Is it Right to Franchise Your Business?

According to the Canadian Franchisee Association, there are over 1300 franchisee brands that employ over 1 million Canadians in the country. Franchising is a way to expand your successful business in Canada. By increasing the number of distribution points or units you can make your brand more familiar among the consumers. If you have an established and successful business, franchising can be a way to expand it across the country.

Why would you franchise?

Usually, a company decides to franchise for one of three reasons: lack of manpower, money or time.
It is sometimes difficult to find skilled manpower as well as retain them. Often a business spends a month looking for suitable employees and training them only to discover they are hired by competitors. Franchising helps entrepreneurs to overcome these problems as franchisee can replace the employees.

Sometimes the entrepreneurs face capital crunch. Franchising allows them to expand without taking on the risk of debt and concern of equity. As the franchisees provide the initial cost of investment, franchisors bear minimal capital investment for expansion.

Lastly, opening at another location takes time. The business owners will hunt for space, negotiate lease contracts, arrange for the construction or design the space and invest in inventory. Franchisees, however, offer the fastest way to expand. As franchisees perform the growth tasks, it saves time as well as money.

Is your business ready for franchising?

Franchise systems in Canada are flexible and any type of business can be franchised. You can franchise your business if it meets these basic characteristics:

• You own a successful business with a unique concept that can be replicated;
• There are learned people in your company who can teach the operating procedures to franchisee;
• People recognize your brand or company and you have a good reputation in the market;
• You generate adequate return on investment.

If your business meets these above criteria, it is ideal for franchising.

How will the franchisee work?

As a franchisor you will provide a license to the franchisee. It is a right to use your brand, trademark and operating methods against paying off an initial fee. The license is usually fixed in nature. Both parties gain from such deal – the franchisor accepts a fee and royalties as well as there is an increase in market share, and the franchisee can be a part of the established business model and a brand name.

To explore the best franchise opportunities, you must thoroughly research the options before signing a contract with any company. Though the company will follow your proven systems and processes, it must have the skills and capital that are needed to be successful. When you are looking for franchises in Canada, consider these factors carefully. It is always advisable to get legal assistance and accounting advice before making any franchising decision.

Before making any decision to franchise, you need to develop an expansion plan. The plan must take into account several issues like support services, fee structure, franchisor’s staffing ability, speed of growth, resource allocation, channel conflicts, etc. Once the plan is ready you need follow through with legal documentation and financial analysis. You must also assist with developing the prospective franchises and share your experience in proper sales, compliance and disclosure technique.