If you are interested in operating a franchise in Canada, this article will help you understand how to invest in a Franchise business as a Canadian immigrant, the background of the Canadian franchise industry, and some of the considerations that need to be addressed in advance.
What is a Franchise?
A franchise is a method of distributing a product or service involving a franchisor that sets up a brand or trade name and business system, and a franchisee that charges a license fee and often the initial cost of the right to do business with the franchisor name and system.
Technically, the contract that binds the two is a “franchise,” but the term often refers to the actual business that the franchisee is running. The practice of creating and popularizing branding and franchising systems is most commonly referred to as franchising.
Types of Franchise
There are two different types of franchise relationships.
Business format franchising
They are the most identifiable type of franchise. In the franchise format, franchisors provide franchisees with trade names, products, and services, as well as the entire system for running their business. Franchisees typically receive location selection and development, operating procedures, training, branding standards, quality control, marketing strategy support, and business consulting support from franchisors.
Traditional franchises or product distribution franchises
They are less well-identified as being franchises, but total revenue is higher than business format franchises. Examples of traditional franchises or product distribution franchises can be found in bottling, petrol, automobiles, and other manufacturing industries.
Examples of Franchise Companies in Canada
Below is a list of most franchise companies in Canada:-
- Tim Hortons
- Circle K
- McDonald’s (of Canada)
- Jan-Pro Canada
- Shell Canada
- H&R Block Canada
- A&W (of Canada)
- Canada Bread
- Pizza Pizza
- Dairy Queen
- Gateway Newsstands
- Marlin Travel
- CARSTAR Canada
- Mr. Lube Canada
- Booster Juice
- Century 21 Canada Limited Partnership
- Boston Pizza
- Canadian Tire Gas+
- Wendy’s (of Canada)
- Pet Valu
- Belron Canada
- The UPS Store
- Pizza Hut
- Country Style Foods
How to Invest in a Franchise Business as a Canadian Immigrant
Here is a step-by-step guide to investing in a franchise business in Canada
1. Check your reasoning
Owning a franchise (or any other business) can be a significant emotional, physical, and financial endeavor. Before you dive into buying a franchise, you should see why you want to own it.
If you find it easier to own a franchise than any other type of business, keep in mind that business owners are generally involved in their challenges.
2. Research which franchises you want to own
That a franchise is famous doesn`t always imply that it’s proper for you. Do not ever take your franchise studies lightly. Expect to devote numerous weeks to this process, and search for these subsequent criteria:
- A strong record of extremely good sales: It`s recommended to select a franchise that has evidence of being profitable.
- A developing marketplace: For success, the franchise you select ought to be in a marketplace that is developing.
- Social responsibility: People need to do enterprise with socially responsible organizations. Find out what the franchises you’re thinking about are doing to be socially responsible.
- Local opposition: A little opposition may be good, however, an excessive amount of opposition close by can destroy your enterprise. A competitive business located close to you in a single region can also ruin sales.
- Repetition of business: What is the chance that the franchise you are going into can keep bringing your customers back for business. For instance, a person who owns a GNC franchise can hope that each month, the same clients might return to replenish their vitamins.
- Opportunities to upsell products and services: McDonald`s is an extremely good instance of an organization that excels at upselling products.
- Franchise fees: Always ask yourself how much the fees are, and what you stand to get for such? At least you should hope to get hold of extremely good advertising and support.
- How does it feel to work in that franchise: See if you could get a franchise proprietor who can allow you to work under them. Working under someone who owns a franchise will help you to get a higher experience of what it means to run one, and if it`s something you could and need to do.
3. Start the application process
Once you have decided on the franchise, start the application process. This is one of the areas where lawyers can help. As part of the application process, you will be screened as if you were screening a franchise business.
The franchisor makes the following considerations:
- Your finances to make sure you have enough money to keep the door open.
- Your background, including educational background, professional background, and reasons for starting a business.
- Your intended location to operate the franchise.
- You are interested in their franchise, and your knowledge of it.
4. Set up a Discovery Day meeting
Before COVID19, the franchisee’s office held face-to-face meetings with potential franchisees. This conference, commonly known as Discovery Day, allows you to get to know each other better and ask questions before you buy a franchise.
However, the day of discovery takes place online during the pandemic. You should request a virtual tour of the franchise as part of your virtual meeting. When Discovery Day occurs depends on the franchise. Some choose to hold a meeting at the beginning of the hiring process, while others prefer to hold a meeting at the end.
5. Apply for funds
If you don’t have the money you need to open a franchise, there’s no reason to continue for the time being. Apply for funding and wait until sufficient approval is obtained to cover all franchise fees and other costs.
6. Please check the franchise paper carefully and return it
These contracts are usually long and contain confusing language. Therefore, it can be beneficial to consult a lawyer to assist in this process.
7. Buy or rent a place
At this point, the franchise city has already been selected. Now is the time to physically go out and buy or rent commercial space.
8. Get training and support on how to invest in a franchise
You are entering an established brand. There are logos, messages, guidelines, and products. This is the step you take to take root in your business. Take training on the following aspects of the franchise to learn how to invest in a franchise business:
- Products and services (including their sale and purchase).
- Product placement and POS display.
- Product placement and POS display.
- Payment technology.
- Sales tactics for this particular business model.
Best Province to Invest in a Franchise
Ontario is the nation’s leading franchise province, with 56% of its franchise operations headquartered in Ontario (mainly in the Toronto region).
Approximately $1 out of $5 will be spent on franchise products or services. Nearly 2 million Canadians are employed directly in the franchise industry.
Frequently Asked Questions on How to Invest in a Franchise
Is the franchisee the same as the franchisor?
No, a franchisor is a legal entity that owns the intellectual property, patents, and trademarks of a brand or company that is franchised. The franchisee obtains the right and licenses to operate at a location from the franchisor.
Does the franchisee own a business?
Yes, a franchisee is considered a business owner, even if the type of business it owns is a franchise business. This may limit the scope and autonomy of what an employer is allowed to do under a franchise agreement.
For example, McDonald’s franchisees cannot sell Burger King products and must use the official McDonald’s logo and brand.
Can a franchisee be dismissed or removed?
Yes, if a franchisee violates the terms or commitments of a franchise agreement, it can be terminated for good reason. Terminations that are not considered significant reasons may be prosecuted as illegal terminations of the franchise.
Do I need industry experience to invest in a franchise?
No. Career development in the franchise tends to be a little different from traditional job hunting. In particular, you don’t need industry-specific experience to open a franchise. You just need to know how to invest in a franchise business
How do I choose the right franchise?
Deciding which franchise is right for you is a big decision. Not only are you interested in the right business, but your initial investment needs to fit your budget and allow you to live the lifestyle you want (more free time, more money, managing the work environment).
In addition, the business you want to buy must meet the market demands of your community. If there is no market demand, or if the region is already saturated with similar companies, your new business has no bright future.
The best advice is to survey before signing a franchise agreement. Talk to current and past franchisees to make sure there is a demand for your business in the area where you plan to open your business.
How much can I invest in a franchise?
The cost of purchasing a franchise depends largely on the industry in which you start your business, whether your concept requires a store, office, home office, or mobile business, the state in which you run your business, and the amount of overhead your business requires. In addition, many franchise concepts can provide financing or, if interested, assist in financing.
Can I own multiple franchises?
Yes. But again, it depends on the franchise concept. Many franchisors sell areas or master franchises within a particular region. These larger areas can be expensive. If you own a single franchise and are successful, most franchisors will gladly sell you another region.
If you own a concept and want to get another franchise from a different unrelated brand, it’s usually possible unless you plan to buy a competing concept.
Be sure to read the entire franchise agreement and check it before having a lawyer specializing in franchise law sign it. Inform your lawyer that you plan to acquire another franchise concept in the future so that you can be sure you are not having problems.
Finally, buying a franchise is a hassle. Do due diligence on the franchise business you are considering, find the funding you need, choose a location, and get the training and support you need to get started. We hope this article will help you navigate successfully and know how to invest in a Franchise Business as a Canadian Immigrant.