Starting a business or franchise in Canada

Buying into a franchise in Canada is a great way to start your own business and establish yourself in your new country.

Canada is home to the second largest franchise industry in the world, with over 75,000 units currently operating. Annual sales from Canadian franchises add up to over CA$100 billion, and over 500 franchisors from the US have branched out into the Canadian market.

What is franchising?

Franchising is a way of doing business where the franchisor authorises an individual or group (the franchisee) to offer, sell or distribute goods or services under their professional strategy or marketing plan. It is very effective for establishing and developing a brand and achieving a large market share. Franchises in Canada are generally classed as either ‘product or service’ or ‘business format’. While most franchises usually are more one category than the other, many still combine both aspects.

Benefits of buying a franchise

Buying into a franchise gives you the ability to run your own business and get involved with an established brand. Entering into a franchise as a newcomer to Canada can be a great idea, as there is a lower risk of failure and you’ll have the added security of start-up help.

There is a vast array of franchise opportunities ranging from coffee and pizza restaurants to gyms and home services. Start out by looking within a field of business that holds particular interest for you, or one in an area that you're already know a lot about.

Be prepared for the franchise business

Starting a franchise can seem like a safe bet with guaranteed success, but there are pitfalls of which you should be aware. Thousands of people join the franchise community every year in Canada, and while statistics show that most prove to be successes, not everyone is cut out for it and it is imperative that a prospective franchisee knows what they’re in for.

It is important to note that purchasing a franchise can be expensive, with steep start-up and ongoing costs, and that you will be required to follow the guidelines set out by the franchisor. It is recommended you do your homework when considering with the type of franchise you’d like to buy. Some franchisors can be exceptionally strict with their regulations, so if you find it hard to take direction or prefer to go your own way, it is advisable to go with a franchisor who is more relaxed with their guidelines.

On the flipside, having rigid instructions can be beneficial when you’re unsure of a new industry and new to a country. This discrepancy also extends to the costs involved. Start-up and ongoing expenses can vary greatly depending on the industry and how established the franchise is.

Keep in mind that you have more to lose than the franchisor – you’re the one investing your money and livelihood in the business. You can and should ask a lot of questions and research the franchise as much as you can before getting involved and expect the same of the franchisor. Mutual respect and honesty is the best place to start.

Facts about franchising in Canada:

  • 97% of franchises that open in Canada are still in business five years later, and a full 86% are still operating under the original ownership.
  • A new franchise opens in Canada every two hours.
  • The average franchise fee in Canada is $25,000.
  • One franchise operation exists for every 450 Canadians.

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