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How to Choose a Franchise in Canada

If you are thinking of buying a franchise in Canada, it is essential to know the procedure involved in choosing the most suitable franchise to ensure your business venture is a success.

how to choose a franchise in Canada

Why Should You Buy a Franchise?

Franchising involves an agreement between a franchisor (the owner of the business) and a franchisee. The franchisor grants the franchisee the right to own the brand, trademark, name, and business model in return for an initial start-up fee and annual licensing fee.

One of the major reasons entrepreneurs have for investing in a franchise is to start a business without facing the risks that building a business from scratch brings. Franchising offers the basic knowledge, systems, and materials you need to manage and run a business successfully.

Criteria that Make a Franchise System Successful

criteria franchise system

Regardless of the franchise you are considering, the most successful franchises should have all or most of these criteria:

  • It should be an active member of the Canadian Franchise Association (CFA) and must be ready to work towards the fulfillment of the association's goals.
  • Possession of effective advertising materials, marketing approaches, and knowledge of the perfect media that suit the brand.
  • Development of brand identity that is unique and innovative.
  • Knowledge of the dynamics of the marketplace and the competitive situation of the location.
  • Provision of support and adequate training for new franchisees to get their business up and running and develop skills and knowledge in critical areas like staffing and business operations.
  • Generation of a strong business system appropriate for a location because of experience through trial and error.
  • Reasonable track record of achievement by helping multiple franchisees attain business success.
  • Experience, knowledge, and skills, in growing, leading and controlling franchise systems.
  • Practicing thorough interviewing process and creation of franchise profile before selection.
  • Strong financial base and reasonable reserve with no experience of bankruptcy.

Choosing a Franchise that Suits Your Goals and Budget

Explore the market

You should carry out a proper investigation on the franchise you want to choose. In this case, you should be able to examine the level of demand for the products or services provided by the business. Also, you should know the rate of competition in the industry. While fierce competition leads to harder work and dedication, minimal competition is always a good sign.

The franchises’ potential and brand reputation

It is essential to consider the potential and brand reputation of the franchise. This will determine the rate of demand and level of trust from customers in your new business. We all know that people buy from who they trust, so you should consider franchises with goodwill and a strong customer loyalty. Tim Hortons, Canada Bread, and Marlin Travel are examples of franchises that have strong reputations.

What type of industry do you want to consider?

You should conduct research and evaluate the types of franchises that will encourage your interest, skills, and goals. In this case, you should be able to know the franchise management, understand the franchise fees, level of experience, the brand reputation, and so on.

Calculate the franchise fee

Before you enter an agreement with any franchise, you have to consider the franchise fee (initial start-up fee and royalty) and check your budget to see if you can afford it. This is essential so you will not end up in bankruptcy. For example, the franchise fee for Tim Hortons ranges from $25,000-$50,000.

The skills and experience to manage the franchise

Any franchise that lacks skills and experience will surely crumble. Therefore, to be cautious, there are many skills you should consider before choosing a franchise system. These are marketing skills, management skills, distribution skills, communication skills, and other skills relevant to the sector you are interested in.

Training and support

A franchise should be able to provide adequate training and support relevant to the skills they offer. The franchisor can design comprehensive training to get all franchisees to run their industries. The training can be grouped to initial training and ongoing training. For example, Perkins restaurant trains its franchisees on how to manage finances and marketing, utilize procedures for cooks, servers, dishwashers, and managing other employees.

Conversation with the current franchisees

During your initial investigation, you should be able to have a strong and reliable conversation with the current franchisees to know the system of operation of the franchise and to discover if it suits you. Knowing first-hand experience from franchisees is important. Think of it has reading reviews on a brand you are thinking to buy from.

Understand the franchise network

Understanding the franchise network will help you learn from and collaborate with the franchisees and other entrepreneurs, and this will help you to navigate the challenges of running your own business.

You should also consider attending franchise expos – a great way to make connections, ask questions and meet the faces behind brands.

Scrutinize the franchise agreement

A better understanding of the franchise agreement will protect your rights and allow you to know your obligation and duties in a franchise system. Also, you get to know the principles that guide the franchise. You must understand the franchise agreement to prevent risks and disagreement.

Top Performing Franchises in Canada You Should Know

Tim Hortons

Amidst all the fast-food restaurants in Canada, Tim Hortons is opportune to be the most popular and influential. It has gained around 4,300 locations in Canada and around 4,949 worldwide. It offers some Canadian fast-food deals like coffee, doughnuts, and other fast-food items.

Tim Hortons serves over 5 million cups of coffee every day with 80% of Canadians visiting a restaurant at least once a month. Currently, Tim Hortons will charge its restaurant owners more for advertising (0.5%) to increase their investments in advertising and technological initiatives.

Starbucks

Starbucks is known to be the dominant force in the coffee industry all over the world. Statistics of 2020 demonstrated that Starbucks boasts the highest market share in the coffee shop sector in the US, with an incredible 40%.

Dollarama

Dollarama is a recognized Canadian retail store. The headquarter is in Montreal. Almost all Canadians go to Dollarama to buy things for a single dollar. Dollarama has over approximately 1,300 stores throughout Canada, and it has set a target to grow this number to 2,000 by 2031.

Chick-fil-A

Chick-fil-A is a restaurant chain that specializes in chicken sandwiches. It is one of the largest American fast-food restaurants. Chick-fil-A’s headquarter is in College Park, Georgia. The company has an expansion target to open 20 more restaurants in Canada by 2025.

Chick-fil-A is one of the best fast-food restaurant franchises you can invest in.

Start Exploring Your New Route to Success

Now that you understand how much research and evaluation needs to go into choosing a franchise that suits you, you can start exploring franchise opportunities that meet your goals.

While franchising is an effective and sustainable route to business ownership, it still requires the same level of focus, dedication and research as starting a business.

If you’d like to understand more about the franchising journey, feel free to contact us.