Little Sunshine's Enterprises adds franchisees, leaves lawsuits behind

Little Sunshine’s Enterprises Inc. is working to overcome its early growing pains. The Springfield-based child care center and preschool that began selling franchises in 2005 assumed the operations of two former franchisees following lawsuits over trademark infringement that were settled in court in May 2010.

This year, the company has added a franchisee in Leawood, Kan., and signed another in Colorado, with an Arizona franchisee in the works that Little Sunshine’s founder and President Rochette Dahler said would bring the number of centers to nine in five states.

Two turned over
In December 2009, Little Sunshine’s filed suits in the U.S. District Court for the Western District of Missouri against two of its franchisees – Paschke Enterprises LLC and Brodersen Wyrsch LLC – seeking a combined $200,000 in unpaid royalties. Paschke Enterprises operated a preschool at 201 E. Cardinal St. in south Springfield that went by the name Storybook Children’s Academy after the court ordered it to stop using the Little Sunshine’s Playhouse & Preschool name while lawsuit hearings were ongoing. Brodersen Wyrsch ran the Pinnacle Children’s Academy in Rogers, Ark., at the time of the settlement.

Paschke Enterprises filed a countersuit claiming breach of contract, false representations about the business and a lack of support from Little Sunshine’s, according to court documents.  

Dahler, who started the child care center in 2002 at the age of 21, said the company has been working to overcome the fallout from the franchise lawsuits for the last two years.

“We’ve learned a lot. We’re 10 years ahead of where I think a startup franchise would be because of what we’ve been through,” Dahler said from her home in Hawaii. “We’re excited to be franchising again, but are (using) a bit more caution. We definitely have more of a selective approach to franchising. I think that was our major issue before.”

The 2010 settlement, which is sealed by court order, turned over the two franchisees’ operations to Dahler and company.

“We had actually stopped franchising prior to the litigation. The main reason we stopped franchising was the economy,” Dahler said. “We’ve resumed franchising because we feel like the market is back for our industry.”

Three ahead
Little Sunshine’s franchisees operate in Ozark and Leawood, Kan. The day care franchisor operates three corporate schools in Springfield, and one each in Rogers, Ark., and Scottsdale, Ariz. This summer, the company selected one franchisee in Colorado Springs, Colo., and has two applicants vying for another franchise in Gilbert, Ariz.

Dahler said Little Sunshine’s startup costs are roughly $70,000 and royalties are 7 percent of revenues. She said the company employs nearly 150 companywide caring for roughly 600 children, and each of the Little Sunshine’s four Springfield area locations has 100 percent enrollment. Dahler declined to disclose company revenues.

Though Dahler is based in Hawaii, Little Sunshine’s Operations Executive Nicole Carr manages the headquarters in Springfield. Carr said child care rates vary based on ages and locations, but she said the weekly rates are typically higher than average for a given market. In the Springfield area, she said rates are comparable to The Goddard School, another private, for-profit franchise model, which operates at 2238 W. Kingsley St. in Springfield.

The average cost of center-based day care in the U.S. is $11,666 per year, or just under $1,000 per month per child, with most centers ranging in price from roughly $3,600 to nearly $19,000 per year, according to the National Association of Child Care Resource & Referral Agencies.

Colorado Springs franchisee Terrence Limebrook said he and his wife are working with contractors to build its Little Sunshine’s center near an affluent neighborhood. He said average rates for child care would range between $1,000 and $1,100 per month, which he considers competitive in the market. Limebrook said he had worked with Dahler’s husband, Matt, in Hawaii, and with three young children and his wife’s education background, the couple decided to open the franchise.

Limebrook said Dahler helped the couple secure a $325,000 business loan that will cover the franchise fee and the first four months of operations. The Limebrooks plan to lease the property from a developer once it opens.

“The support started with Rochette helping us out through the loan process and talking to banks,” Limebrook said.

“They’re doing a lot of the leg work – almost all of the leg work as far as getting the developers and contractors and negotiating a lease for us.”

Carr said Little Sunshine’s offers parents “kiddie cams” for daytime viewing, a curriculum developed in-house and playgrounds with natural elements.

She said the preschools have between 20 and 25 teachers and two administrators, and the number of children – ages six months to 6 years – range from 68 to 110.

“We go for more of the home-environment approach as opposed to more of a clinical [environment],” Carr said. “The kiddie cams are one of the biggest features we offer. It gives parents that opportunity to have a little extra peace of mind. Any time during the day, they can log in via their smartphone or on their computer with their secure log-in and password.”

Joyce Harrington, the first franchisee of Little Sunshine’s through RoseJoy Inc., said she has had a smooth working relationship with Dahler since opening her preschool in 2005.

“She is very professional and is very knowledgeable about our profession. She has always been responsive to any questions or advice I may (need),” Harrington said by email.

Two of the company’s franchisees have a family connection with Dahler. Harrington was related to Dahler through a previous marriage, and Dennis and Brad Dahler, franchisees of the Leawood, Kan., center, are Rochette Dahler’s brothers-in-law.

Cary Paschke, co-owner of Paschke Enterprises and owner of commercial contractor Fusion Consulting LLC, said he has learned a lesson in franchising.

“I would be extremely cautious in entering into any franchise agreement,” Paschke said. “You are buying a franchise because you believe a business would support you – that’s what you’re buying is their expertise. Just make sure if you buy into a franchise, that the franchisor has the expertise to (assist) you properly in the business to make it a go.”