Owning a Franchise Could Change Your Life
By Ali Hemati, Esq.
In my business I meet a lot of people who have come to Canada to buy or start a small business without any related experience whatsoever. Unfortunately, I typically meet them after they have lost their investment and closed down the business. If only they knew the benefits of owning a franchised business in the beginning, they could still be in business. Franchises offer much more than just high potential for success, they offer the prestige of recognized brands and the support systems that enable the lifestyle people are seeking as an alternative to a job or career.
The recent recession has shown that the idea of a permanent job is not realistic for most Canadians. The good news is franchise growth tends to be countercyclical to the economy. This means there are more opportunities to ride the franchise growth curve and that is why we are seeing so many young people leaving traditional careers to own a business. According to a recent survey by the Research Strategy Group found that the majority of Canadian franchised businesses are owned by people between of 35 – 45 years of age indicating a conscious career choice.
What is a Franchise? Franchising is a business relationship where a franchisor (a company or individual who owns the franchise system) grants a licence to a franchisee (a company or person who contracts to use the franchise system) the right to use the franchisor's trademark, brand, operating system and ongoing support for an “Initial Franchise Fee.” In return, the franchisee provides a share of the income back to the franchisor usually in the form of a “Royalty”.
Franchises are more profitable and have greater longevity than most independent small business because they have business experience in their category, purchasing power, brand power, and proven systems that are easier to learn. I tell people to talk to owners of franchises and hear it for themselves. They often learn many franchisees own more than one unit and continue to multiply their success.
At Franchiselink, we also see people that have built up their own independent businesses and decide to sell them only to find it difficult to attract buyers. Franchised businesses build more value due to brand recognition, customer retention, and profitable operating systems. This makes it easier to attract more buyers and higher prices than independent businesses. Are you ready for franchising?
So, how does one find the Franchise that is right for them?
I recommend people use a systematic method to select the most suitable franchise and seek professional assistance to ensure they are prepared mentally (expectations), financially (qualifications), and physically (adequate skills/experience), before applying to a franchisor. They should first develop their own decision criteria such as location (close to home?); total investment (what are your limits?); established brand or emerging/high-growth concept (appetite for risk?). Once they have understood these drivers they need to narrow their selection to a few alternative franchises and consider the following important questions:
• What is the franchisor’s Winning Strategy?
• How many years has the franchisor been operating?
• How many franchises does the franchisor have?
• Can the franchisor provide a list of all franchisees?
• What do the franchisees say about the franchisor?
• How does the franchisor choose its franchisees?
• How much is the initial franchise fee?
• What are the franchisor's plans for future development?
• What is the competition for the product?
• What kind of support does the franchisor provide to franchisees?
Fast Facts About Franchising in Canada:
• Canada has the largest franchise industry in the world led only by the US. One franchise operation exists for every 450 Canadians
• The Franchise industry in Canada represents over $100 billion annually and continues to grow strongly in spite of the economic downturn
• Approximately 1 out of 5 consumer dollars are spent on goods and services from franchises
• Approximately 76,000 individual franchise operations do business in Canada with over 900 brand names
• Franchising employs over 1 million Canadians and 1 out of every 14 working Canadians is employed by a Franchise
• Approximately 54% of all retail and food service are franchised
• Of all the franchises opened in Canada within the last 5 years, 86% are under the same ownership and 97% are still in business
• Ontario leads the rest of the country in franchising with 56% of franchises headquartered in Ontario, mostly in the Greater Toronto Area, and 65% of franchises are operating in Ontario
• Next to Ontario and Quebec, British Columbia has the highest percentage of franchises operating in Canada
• Although the hospitality, restaurant and fast food industry continues to be the largest sector comprising of 40% of franchised brands, the franchise industry is active in over 75 various industries
• The fastest growing sectors of franchising are; health care, senior care, healthy fast food, pets, children’s services, fitness, personal care and “Green”
• Franchisors from overseas are starting to make inroads in the franchising business in Canada
• All Canadian banks have established national franchise departments
• Canadian Government Guaranteed Small Business loans are available for amounts up to $350,000. This widely available program has many outstanding benefits and is very popular with franchisees.
o Source: Canadian Franchise Association www.cfa.ca
About Ali Hemati, VP International Business Development
As an executive with over 30 years of international trade experience Ali knows the complexities of doing business across multiple cultures and geographies. He uses these skills to add tremendous value to Franchiselink’s business development activities attracting exciting new international brands for the Canadian franchise market space. Closer to home, Ali advises new Canadians with respect to investing in franchised business opportunities. Ali’s engaging and honest approach with his clients results from many years of senior advisory to corporate leaders in Iran, Europe and the Persian Gulf Countries.
About Franchiselink
Franchiselink is Canada’s LARGEST consulting network dedicated to helping people navigate Canada’s LARGEST selection of franchises and business opportunities. Its CEO Ted Van Samang has been in the franchise matching business for over 30 years. Franchiselink uses a proven system that has helped hundreds of clients find the franchise right for them. The company is comprised of commercial real estate professionals, business coaches, and finance specialists with National & International expertise in Franchise Development. Our clients include over 500 franchisees, shopping center landlords, franchisors and small business owners developing a franchise system.
Reference:
“What Motivates a Franchisee to Invest?” the Research Strategy Group for Gowlings: Toronto, retrieved January 15, 2010 from www.cfa.ca
In my business I meet a lot of people who have come to Canada to buy or start a small business without any related experience whatsoever. Unfortunately, I typically meet them after they have lost their investment and closed down the business. If only they knew the benefits of owning a franchised business in the beginning, they could still be in business. Franchises offer much more than just high potential for success, they offer the prestige of recognized brands and the support systems that enable the lifestyle people are seeking as an alternative to a job or career.
The recent recession has shown that the idea of a permanent job is not realistic for most Canadians. The good news is franchise growth tends to be countercyclical to the economy. This means there are more opportunities to ride the franchise growth curve and that is why we are seeing so many young people leaving traditional careers to own a business. According to a recent survey by the Research Strategy Group found that the majority of Canadian franchised businesses are owned by people between of 35 – 45 years of age indicating a conscious career choice.
What is a Franchise? Franchising is a business relationship where a franchisor (a company or individual who owns the franchise system) grants a licence to a franchisee (a company or person who contracts to use the franchise system) the right to use the franchisor's trademark, brand, operating system and ongoing support for an “Initial Franchise Fee.” In return, the franchisee provides a share of the income back to the franchisor usually in the form of a “Royalty”.
Franchises are more profitable and have greater longevity than most independent small business because they have business experience in their category, purchasing power, brand power, and proven systems that are easier to learn. I tell people to talk to owners of franchises and hear it for themselves. They often learn many franchisees own more than one unit and continue to multiply their success.
At Franchiselink, we also see people that have built up their own independent businesses and decide to sell them only to find it difficult to attract buyers. Franchised businesses build more value due to brand recognition, customer retention, and profitable operating systems. This makes it easier to attract more buyers and higher prices than independent businesses. Are you ready for franchising?
So, how does one find the Franchise that is right for them?
I recommend people use a systematic method to select the most suitable franchise and seek professional assistance to ensure they are prepared mentally (expectations), financially (qualifications), and physically (adequate skills/experience), before applying to a franchisor. They should first develop their own decision criteria such as location (close to home?); total investment (what are your limits?); established brand or emerging/high-growth concept (appetite for risk?). Once they have understood these drivers they need to narrow their selection to a few alternative franchises and consider the following important questions:
• What is the franchisor’s Winning Strategy?
• How many years has the franchisor been operating?
• How many franchises does the franchisor have?
• Can the franchisor provide a list of all franchisees?
• What do the franchisees say about the franchisor?
• How does the franchisor choose its franchisees?
• How much is the initial franchise fee?
• What are the franchisor's plans for future development?
• What is the competition for the product?
• What kind of support does the franchisor provide to franchisees?
Fast Facts About Franchising in Canada:
• Canada has the largest franchise industry in the world led only by the US. One franchise operation exists for every 450 Canadians
• The Franchise industry in Canada represents over $100 billion annually and continues to grow strongly in spite of the economic downturn
• Approximately 1 out of 5 consumer dollars are spent on goods and services from franchises
• Approximately 76,000 individual franchise operations do business in Canada with over 900 brand names
• Franchising employs over 1 million Canadians and 1 out of every 14 working Canadians is employed by a Franchise
• Approximately 54% of all retail and food service are franchised
• Of all the franchises opened in Canada within the last 5 years, 86% are under the same ownership and 97% are still in business
• Ontario leads the rest of the country in franchising with 56% of franchises headquartered in Ontario, mostly in the Greater Toronto Area, and 65% of franchises are operating in Ontario
• Next to Ontario and Quebec, British Columbia has the highest percentage of franchises operating in Canada
• Although the hospitality, restaurant and fast food industry continues to be the largest sector comprising of 40% of franchised brands, the franchise industry is active in over 75 various industries
• The fastest growing sectors of franchising are; health care, senior care, healthy fast food, pets, children’s services, fitness, personal care and “Green”
• Franchisors from overseas are starting to make inroads in the franchising business in Canada
• All Canadian banks have established national franchise departments
• Canadian Government Guaranteed Small Business loans are available for amounts up to $350,000. This widely available program has many outstanding benefits and is very popular with franchisees.
o Source: Canadian Franchise Association www.cfa.ca
About Ali Hemati, VP International Business Development
As an executive with over 30 years of international trade experience Ali knows the complexities of doing business across multiple cultures and geographies. He uses these skills to add tremendous value to Franchiselink’s business development activities attracting exciting new international brands for the Canadian franchise market space. Closer to home, Ali advises new Canadians with respect to investing in franchised business opportunities. Ali’s engaging and honest approach with his clients results from many years of senior advisory to corporate leaders in Iran, Europe and the Persian Gulf Countries.
About Franchiselink
Franchiselink is Canada’s LARGEST consulting network dedicated to helping people navigate Canada’s LARGEST selection of franchises and business opportunities. Its CEO Ted Van Samang has been in the franchise matching business for over 30 years. Franchiselink uses a proven system that has helped hundreds of clients find the franchise right for them. The company is comprised of commercial real estate professionals, business coaches, and finance specialists with National & International expertise in Franchise Development. Our clients include over 500 franchisees, shopping center landlords, franchisors and small business owners developing a franchise system.
Reference:
“What Motivates a Franchisee to Invest?” the Research Strategy Group for Gowlings: Toronto, retrieved January 15, 2010 from www.cfa.ca
