You want to run a business and have heard about franchising — and you're intrigued, but you aren’t sure if a franchise opportunity is the right choice for you. You’re in the right place. This page will give you an overview of what franchising is, giving you a better foundation of knowledge as you begin your journey towards (potentially) being a franchisee.
Is Franchise ownership the right choice for you?
Franchising is about following a proven and successful system. The ability and willingness to follow directions is a key marker of someone who would make a good franchisee. After all, if the franchisor has already established a franchise model that works, a person would be wasting time and money if they tried to fight the system and create something different. Franchise ownership is often correctly referred to as: “In business for yourself, but not by yourself”.
• The main benefit of becoming a franchisee is that the business will have an established product or service. In franchising, someone has already done the work of developing and establishing a viable business system. Rookie mistakes will likely have already been ironed out.
• Franchises offer the independence of small business ownership supported by the benefits of a big business network.
• You don't necessarily need business experience to run a franchise. Franchisors usually provide the training you need to operate their business model.
• Franchises have a higher rate of success than start-up businesses.
• You may find it easier to secure finance for a franchise. It may cost less to buy a franchise than start your own business of the same type.
• Franchises often have an established reputation and image, proven management and work practices, access to national advertising and ongoing support.
● Buying a franchise means entering into a formal agreement with your franchisor.
● Franchise agreements dictate how you run the business, so there may be little room for creativity.
● Buying a franchise means ongoing sharing of profit with the franchisor.
Canadian Franchisee Statistics
Most people don’t understand the impact that franchising has on an economy and would be surprised to learn that around 45% of all retail sales in Canada are generated by franchised businesses. This is comparable to the United States where approximately 50% of retail and service revenue is generated by franchised businesses.
● Canada has the 2nd largest franchise industry in the world, trailing just behind the U.S.A.
● There are between 1,200 and 1,300 franchise companies operating approximately 76,000 franchised outlets in Canada.
● Around 4,300 new franchise outlets open in Canada each year.
● It is estimated that a new franchise in Canada opens every 2 hours 365 days a year.
● One franchise operation exists for every 450 Canadians.
● Approximately $1 of every $5 is spent on goods or services at franchise.
● The Canadian Franchise Association has almost 500 corporate members nation-wide.
● The hospitality industry is the largest single sector, accounting for almost 40% of franchised brand names.
● Approximately 500 of the largest U.S. franchisors have introduced their franchise systems to Canada.
● The franchise business in Canada represents over $100 billion in sales annually and continues to grow.
● Franchising is responsible for 5% of Canada’s Gross Domestic Product (GDP).
● Franchising employs over 1.5 million people in Canada or expressed in a different way 1 out of every 10 people is employed in a franchised business.
● Ontario leads the rest of the country in franchising with 56% of franchises headquartered in Ontario (primarily in the Greater Toronto Area), and 65% of all franchise outlets operating in Ontario.
● The average initial franchise fee is $25,000 and the average total initial investment required by a franchisee is between $150,000 and $200,000.
● Of all the franchises opened in Canada within the last 5 years, 86% are under the same ownership and 97% are still in business.
● In the restaurant sector, 35% of all sales are from franchise operations.
● In the retail sector, 45% of all sales are from franchise operations.
● Franchising is active in over 30 businesses, retail and service sectors.
● 12 corporate units and 63 franchised units for a total of 75 units
● Been in business over 17 years
● An annual growth of 4.4 units per year
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