Do you actually want to give notice as such or just give them the written notice that you have started advertising to fill the other two spaces in your daycare to bring you up to provincial standard. Then leave it up to them to agree or leave. On the other hand you risk them agreeing and then secretly be looking elsewhere only to leave after you thought all spaces were filled.

It does seem like no matter what they are not going to be happy and by them already saying no and you in effect saying too bad I can do what I want which you can so do not feel guilty for that it probably is better that they just go.

I would give them plenty of time to find alternate care but not so much it holds you up from advertising. Better to know that as of whatever date.