How a Toronto daycare was thrown into turmoil after it was bought by a corporate chain

A rapidly expanding daycare that bought an independent Toronto facility managed to evict most of its staff and many families in a matter of weeks, according to some parents and staff.

Lullaboo Nursery and Childcare Center Inc., which has promised to add thousands of new childcare spots over the next few years, is now facing a lawsuit from the daycare’s former director.

The case is an example of the potential pitfalls faced by the childcare sector as the for-profit side expands rapidly to meet government targets for childcare places and attracts investor interest.

Lullaboo was founded in 2008 by husband and wife team Irini and Halim Mikhael. It grew steadily, adding an average of one location per year for its first decade, according to its website. But the company’s expansion accelerated around the time the federal government promised to work with states on a childcare grant and create new spaces for children.

Ontario Secretary of Education Stephen Lecce and two progressive Conservative MPPs attended the dedication of a new Lullaboo site — its eleventh — in Mississauga in early 2022. In a LinkedIn post celebrating the event, Mr. Mikhael said the company plans to open three more centers this year, aiming to have 25 locations by 2025.

In a separate post about the construction of a new facility in Brampton, Mr. Mikhael said Lullaboo plans to meet 5 percent of the province’s pledge to add 86,000 childcare places by the end of 2026.

Lullaboo has “doubled its sales every 24 months since its inception,” according to a brochure published online by Behar Group Realty Inc., a brokerage firm that counts Lullaboo among its clients. The brochure states that the daycare chain plans to “continue its exponential sales growth rates” in the coming years.

Most of the new locations were built from the ground up, but the company’s first acquisition of an existing daycare business was the North Toronto Early Years Learning Centre, which had two locations: the main facility on Avenue Road and a small operation on Bedford Park Avenue , which only offered half-day care.

The purchase immediately proved disruptive to employees and families at the Avenue Road site, who were not told the company was up for sale, according to documents, a wrongful dismissal lawsuit, and interviews with three parents and a former employee.

The Globe and Mail does not identify the parents, concerned for their children’s well-being, nor the educator, who fears professional repercussions.

Within 24 hours of completing the purchase on Oct. 27, Lullaboo sent new employment contracts to existing employees and asked them to sign them within days.

But the staff had concerns. The new contracts paid less; For example, an employee with years of experience was offered a base salary of $15.50 – Ontario’s minimum wage – with supplements from provincial grants. The contracts also included a three-month probationary period for all employees, banned them from taking on outside jobs and said Lullaboo could transfer them to another location at any time.

Martha Friendly, executive director of the Toronto-based child care resource and research unit, said labor is the biggest cost for daycare, so it can be the first expense to be pressured. She said 2017 data showed that 25 percent of workers at licensed daycares in Ontario made minimum wage — but most of them worked in for-profit companies.

“This leads to poor quality in for-profit day care centers and staff turnover,” Ms. Friendly said.

On October 28, the Mikhaels held a virtual meeting with the parents to discuss the adoption. According to a wrongful dismissal lawsuit filed by Jennifer Andrade, the center’s director at the time, Ms. Mikhael used the meeting to inform parents that she was coming in to fix the daycare as it was poorly run and in a state of utter confusion be .

The following week, a group of more than 50 parents emailed Ms. Mikhael expressing concern about the potential disruption to the center’s educational program and staffing during the school year. “We cannot stress enough how important the current teaching staff is to the running of the school and our community. We fully support and stand behind our teachers,” the email said.

On November 8, Ms. Mikhael held a town hall with parents where, according to the lawsuit, she again belittled the staff she inherited through the takeover. One parent even offered to buy the center to maintain the status quo, an offer Ms. Mikhael declined.

Over the next few weeks, employees began to quit. Ms Andrade said 16 of the center’s 19 staff eventually left.

Ms Andrade, who had run the center for 18 years, worked her last day on November 18th. She then sued Lullaboo for constructive dismissal, alleging that she was effectively demoted to receptionists and that the owners intentionally caused her psychological distress.

Irini and Halim Mikhael did not respond to requests for comment on this story.

A defense statement filed Jan. 18 said Ms Andrade “reacted with tears of joy and relief” upon learning the center had new owners. The statement adds that the change has also been welcomed by other staff: “Center staff have welcomed the new ownership, reporting better working conditions, increased benefits and an overall increase in morale and business.”

They also denied changing Ms Andrade’s duties and said Ms Mikhael’s statements to the parents about the daycare’s financial situation were “completely and unequivocally truthful”.

As new ownership stretched into its second month, parents continued to express concerns. On December 2, a group of 20 parents wrote to the Mikhaels to reiterate their dissatisfaction with the departure of teachers and the change in curriculum, as well as safety concerns about renovations being carried out during the day and contractors entering and exiting the building without themselves to show, to express I WOULD.

In a reply aired on December 4, the Mikhaels told the parents that this was their first purchase of a company school and acknowledged they made mistakes in the transition.

“Perhaps our initial mistake with new contracts with educators was too much to overcome. It now appears that any initiatives to bring about additional improvements are met with suspicion and cynicism,” the email read, adding: “It is simply unfair that the children are having to go through this and we truly regret that this change happened. ”

At the same time, Lullaboo enrolled parents in his fundraiser for the SickKids Foundation, which aimed to raise $100,000 by the end of the year. In an email to parents Dec. 13, the company said it automatically adds $3 to bi-weekly fundraiser bills, although it gives them a week and a half to opt out if they “are not ready.” , so little amount to donate.”

The Globe spoke to three parents who have withdrawn their children from school or are in the process of doing so. They said they are in touch with other families who are taking their children to new centers.