Franchising in Canada: Why it May Be Right For You
Published on: 27 March, 2020
Reading Time: 5 minutes
Not many franchise owners come to the decision to buy a franchise right away. For many, doing the research on the advantages and disadvantages of owning a franchise becomes the deal breaker on whether that is a business model that works for their interests and personality. While franchising business in Canada offers its own benefits, it is definitely not a venture for everyone. There is a certain type of entrepreneur that likes to establish their own systems, processes and visions when running a business. For those people, buying a franchise is probably not the best choice. But for many, especially first-time business owners, the franchise model offers several strategic business advantages while still providing the owner with a profitable business at the end of the day.
Why Buying a Franchise may be right for you?
As we mentioned above, franchising is often ideal for new and first-time business owners. Many entrepreneurs that are starting out today are full of energy and motivation when it comes to running a business, but sometimes lack the ideas or the know-how required in creating and setting up a unique business that will succeed in its industry. Simply put, franchising allows them to bridge the gap between creating a successful business and running one. Today, approximately 75 000 businesses in Canada have taken on the franchising approach to running and growing their company. Franchises exist in all service related industries from fast food to dance lessons, and more practical services like moving, automotive, and cleaning. For a prospective business owner, this means that there is probably a franchise opportunity in the industry you are already interested in. A major suggestion all franchisors have to their prospective franchisees is to be truly passionate about what you do and not just treat the business as a numbers game.
Another major benefit of owning a franchise is that it allows you to forego the trial and error associated with implementing systems and standards in your own business. Essentially your set-up fee and royalty payments to the company are a trade for their knowledge, and time that it took them to come up with a successful business model. But there is also a secondary benefit for franchise owners. In return for your investment, you get to learn how the company is run and why they do the things they do, which will help you not only in running your franchise but any future business ventures that you may consider.
In that vein, buying a franchisee may be right for you if you actively like to work for yourself and physically put the time into running a business. The big misconception about franchise ownership, is that it is a great source of passive income. In reality, most franchises require a lot of work and presence, especially in the set-up and early stages of running the franchise location. Again, this all comes down to your personal interests and passions. If the franchise you own is in an industry that motivates and excited you, there is a good chance you will want to put in the time and work to make your business successful.
What does it take to franchise a business in Canada?
Franchising a business has some of its own unique costs associated with it. Usually, there is a start-up fee that can range anywhere between $10 000 – $100 000 and higher depending on the brand strength, reach and market presence of the franchisor, but an average franchise fee in Canada is around $25 000. In turn, it is up to the parent company to assist with setting-up, training, and preparing the franchise to be successful in their respective market. The parent company may also provide the franchisee with clients at the outset, but with most companies, the franchise relies in a way on the marketing and presence of the franchisor’s brand. Once the franchise is set up and running, the owner pays a small percentage from their income to the parent company as a form of royalties. While the franchise is yours to own, it is usually only for a period of time, most common franchise agreements being around 10 years.
Of course, running a franchise requires the franchisee to buy into the values, goals, and practices of the franchisor’s company. Franchise networks succeed because the customer has an expectation that a service provided at one location will be consistent and just as quality as it is at the other franchise locations. This is why we said a franchise may not be the best option for prospective business owners who want to implement their own visions and systems into how the business is run. For most franchise owners, however, buying into the system is a sure and guaranteed way to benefit from a profitable business model and a recognized brand name.
Is buying a franchise a good investment?
Hopefully, now you have a better understanding of what kind of business owner a franchise suits best, and what are some basic advantages and disadvantages, but what about the main question: is it profitable to own a franchise? After all, you wouldn’t invest in one If it was an outright loss of money.
Unlike starting your business from scratch, the risks and success associated with buying a franchise depend greatly on the strength of the franchisor and their brand. Several factors play into how well a franchisor company markets themselves, but often their maturity or length of operation is a key factor to consider. Newer businesses often have more groundbreaking ideas but may lack in the market presence. Older businesses have their proven reputation, but run the risk of being overcome by a newer more innovative competitor that may be offering a better service.
Franchises also generally have a higher rate of success compared to regular businesses. Of all the franchises opened in Canada within the last 5 years, 86% are under the same ownership and 97% are still in business.
Moving Franchise Opportunities
If you think a moving franchise may be a business opportunity you are interested in, you are not alone. While the hospitality industry is the most dominant franchise sector in Canada, service-based industries like moving are growing fast because of relatively low initial investments and lower operational costs associated with running a moving business.
As with all franchising opportunities, it is important that the brand of the moving company you are considering has some recognition and already operates near the market territory you are looking to enter.
A good moving franchisor will also offer office support when dealing with new clients, scheduling, and customer service questions or concerns. A big benefit of owning a moving franchise is that the centralized office system becomes a consistent hub when it comes to dealing with customers, providing you with a client database when you’re starting out, and sharing clients between franchisees, allowing you to focus on your work.
The biggest complaint about the moving industry in Canada has to do with poor customer service and generally high levels of unprofessionalism displayed by moving companies in the country. That’s why when considering a moving company franchise, you should pick one with a proven customer service record. The whole success of a franchise system depends on all franchisees buying into the brand vision. If you see that a moving company isn’t recognized for the quality of their customer service, there is a good chance they’re not doing a good job of implementing their training across the board, and franchisees are left out, taking away from the effectiveness of the system and the power of the brand name.
When considering a moving company to invest as a franchise in, consider the following factors:
-Brand recognition across Canada
-The existing customer base in the area you are interested in
-Assistance and training to get you working to the company standard
-Consistent office support that reflects the company’s vision
-Marketing power that will allow the company’s brand to grow
Find out why franchising with Metropolitan Movers may be the business investment opportunity you’ve been looking for.