- Assignment of the premises lease and landlord consent
- The seller's obligations to cooperate during handover
Buying the property or the business?
Some investors buy the freehold of a centre leased to an operator rather than the business itself. The value then depends mainly on the lease terms and the operator's strength, so the checks are different. Our property work is Victoria only.
Need help?
Before you sign or pay a deposit, book a 30-minute paid consultation. We work in Mandarin and English; contact us on WhatsApp at +61 490 369 102 or call +61 3 9602 3988.
This article contains general information only and is not legal advice. You should not rely on it for any specific matter. The law may change; please book a consultation for advice on your circumstances.
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