Franchise Canada Directory 2021 by Franchise Canada

THE FRANCHISE ADVANTAGE

SUCCESS SECRETS FROM THE PROS

FRANCHISING FUNDAMENTALS

A Canadian Franchise Association Publication / FranchiseCanada.Online

MORE THAN 1,300 LISTINGS INSIDE

DIRECTORY

YOUR COMPLETE SOURCE GUIDE TO FRANCHISING IN CANADA

FRANCHISE SOURCE GUIDE 2021 $9.99 PM 41043018

DISPLAY IN BUSINESS

REAL FOOD FOR REAL LIFE. A REAL OPPORTUNITY.

the future is frozen As more people turn to meals prepared at home, M&M Food Market has become the franchise to own. Times are changing and our stores are changing right along with them. Never standing still, innovating, and adapting to the challenges of today while

preparing for tomorrow has been a key to success in our 40 year history.

Learn more about a franchise opportunity built for today and tomorrow at mmfoodmarket.com.

Choose the franchise that moves you. We believe there is a better way to solve transportation challenges. In fact, we believe there is a better way to lead a company. Driverseat is an innovative transportation franchise with two unique service offerings. Chauffeur services (in the clients car) and Shuttle services (in fleet vehicles). Consumers use our services for airport trips and weddings, and businesses use our services for corporate travel, and employee shuttles. Our strategic focus is on building a global transportation brand made up of entrepreneurial leaders who want something more in their life. We are laser focused on franchisee success and have built training and support systems that are second to none. Our brand promise is to out-care the competition. We expect our franchisees to keep this promise with their clients, and we keep this promise with our franchisees.

CFA Franchisees Choice Designation 4 Consecutive years

Winner of CFA Awards of Excellence

Extensive training and support programs

State of the art business technology solutions

Chamber of Commerce Innovation Award

CONTENTS FRANCHISE

DIRECTORY 2021

CANADA

Looking for a franchise? Discover

the best franchise business opportunities available now

Go in business for yourself with the support of a credible franchise system! With hundreds of franchise opportunities, LookforaFranchise. ca is the most comprehensive online directory of legitimate franchises available in Canada. We make searching for a franchise easy – you can find franchises by company name, location, investment, or industry. Begin your search now and realize the dream of running your own business.

Get Started Today!

• Information your can trust • Credible franchises opportunities • Narrow your search • Contact franchisors directly • Get the info you need

LookForAFranchise.ca

FEATURES

The Canadian Franchise Association (CFA): Helping everyday Canadians realize the dream of building their own business through franchising

Why Choose a CFA Member? Investing in a franchise committed to excellence

Franchising 101: An Introduction to Franchising

Franchising Weathers the Economic Storm The franchise business model is built to last through times of crisis

The Franchise Advantage Why franchised businesses can quickly and successfully fill market gaps in difficult economic times

4 Canadian Franchise Association

16 30

10 Reasons to Become a Franchisee

9 Rules for Finding Your Optimum Franchise

Business Plan and Financial Management Basics

Franchise Financing Fundamentals

Checklist for Franchisees

5 Things Smart Franchisees Know about Support Services When and why you should call in the pros during your franchise search

www.cfa.ca | www.FranchiseCanada.Online

Franchise Canada is published by the Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

Success Stories: The Faces of Canadian Franchising Meet some of the thriving franchisees who have achieved success with the franchise model

Thinking About Franchising Your Business? 4 BIG questions to consider before you get started

DEPARTMENTS

Publisher’s Message

CFA Code of Ethics

How to Use This Directory

Franchise Brands Listings

231

252

259

Franchising Your Business: A Checklist Franchise Matters Franchise Legal Matters

Ask the Experts

SE ASON 3

Franchise Support Services Listings Franchise Brands Index Franchise Support Services Index

260

Advertisers’ Index

Tune in to the Franchise Canada Chats Podcast!

A NOTE TO READERS Every attempt has been made to make the information in this guide as comprehensive as possible. But given the limitations of space, it can only be a beginning – not an end in itself. Every franchise system has its own unique characteristics. Consequently, each franchise you may consider purchasing must be examined anew, and may present considerations that are not touched upon in this guide. The CFA hopes that the materials in this guide, combined with your own careful analysis and common sense, will help you achieve your goals and avoid making mistakes in your search for the right franchise business. Every effort has been made to ensure the accuracy of the information supplied herein and the Canadian Franchise Association cannot be held responsible for any errors or omissions.

Available on Google Play, iTunes, SoundCloud, Spotify, and Stitcher Radio

FranchiseCanadaChats.ca

The information in the listing of this Directory has been provided by the franchise systems and franchise support services providers named. While the CFA has requested that such systems and providers submit information that is up-to-date and correct, the CFA makes no guarantee, endorsement, representation, or warranty of any kind regarding the completeness, accuracy, or reliability of any of the information submitted and the CFA disclaims any obligation to do so. The CFA encourages readers to conduct their own due diligence regarding such systems and providers (including obtaining and reviewing a disclosure document for each system of interest) and to consult with franchise lawyers, accountants and financial advisors of their own choosing before entering into any agreement with or paying any deposit/retainer to any system or provider listed herein.

Franchise Canada Directory 2021 5

PUBLISHER’S MESSAGE

FRANCHISING PROVIDES INCREASED SUPPORT IN TIMES OF UNCERTAINTY

ince March of 2020, the impact of COVID-19 has wreaked havoc on our lives and businesses. At press time, many businesses are closed or operating at a reduced capacity as Canadians practice physical distancing to help stop the spread of the virus’s second wave. This has led to much uncertainty, and unfortunately, business closures across the country. But there is a light at the end of the tunnel as we turn our focus to recovery. The franchise business model provides a strong opportunity for entrepreneurial Canadians to go into business, with much-needed support behind them. The foundational relationship between franchisees and franchisors, along with the established operating procedures and franchise system support, mean franchisees aren’t in business by themselves, even during times of crisis. The “Franchising Weathers the Economic Storm” article on page 26 explores this further, along with the factors that make franchising such a strong and resilient business model. The franchise business model has also played a big role in helping franchisees adapt in the face of challenges. On page 28, three franchise professionals explain the benefits of franchise ownership compared to independent business ownership, and the reasons why franchises are in a good position to quickly and successfully fill market gaps left by the economic downturn. In such an uncertain time, it’s essential to make the most informed investment decision possible as you start on your path to franchise ownership. The Canadian Franchise Association (CFA) can help make your dreams of business ownership become a reality, and this Franchise Canada Directory is a great place to start. The CFA is the authoritative voice of franchising in Canada, and has been equipping entrepreneurs with the knowledge and tools they need to find success for more than 50 years. This Directory contains more than 1,300 listings of franchise opportunities in Canada, from fresh and emerging concepts to established iconic brands in over 50 different categories. In addition to our member listings, the articles in the front of the Directory (pages 16 through 71) provide franchising fundamentals to help you get started. We share a wide range of background information, tips, and advice to help you gain the franchising knowledge you need to make the best possible investment decision.

6 Canadian Franchise Association

The easy-to-use listings (starting on page 75) are arranged alphabetically by category, and contain comprehensive information about each opportunity, including contact information, number of units, investment amounts, available territories, and more. The valuable information contained in these listings has been provided directly by the franchise systems and suppliers. It’s also important to call in the professionals to help ensure you’re making the right franchising decisions. This Directory also includes listings for CFA Franchise Support Services and Suppliers, who can play a pivotal role in helping to guide your franchising journey. This section of the Directory, starting on page 231, helps you connect with the services you’ll need to carefully complete the due diligence process. As you read through this Directory, note the CFA member logo that highlights the CFA’s many members. As members of the Association, these companies voluntarily pledge to promote excellence in franchising by upholding the CFA Code of Ethics (see page 10 for more details). Beyond this Directory, the CFA offers many other valuable resources. You can find educational articles, Franchise Canada Chats podcast episodes, and Franchise Canada TV videos on www.FranchiseCanada.Online. You can also connect with CFA member brands through the www.LookforaFranchise.ca online directory, Franchisor Spotlight webinars available on www.cfa.ca, and free Virtual Franchise Canada tradeshows. Also be sure to follow the CFA on Facebook, Twitter, Instagram, and LinkedIn. Canadian franchising is strong and resilient. The support systems built into the business model will continue to provide increased security for Canadian franchisees in 2021. We hope our Franchise Canada resources, including the tools and member information contained in this Directory, can help you make an informed business decision in this difficult time. While the world is currently filled with uncertainty, one thing is clear: with the right tools at your disposal, you can make your business dreams become reality through franchising.

Sherry McNeil President & CEO, Canadian Franchise Association

www.cfa.ca | www.FranchiseCanada.Online

CFA BOARD OF DIRECTORS (as of time of print) BOARD CHAIR Gerry Docherty*, Good Earth Coffeehouse PRESIDENT & CEO Sherry McNeil*, Canadian Franchise Association 1ST VICE CHAIR David Druker*, The UPS Store TREASURER Lyn Little, BDO Canada LLP

PUBLISHER

Canadian Franchise Association (CFA)

SECRETARY & GENERAL COUNSEL

Larry Weinberg*, Cassels Brock & Blackwell LLP

VP, CONTENT & MARKETING Kenny Chan

PAST CHAIR John DeHart*, Hartify Franchise Consulting

EDITOR Lauren Huneault

CHAIR, LEGAL & LEGISLATIVE COMMITTEE

GRAPHIC DESIGNER Andrea Lee

Darrell Jarvis*, Fasken

CHAIR, FRANCHISE SUPPORT SERVICES

Kirk Allen, Reshift Media

LISTINGS MANAGER Lauren Huneault LISTINGS COORDINATOR Nav Matharu EDITORIAL ASSISTANT Stefanie Ucci

DIRECTORS

Steve Collette, 3rd Degree Training/Affordable Canadian Movers John Gilson, COBS Bread Andrew Hrywnak, Print Three Franchising Corporation Rimma S. Jaciw, CFE, WSI Digital Ken Otto, Redberry Restaurants Ryan Picklyk, A&W Food Services of Canada Inc. Gary Prenevost, FranNet Stephen Schober, Metal Supermarkets Family of Companies Frank Stanschus, Little Kickers

ADVERTISING SALES Nav Matharu

*Executive Committee member

TO SUBSCRIBE TO Franchise Canada

AD COORDINATORS

Andrea Lee, Nav Matharu PRINTING Premier Printing FOR ADVERTISING INFORMATION:

Nav Matharu nmatharu@cfa.ca

visit www.FranchiseCanada.Online or call 1-800-665-4232 ext. 224. Return Undeliverable Canadian Addresses to: Canadian Franchise Association 5399 Eglinton Ave. West, Suite 116 Toronto, ON M9C 5K6

We invite your comments, questions and suggestions. Please contact us at editor@cfa.ca or 1-800-665-4232.

NATIONAL SPONSORS

The CFA wishes to acknowledge and thank these National Sponsors for their support throughout the year. Find out more about these companies at www.cfa.ca/sponsorship © 2021, Canadian Franchise Association. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. Publications Mail Agreement No. 41043018 Legal Disclaimer The opinions or viewpoints expressed herein do not necessarily reflect those of the Canadian Franchise Association (CFA). Where materials and content were prepared by persons and/or entities other than the CFA, the said other persons and/or entities are solely responsible for their content. The information provided herein is intended only as general information that may or may not reflect the most current developments. The mention of particular companies or individuals does not represent an endorsement by the CFA. Information on legal matters should not be construed as legal advice. Although professionals may prepare these materials or be quoted in them, this information should not be used as a substitute for professional services. If legal or other professional advice is required, the services of a professional should be sought.

FSC® certification is a commitment to good forestry practices, carried from forest to consumer

8 Canadian Franchise Association

www.cfa.ca | www.FranchiseCanada.Online

LOOKING FOR WAYS TO MAXIMIZE YOUR CASH FLOW? With an American Express® charge card you may be able to: • • • •

change your accounts payables optimize working capital minimize the need to borrow improve long term profitability

Ready to see why it pays to work with American Express? Email us at franchisesolutions@aexp.com or visit us at www.americanexpress.ca/canadianfranchiseassociation to learn more.

CODE OF ETHICS

he Canadian Franchise Association (CFA) is dedicated to encouraging and promoting excellence in franchising in Canada. Each member of the Association agrees to abide by the CFA Code of Ethics and to further the Association’s goals of encouraging and promoting ethical franchising in Canada. Each member of the Association agrees to comply with the spirit of this Code of Ethics in its general course of conduct and in carrying out its general policies, standards and practices. The following are considered by the Association to be important elements of ethical franchising practices: 1. Franchise system and franchise support services members should fully comply with Federal and Provincial laws, and with the policies of the Canadian Franchise Association. 2. A franchisor should provide prospective franchisees with full and accurate written disclosure of all material facts and information pertaining to the matters required to be disclosed in advance to prospective franchisees about the franchise system a reasonable time [at least fourteen (14) days] prior to the franchisee executing any binding agreement relating to the award of the franchise. 3. A ll matters material to the franchise relationship should be contained in one or more written agreements, which should clearly set forth the terms of the relationship and the respective rights and obligations of the parties. 4. A franchisor should select and accept only those franchisees who, upon reasonable investigation, appear to possess the basic skills, education, personal qualities and financial resources adequate to perform and fulfil the needs and requirements of the franchise. Franchise systems and franchise support services members of the Association should not discriminate based on race, colour, religion, national origin, disability, age, gender or any other factors prohibited by law. 5. A franchisor should provide reasonable guidance, training, support and supervision over the business activities of franchisees for the purposes of safeguarding the public interest and the ethical image of franchising, and of maintaining the integrity of the franchise system for the benefit of all parties having an interest in it. 6. Fairness should characterize all dealings between a franchisor and its franchisees. Where reasonably appropriate under the circumstances, a franchisor should give notice to its franchisees of any contrac-

10 Canadian Franchise Association

tual default and grant the franchisee reasonable opportunity to remedy the default. 7. A franchisor and its franchisees should make reasonable efforts to resolve complaints, grievances and disputes with each other through fair and reasonable direct communication, and where reasonably appropriate under the circumstances, mediation or other alternative dispute resolution mechanisms. 8. A franchisor and a franchise support services member should encourage prospective franchisees to seek legal, financial and business advice prior to signing the franchise agreement. 9. A franchisor should encourage prospective franchisees to contact existing franchisees to gain a better understanding of the requirements and benefits of the franchise. 10. A franchisor should encourage open dialogue with franchisees through franchise advisory councils and other communication mechanisms. A franchisor should not prohibit a franchisee from forming, joining or participating in any franchisee association, or penalize a franchisee who does so. 11. A franchise support services member in providing products or services to a franchisor or franchisee should encourage the franchises to comply with the spirit of this Code of Ethics. A franchise support services member should not offer or provide products or services if legislative or professional qualification is required to do so unless the franchise support services member has such qualification.

LOOK FOR EXCELLENCE As you investigate the many franchise opportunities available to you, you will see a special logo featured in franchise literature, on franchising websites and in franchise tradeshow booths. This logo identifies franchise systems and franchise support services/suppliers as members of the Canadian Franchise Association (CFA). You should be on the lookout for this symbol when researching franchise systems or assembling a team of franchise support professionals to assist in your search. CFA encourages and promotes excellence in franchising in Canada and members of the Association voluntarily agree to follow the CFA’s Code of Ethics in pursuit of these goals. Start your search for your franchise dream with a CFA member. Visit FranchiseCanada.Online today.

www.cfa.ca | www.FranchiseCanada.Online

GET TO KNOW AMEX OFFERS

Optimized for your franchise, tailored for customers. Reach the right customer, at the right time, with an offer that is most relevant to them. With Amex Offers* franchises that welcome American Express® Cards can reach eligible Cardmembers with tailored and enticing offers. Through American Express digital channels, franchises can help increase brand awareness and potential revenue through targeted reach and hassle-free management. The setup is simple, the results are powerful.

Interested in Learning More? To find out more about how your franchise can benefit from Amex Offers, visit www.amex.ca/amexoffers or contact us at amexofferscanada@aexp.com *

Eligible cards will vary by offer and are subject to change. Select Canadian American Express Cards issued by Amex Bank of Canada and Cards issued by a licensed third-party issuer (as applicable) are eligible cards for the offer. The following Cards are not eligible: American Express Corporate Cards, American Express® Gift Cards and Prepaid Cards. Subject to offer terms and conditions and full Program Terms.

™,®: Used by Amex Bank of Canada under license from American Express.

CHICKEN Training. Support. Unparalleled growth. All that’s missing is you. If you’re ready to be your own boss, let’s talk. We’ve redeﬁned the quick-serve restaurant category with unprecedented growth – and that’s just the beginning.

20%

Sales Growth in 2020

10%

Increase Average Unit Volume 2020

New Stores Opened 2020

Your new life begins today

Your business. Your success. Our industry-leading sales. Interested? "Mary Brown’s is a great business to get into because it’s growing. Starting a new business is daunting, but the support from the family at home office is just tremendous throughout." Shan Ali, Multi-Unit Franchisee, AB "Joining the Mary Brown’s franchise family has provided us with a successful business to propel our lives and enhance our community – a dream come true!" Linda & Tony Strickland, Franchisees, Brandon, MB "Strong home office support and proven practices make focusing on delivering the best product and customer experience effortless.” Russell & Nazreen Pacheco, Franchisees, Mississauga, ON "I am proud to be part of a true Canadian brand that always keeps their promise to serve communities and to give their Franchisees a voice.” Sean Huang, Franchisee, Abbotsford, BC

Winner of the Franchisees’ Choice Award 10 years running 50+ years in business 100% Canadian owned and operated

franchising@marybrowns.com

marybrowns.com

ADVERTORIAL

DISRUPTING REAL ESTATE ONE ROUND SIGN AT A TIME WELCOME TO THE FUTURE OF REAL ESTATE® Once upon a time, in a land called North America, there were real estate agents who earned large commissions from people who were buying and selling properties. It was a highly profitable (and monopolistic) era in which these agents lived. It was a great time, for them, as they earned billions of dollars in commissions every year.

One day, armed with a vision of something better for home sellers and the power of technology, PropertyGuys.com swooped in and designed a modern alternative to the traditional model - one that streamlined the process and empowered both buyers and sellers. To make the process more efficient they put the customer at the centre of the transaction - creating a flat-fee approach that typically saved the seller 10 times more than if they used an agent (and gave them far more control over the process). If you think the idea of transforming the real estate industry sounds like a fairy tale, then you’re probably never heard of Uber or Netflix. Meanwhile, PropertyGuys.com is growing quickly thanks to its franchise operators and the enthusiasm of thousands of users who have become raving fans.

SAY GOODBYE TO THE OLD WAY

“The traditional agent model has become unnecessary and way too expensive for the average homeowner,” says Ken LeBlanc, President and CEO of PropertyGuys.com. “We believe that homeowners work hard for their money. That’s why we are transforming every single piece of the real estate puzzle – putting the needs of buyers and sellers above everything else. When our customers are happy, our franchisees grow their businesses and our brand gets stronger - it’s a win-win-win.”

ADVERTORIAL

JOIN THE REAL ESTATE REVOLUTION As one of the fastest growing franchise systems in Canadian history, PropertyGuys.com is an exciting opportunity for investors looking to get involved in the real estate industry. Their proven system and training programs ensure franchisees have all the tools needed to operate a successful business.

Instead of charging commission (often 5-7 % of the final sale price), PropertyGuys.com franchisees collect an upfront flat marketing fee for their services. That flat fee is based strictly on the types of services that the seller selects. Which can range from online support for their private sale - to an end-to-end experience from a team of experts including pricing, showings, offers, and promotion on all of the most popular real estate platforms.

WHEN THE PARADIGM SHIFT IS COMPLETE, THE OPPORTUNITY WILL HAVE PASSED If imagining a world where the majority of real estate transactions happen without a listing agent seems implausible to you, consider this...

With an over 20-year track record of growth and success, the brand has established its staying power in the real estate industry, yet there is still work to be done. The timing could not be better for new entrepreneurs to get involved with the brand. PropertyGuys.com still has some exclusive franchise territories available in Canada (and beyond) for entrepreneurs who believe that the real estate industry can be transformed through value-driven packages, specialized service and innovative technology. Franchise owners don’t need a real estate license, but they do need to believe in the power of innovation and the huge upside obtained by helping disrupt real estate forever.

THE TIME IS NOW Uber understands it. Netflix nabbed it. PropertyGuys.com gets it. Do you? If you’re ready to stand out from the crowd, they want to hear from you!

Less than five years ago, there were still people waiting in line at Blockbuster on Saturday night with DVDs and an over-sized bag of popcorn in hand. Today, those iconic yellow and blue signs are only a memory. They gave up their market dominance to Netflix because they were unable to see (and adjust to) the vast potential of a new way before it was too late. PropertyGuys.com is at the forefront of the opportunity that has been opened up by technology and favourable regulatory changes. In the old agent-centric model, the customer sits on the sidelines in the dark, while the agent dabbles in the role of all experts - yet masters none. “We believe the real estate transaction isn’t complicated when you break up each task and place it in the hands of the most capable professional,” said PropertyGuys.com franchise owner, Shannon Gavin. “PropertyGuys.com uses a team approach instead of the ‘jack of all trades’ model. That means our customers benefit from the best experts in the real estate field. From a franchisee perspective, that means we don’t have to be all things. We focus on our expertise and rely on a combination of people and technology for the rest.” In the new real estate model, online engagement and connectivity put the seller at the hub and in control. In addition to connecting customers with its online private sale platform, PropertyGuys.com is ahead of the curve when it comes to social media, a tool that is typically not well-used by traditional agents. “Customer engagement is the cornerstone of everything we do,” says LeBlanc.

Established: 1998 Outlets: 85+ Franchise Fee: $29,999+ Contact Us: 1-844-333-7017 opportunities@propertyguys.com

Growing About the CFA Our Purpose: To help everyday Canadians realize the dream of building their own business. Our Mission: To amplify the understanding and power of franchising in Canada by: nA dvocating on the issues that impact this dream; n Connecting people with opportunity; and n Delivering learning opportunities that make franchising stronger.

16 Canadian Franchise Association

www.cfa.ca | www.FranchiseCanada.Online

Together

™

The Canadian Franchise Association (CFA) Helping everyday Canadians realize the dream of building their own business through franchising What is the Canadian Franchise Association? Back in 1967, as Canada’s centennial was being celebrated, a group of franchise business owners recognized a need for a national umbrella organization committed to the growth, enhancement, promotion, and development of ethical franchising across the country. The Canadian Franchise Association (CFA) was founded with this mission and principles and is now the only national trade association serving the franchise industry and the needs of franchisors, franchisees, and anyone considering opportunities in the franchise sector. The CFA is now the recognized authority on franchising in Canada, and represents members across the country, including iconic Canadian brands such as Pizza Pizza, M&M Food Market, and McDonald’s Canada. Our purpose: To help everyday Canadians realize the dream of building their own business The CFA’s mission is to amplify the understanding and power of franchising in Canada by advocating on the issues that impact this dream, connecting people with opportunities in franchising, and delivering learning opportunities that make the industry stronger. The CFA

produces the annual Franchise Canada Directory, and Franchise Canada magazine, considered the country’s most trusted franchise resources. The bi-monthly magazine is a digital publication, with each issue available as a flipbook on www.FranchiseCanada.Online. The annual directory is a print publication that is available on newsstands and in bookstores throughout the country. Prospective franchisees can also learn more about franchising through Franchise Canada E-News, a bimonthly digital newsletter; the Franchise Canada Chats podcast, now in its third season; and Franchise Canada TV, which features interviews and informational videos. The Association also offers Canada’s only tradeshows that exclusively feature CFA member franchise systems. Due to the COVID-19 pandemic, the event has recently been promoted as the Virtual Franchise Canada Show, and is a fully virtual event featuring some of the biggest names in franchising, and focused on different regions of the country. The CFA’s Franchise Canada resources can be found at www.FranchiseCanada.Online. The CFA’s wealth of knowledge flows, in part, from its prominent role in the nation’s business community.

Franchise Canada Directory 2021 17

THE CANADIAN FRANCHISE ASSOCIATION

Leadership

We amplify the understanding and power of franchising in Canada by advocating on issues that impact the dream of building their business through franchising.

Opportunity

We help everyday Canadians realize the dream of building their own businesses and connect people with opportunities in franchising.

CFA members represent thousands of business outlets across the country. As a whole, the franchise industry employs almost two million people. About half of these employees work under the banners of hundreds of CFA member franchise systems. What can the CFA do for you? One of the CFA’s primary roles is to help prospective franchisees make the best decision when investing in a franchise by providing resources and education about franchising. The CFA’s websites (www.cfa.ca, www. LookforaFranchise.ca, and www.FranchiseCanada. Online) offer valuable information and resources about franchising, as well as detailed listings in its online member directories. Directories are separated into franchise systems and franchise support services providers (e.g. franchise lawyers, accountants, consultants, etc.). CFA members represent a diverse cross-section of franchise systems in Canada, ranging from very large, established operations to smaller regional concepts. When you deal with CFA members, you can be confident you’ll be treated fairly because all members must adhere to a strict Code of Ethics. Franchisors can become members only after they undergo a review process performed by a committee of their peers. Members join the CFA voluntarily, as franchise sys-

So Many Opportunities Made up of thousands of small businesses in every community from coast to coast, the franchising sector is the 12th largest contributor to the Canadian economy. The Canadian franchise industry is estimated to have almost 1,300 brands and more than 76,000 franchise locations across a variety of sectors.

18 Canadian Franchise Association

Trust

We deliver the learning and networking opportunities for everyone in the franchise community to make franchising stronger.

Credibility

We provide our members with credibility and a full range of programs and services to help them grow through the support of the franchise community.

tems are not obliged to belong to any trade organization. CFA members share the conviction that their commitment to excellence in franchising improves the industry as a whole for everyone involved, including franchisors, franchisees, suppliers, and customers. Realistically, however, what the Association can’t do is protect potential investors from making bad business decisions. The CFA does not have specific punitive powers to use against members if they violate the Association’s Code of Ethics. Members, however, may use the confidential, complimentary services of a third-party & neutral Ombudsman (available through www.cfa.ca) to help resolve disagreements between franchisors and franchisees. We fulfill our mission through our four brand pillars – leadership, trust, credibility, and opportunity. Through these pillars, we create a unified force that represents different elements coming together to create and grow as a multifaceted whole. Working under the motto of “Growing Together™,” we embrace the concept of growing your business with the support of the greater franchise community through CFA membership. This holds true to the concept of franchising – that franchisee and franchisor grow their businesses through partnership. Together, we all grow our businesses, our expertise, and our ability to advocate for a thriving future. While franchise concepts operating in the food service category dominate the industry, there’s more to franchising than just fast food. You’d be hard-pressed to find a Canadian neighbourhood devoid of a franchise business serving its residents. With franchise systems operating in more than 50 different sectors, Canadians from coast to coast are interacting with franchise systems daily, from coffee shops to cleaners and day cares to restaurants, hotels, and so much more, the franchise business model is an important part of Canadians’ day-to-day lives.

www.cfa.ca | www.FranchiseCanada.Online

Thank you for voting us The Highest in Franchisee Satisfaction!

Call or go online for more information

866.684.6448

twomenfranchising.ca Each franchise is independently owned and operated.

Why british columbia? • Above average franchise territories available • Large Market potential • Join a national service provider

THE CANADIAN FRANCHISE ASSOCIATION

Quick Look: The Canadian Franchise Association ABOUT US

• Founded in 1967, the CFA is the only national trade association for franchising in Canada. • The CFA is the authoritative, recognized voice for franchising in Canada, and the indispensable resource for the Canadian franchise community. • The CFA advocates on behalf of franchisors and franchisees to enhance and protect the franchise business model. • The CFA promotes excellence in franchising and educates Canadians about franchising, specific franchise opportunities, and proper due diligence through its many events, programs, publications, and websites.

ABOUT OUR MEMBERS

CFA members represent a diverse crosssection of Canadian businesses, ranging from large, established franchise systems to smaller, regional systems, as well as professionals and organizations that provide support services and supplies to the franchise sector. In joining the CFA, members commit to pursuing excellence and voluntarily adhere to the CFA Code of Ethics. Franchise System Members: • Companies that are offering franchises in Canada. • Member franchise systems can be found in more than 50 different business categories and sectors. Franchise Support Services/Suppliers Members: • Persons or companies engaged in providing products and/or services to franchise systems and franchisees. • Support services/suppliers include, but are not limited to, accounting firms, legal firms, consultancies, insurance providers, and financial institutions.

20 Canadian Franchise Association

PROGRAMS AND SERVICES For Members: The CFA offers its members exclusive programs and services, including: •P romotion of excellence and growth in franchising • Industry credibility • Advocacy and government relations • Free, confidential ombudsman program • Awards programs •E ducational programs and networking opportunities, including full-day seminars, webinars, and annual national convention • Member savings program • Mentorship program • Members-Only Resource Area on www.cfa.ca For Prospective Franchisees: The CFA helps prospective franchisees learn about the franchise business model, as well as specific franchise opportunities, through resources such as: •T he CFA’s official online franchise directory, www.LookforaFranchise.ca • Online resources, like Franchisee Tutorials • Franchise Canada magazine • Franchise Canada Directory •F ranchise Canada website (www.FranchiseCanada.Online) • Franchise Canada TV • Franchise Canada E-News • Franchise Canada Chats podcast • The Virtual Franchise Canada Show tradeshows • CFA Starter Kit

www.cfa.ca | www.FranchiseCanada.Online

lifestyle Create a new ness Health & Well uture F l ia c n a in F r You

FACIALS + MASSAGE +

HAIR REMOVAL an energized growing market

With our simple but unique concept, Hand & Stone has the business model that will help you succeed in this fast-growing industry. Discover why Hand & Stone is one of the most exciting new business opportunities to come along in years.

Membership Model = Predictable & Recurring Cash Flow FRANCHISES AVAILABLE ACROSS CANADA For additional information contact John Teza Email: jteza@handandstone.com Call: 1-888-627-7243 www.h and and s tone m ass age f ranch i se . c a

Why Choose a CFA Member? Investing in a franchise committed to excellence

or entrepreneurs looking to be in business for themselves, but not by themselves, franchising provides the opportunity to run a business and be your own boss, while being backed by an established system and brand. Taking the first step towards business ownership through franchising can be daunting. For a prospective franchisee, it’s easy to feel overwhelmed by the thousands of new and emerging franchise concepts available on the market. Whether you’re interacting with brands at the Franchise Canada Show or flipping through the pages of the annual Franchise Canada Directory listings, it’s abundantly clear that there’s no shortage of exciting franchising opportunities out there; it’s just a matter of finding the right fit for your goals. At the Canadian Franchise Association (CFA), we believe strongly that the franchise model is ultimately about people. It’s about everyday Canadians, working hand in hand within a franchisor-franchisee relationship to share success. Each one of our members is committed to this ideal. As members of the Association, CFA member franchises voluntarily pledge to uphold CFA’s core values of excellence in franchising through the

22 Canadian Franchise Association

CFA’s Code of Ethics (page 10), which ensures that our members are dedicated to helping everyday Canadians realize the dream of building their own business through leadership, opportunity, trust, and credibility. By joining the CFA, these franchises have made the conscious decision as an organization to be the best franchisors they can be. Here are a few reasons why, as a prospective franchisee, you should keep your eyes open for the CFA member logo that highlights the CFA’s many corporate members: CFA members strive for excellence Franchisees have made a life-changing financial and time investment in purchasing a franchise. It’s up to franchisors to equip themselves with the right educational and networking tools so that they can work to live up to their promises to franchisees. The CFA offers its members a wide range of educational programs to help them become best-in-class franchisors, resulting in happy and thriving franchisees. CFA members are constantly looking to become better franchise systems. Whether it’s by attending Learn & Grow Webinars to upgrade their skills or attending

www.cfa.ca | www.FranchiseCanada.Online

WHY CHOOSE A CFA MEMBER? EMPLOYMENT RULES:

Employment Standards Tool Kit for Ontario Franchised Businesses

Published by

Franchise Law Day to get up to speed on their legal obligations, CFA members are empowered to grow their network by becoming educated franchisors. Fighting for franchising, on your behalf The CFA is the voice of the franchise community and the recognized authority on franchising in Canada. We speak for a business sector that represents every industry and touches the lives of every Canadian, in every community across the country. Our members understand that as a franchisee, your focus is on growing your business, which is why we’re committed to fighting for Canada’s franchising industry on your behalf. The CFA tackles a wide range of issues directly impacting the operations of a franchised business, including government support programs, common employer, and other important files impacting the industry across Canada to ensure the government works to support the growth of your business, not hinder it. Tools to grow your business As a franchise owner in a CFA-member system, you have at your disposal a wide range of tools that are designed to help your franchise grow and thrive, including our Member Saving Program, which allows you to enjoy the collective power of the CFA’s members and their franchise partners to save on everyday business needs like travel, payment processing, shipping, and so much more. As a franchisee in Ontario, you also have access to the Employment Standards and Education Program for Ontario Franchised Businesses program, which offers a Tool Kit, articles, webinars, presentations, and other materials to help make the employment standards and labour laws of Ontario easier to understand and navigate. Growing Together™ as a franchising community The CFA is made up of a community of franchise leaders and small business owners who are committed to sharing best practices, amplifying the understanding and power of franchising in Canada, and ultimately, Growing Together™ by promoting franchise excellence. You’re making a life-changing financial and time investment in purchasing your own franchised business, but by moving forward with a CFA member franchise, you’d be doing more than just buying a franchise; you’d be joining the greater Canadian franchising community. Franchising is the 12th largest industry in Canada and well on its way to becoming 11th. Collectively, franchising

employs almost two million Canadians, spanning across the country in almost every community. We’re found in almost every sector and industry of business. The average Canadian interacts with three to five franchises every day. The CFA is the “steward” of our community and the “keeper” of the power of that community. We are more than a service provider to individual franchise systems. We are also more than just the representation of the franchise community. We ARE the franchise community in this country. Because the CFA is you – the franchisors and franchisees who make up our membership. We’re successful when you’re successful and together, we’re stronger. To learn more about the franchising opportunities available with CFA member systems, visit www.LookforaFranchise.ca

LOVE YOUR JOB AGAIN. • Be your own boss • Work outdoors • Enjoy great job satisfaction • Be supported by Canada’s largest deck franchise

Prime territories available! decks.ca/franchising 1.800.263.4774

Franchise Canada Directory 2021 23

Franchising 101: An Introduction to Franchising

ranchising is an attractive and powerful way for Canadians to make their business dreams become reality and achieve success as small business owners. Through the proven business concept and support provided by the franchisor, franchisees are able to be in business for themselves, but with the support and assistance of the franchisor, the advantage of the franchise system’s past success, and access to the knowledge and experience of a network of franchisee peers. Franchising is about sharing success. The success of a franchisee leads to the further success of the franchisor and the franchise system as a whole. When you invest in a franchise, you align yourself with a brand that may already enjoy established consumer awareness and loyalty in the Canadian marketplace. This instant brand recognition can bring many advantages, including a stronger position when applying for a business loan. As a franchisee, you’ll benefit from the license to use the franchise system’s proven branding, trademarks, and proprietary products and/or services. A franchise also provides you with the advantage of a tried-and-true system and an operations manual that fully explains how you’re to replicate the franchise’s system at your location. While it’s impossible to eliminate all risk, if you work and follow that system, you can reduce the risk of business failure and increase your likelihood of success. As a franchisee, you’re considered a small business owner, and it’s important for you to assume a leadership role in your business. By joining an already established system, you don’t have to invent the business from the ground up like you would as an independent business. The franchise system can save you time and money by keeping you up to date on your market. Through

24 Canadian Franchise Association

the franchisor, you can stay on top of business trends, research and development, new marketing initiatives, and changes in consumer tastes or behaviours. Being a franchisee also means there is strength in numbers. Many franchise systems have an established supply chain and strong relationships with suppliers. By ordering your stock, supplies, and equipment through approved suppliers as a member of your franchise system, you may receive the benefit of preferential pricing or special delivery. Joining a franchise system also gives you a network of peers upon whose knowledge and experience you can draw. If you encounter an issue or have a question, your franchise system colleagues are just a phone call or email away. What are the key responsibilities of the franchisee? While system-specific responsibilities required of the franchisee will be outlined in the franchise agreement, there are a few key responsibilities that are generally required of the majority of franchisees. The franchisee should: • follow the franchisor’s standards, methods, procedures, techniques, and specifications to ensure consistency; • pay a fee (typically an initial franchisee fee and ongoing royalties) to the franchisor for the right to use the franchisor’s trademarks (brand) and business system; • take care of accounting, local marketing, staffing, and the other administrative aspects of operating a business; • invest their time, particularly during the start-up phase, by working hands-on in their business to fully understand the operational side of the franchise; and

www.cfa.ca | www.FranchiseCanada.Online

FRANCHISING 101: AN INTRODUCTION TO FRANCHISING •w ork in partnership with the franchisor, allowing for effective two-way communication between the two parties and a mutually beneficial relationship.

business plan, understanding franchise finance fundamentals, and navigating franchise disclosure, and also include a handy checklist of questions to ask the franchisor and other franchisees.

What are the key responsibilities of the franchisor? While the franchise agreement will outline the specific responsibilities and obligations of the franchisor, there are a few key responsibilities of the franchisor that apply in most scenarios. The franchisor should: •u ndertake to provide franchisees with operating systems and support services to help their businesses grow in ways that are effective, efficient, and profitable; •c ontinue to evolve the franchise system through research and development of new products and services; •h andle all brand advertising and (usually) provide franchisees with assistance for their local marketing activities; • protect and manage the brand and its trademarks, while ensuring consistency and quality standards are maintained by all franchisees in the system; and •p rovide initial and ongoing training and support. If you’re interested in embarking on a career in franchising, we’ve assembled the resources to help you make an informed investment decision. The franchising resource articles on FranchiseCanada. Online take you through the path to making a franchise purchase, hitting the highlights of finding your franchise fit, building a

Franchise Canada Directory 2021 25

Franchising Weathers the Economic Storm

The franchise business model is built to last through times of crisis BY LAUREN HUNEAULT

s we approach a new year in 2021, it seems like this one will be as unique and challenging as the last. With the world rolling out a long sought after COVID-19 vaccine, it may bring some recovery to the economic crisis in Canada and throughout the globe. As Canadians continue to practice “social distancing,” and non-essential companies are closed for a second time in late 2020, businesses are struggling, and only those that successfully adapt to the challenges presented by the pandemic will continue to thrive after this economic crisis is finally over. As of October 4, 2020, nearly nine million Canadians applied for the COVID-19 Emergency Response Benefit, which was put in place to help those who have lost their source of income as a result of the crisis. But it isn’t all doom and gloom. While the forecasts are currently bleak, there’s hope that clearer economic skies are ahead of us. One reason for this hope comes in the form of franchising. The resiliency of franchising While no one can predict the future, we can learn from the past. Globally, franchising has successfully weathered economic storms before, including the Great Recession of the late 2000s. According to Franchise Canada

26 Canadian Franchise Association

Directory listings, there was a 6.5 per cent increase in franchise and corporate locations in Canada, and a 23 per cent increase in franchise opportunities (brands) between 2008 and 2010. In addition, the 2010 Franchising New Zealand survey found that despite the recession, the total number of franchised units in the country increased by 5.3 per cent between 2009 and 2010. And, 24 per cent of those 2010 respondents had started franchising in the previous five years. While some franchise brands were undoubtedly hit hard during the Great Recession, others successfully expanded during this time. According to Forbes magazine, Subway experienced the most growth of franchise chains, adding close to 6,000 restaurants between 2008 and 2010. Commercial cleaning franchise Jani-King also added just over 4,500 locations in that same period. We can also take a closer look at what’s happening right now in Canada. In the Canadian Franchise Association (CFA) webinar, “Emerge from COVID-19 with a Growth Plan: How to Build Your Franchisee Pipeline Right Now,” Reshift Media noted that “franchise ownership” online searches in the spring were just as strong as they were the previous April. More interestingly, they found that “self-employment” related searches were up 733 per cent, and “work for self” was up 525 per cent.

www.cfa.ca | www.FranchiseCanada.Online

FRANCHISING WEATHERS THE ECONOMIC STORM This shows that entrepreneurial Canadians, many of whom are recently out of work, are choosing not to go back to the corporate world and instead are looking for ways to make their business dreams become reality. Franchising is a strong candidate for making that happen, even in tough economic times. A strong support network The general principles behind franchising make it a more resilient model. There is a tried-and-true system in place, with detailed operations that allow the business to be easily replicated in communities across the country. As a result, consumers recognize and are familiar with these franchise brands, and franchisees can rest assured knowing that the system is providing a relevant product or service to this consumer base. One of the many advantages of the franchise business model is that franchisees don’t have to go it alone. While franchisees are small business owners, they have the backing of a franchise system that can provide much-needed support during challenging times. While an individual franchisee may not have experience with this kind of crisis, the franchisor has likely navigated through turbulent times in the past and can use this insight to help its network of franchisees. As challenges arise, the franchise head office team not only has valuable knowledge to share with the network, but they also have the research, contacts, and resources they need to adapt and innovate their operations to meet the specific challenges, whether that’s changing a marketing strategy or updating the product offering. For example, if a food franchise needs to adapt by also offering grocery products to customers, it’s a lot

easier for the franchisor to determine the strategy and communicate it to individual franchisees than it is for a franchisee to test out a strategy while trying to keep the day-to-day business afloat. With franchising comes opportunity While there are many downfalls to an economic crisis, it can also bring opportunity. Affordable real estate is hard to find in a hot economy, but when the economic climate cools, more real estate can become available, and at a more affordable rate. This is especially important for new franchisees, who can focus more on building their business rather than worrying about being able to pay their rent during this pivotal first year. During an economic downturn, Canadians who have been hit hard by the tough times don’t have a lot of disposable income. The good news for franchisees is that franchises often provide mid-market goods that are still accessible to consumers when budgets are tight, including affordable food service and retail options. Further, franchises provide services that consumers will continue to need, from health care and cleaning services to haircare and health and fitness. Certain franchises also provide essential services, including shipping services and pet care, and remained open during the crisis. Better weather ahead These are tough times for Canadians, but better weather is coming. For those entrepreneurial Canadians who find themselves out of work or who are just ready to take the plunge into business ownership, franchising just might be the right business model to make those business dreams come true.

LOOKING FOR DEVELOPERS IN YOUR MARKET BETTER INGREDIENTS COMPANY COMPETITIVE INCENTIVES If interested please visit us on the web at www.papajohns.com or contact Erin Snyder at

502-261-4825 or erin_snyder@papajohns.com *Estimated costs for typical in-line location. Atypical features of a location may raise these costs. Certain restrictions apply. All benefits, discounts and payments subject to Papa John’s 2015 US Development Incentive Program.

Franchise Canada Directory 2021 27

The Franchise Advantage Why franchised businesses can quickly and successfully fill market gaps in difficult economic times BY LAUREN HUNEAULT

here’s no question that Canadians are experiencing unprecedented challenges in the face of the COVID-19 pandemic. Months of closed doors or limited business have had a major impact on Canadian businesses, with owners forced to make difficult decisions, including some who have had to shutter their operations. While this is a trying time for Canadians, it’s also a time of opportunity for those looking to start their own business. As the economy begins to open again, franchised businesses are in an excellent position to do so quickly while filling any market gaps left in the wake of this economic crisis.

many advantages,” he explains. He points to the large labour pool that exists since many have lost their jobs, lowered interest rates, and increased lending from banks, along with government support programs and incentives as examples. He also notes that business closures will have an impact. “There are prime locations that will become available and it can be expected that landlords will be willing to negotiate favourable rents for prime locations,” he says, adding that “Vendors and suppliers have been hit by the crisis and may have pent-up inventory. New franchisees will be able to leverage the better pricing and terms that will be available.”

The time is right for franchising Joel Friedman, president, JSF Franchise Group, says the tough economic climate can lead to more people turning to franchising. “The realization that they have little or no job security is a real concern for people in corporate employment and they become highly motivated to control their destiny. Franchising will boom during these times,” he explains. He notes that he signed four new franchisees in the months following March 23, 2020, when everything shut down. “It was with people who took this time to look at what they wanted in their life and it was to be an owner.” Wayne Maillet, president of Franchise Specialists, says this is the perfect time to open a franchise. “As the economy grows stronger, franchising will play a part in the rebound of the economy as we get back to the new ‘normal.’ Opening a business post COVID-19 provides

The power of franchising in times of crisis Greg Windle, director, national industry programs at CIBC, says franchisees have advantages in an uncertain economic climate, including the built-in support that comes with the franchise business model. “A well-run franchise system thrives not only on the entrepreneurial spirit, business acumen, and local market knowledge of the franchisees but also on the support provided by the franchisor and the knowledge sharing of best practices amongst the network of franchisees,” he explains. Franchisor support, notes Windle, comes in the form of a trusted brand, sharing best practices, providing financial relief directly (i.e. financial aid programs) or indirectly (i.e. royalty relief), providing access to key financial partners and sources of funding, and providing information on government assistance programs. Franchisee-to-franchisee support comes in the form of

28 Canadian Franchise Association

www.cfa.ca | www.FranchiseCanada.Online

THE FRANCHISE ADVANTAGE increased availability of information and the sharing of best practices. “All of these benefits of being a part of a franchise system give the franchising model great potential to accelerate the path to normalcy for a franchisee emerging from an economic downturn when compared to an independent, non-franchised competitor,” explains Windle. The franchise advantage While an individual owner may not have experience with economic downturns or be able to quickly roll out a new strategy required to adapt to challenges, the benefit of being part of a franchise system is having access to that experience and those tools. “Successful franchise business owners are being innovative to continue to succeed, pivoting to adapt to the new normal. One of my clients is having weekly conference calls with all the franchisees who are sharing what they are doing to adapt, change, and continue to grow during these unprecedented times,” explains Maillet. “As a new business owner, you can capitalize on the experience of others who are in the same business as you, facing the same challenges. The alternative is being in business on your own and having to adapt and change based on trial and error.” Friedman notes some additional advantages to joining a franchise system instead of going it alone, including initial and ongoing training and the higher success rates of franchises versus start-up businesses. He also points out that you may find it easier to secure financing for a franchise and it may also cost less to buy a franchise than to start your own business of the same type. “It will be much easier – and less expensive – to attract customers with a brand that’s established,” he adds. “You’ll also benefit from any national advertising campaigns that your franchisor is running, and other franchisees can offer up their experience and suggestions. You have operational systems and processes that can be standardized to provide a consistent product or service by all franchisees. You have many minds working at head office that can change direction to go with the trends and times.” Mohammed Jehangir, director, packaged loans & strategic partnerships, CIBC, says franchisees also have an advantage when it comes to financing. “All other things being equal, franchise business owners with a track record of business success and strong franchisor backing do have quicker/easier access to business financing. While franchisors do not typically provide guarantees to financial institutions for the liabilities of their franchisees, financial institutions take comfort in knowing that there is another party to any lending agreement that has a substantial stake in the success of its client,” he explains, adding that that banks typically offer a suite of

lending solutions to franchisee clients, from direct provision of operating lines and term loans to federal government-backed lending solutions. “New independent business owners with a three-year historical track record of financial success are in most circumstances going to have to rely on personal resources and personal liability lending sources to fund their startup business,” notes Jehangir. “New franchisees, on the other hand, have been vetted and qualified by a franchisor for both business aptitude and personal net worth. These two things, combined with the knowledge a lender will have as to what support that the franchisor will provide going forward to ensure that the franchisee is successful, may be the difference between qualifying for bank financing or not.” Words of wisdom from the experts Friedman emphasizes the importance of undertaking a thorough self-evaluation before you make a franchise investment decision, regardless of the economic climate. “You need to look at yourself and understand if you are ready to take the risk. If you’re able to follow a system, then franchising is for you. Every good franchisee I met in my career may not have always agreed with the policies and system, but they still always followed them,” he advises. “You need to choose the right franchise – buy a franchise that you will enjoy not based solely on the bottom line.” Windle and Jehangir from CIBC encourage those considering franchising to cover all their bases. “First, do your research on what franchise systems were performing well pre-COVID and industries that are likely to rebound quickly. Second, make sure you have substantial personal liquidity and that you are prepared to use it to support your new business, as there will be more uncertainty going forward,” they advise. “Explore the support the franchisor has provided to their franchisees during the pandemic and carry out a thorough review of the franchise agreement with a franchise lawyer to ensure the clauses provide the necessary protection should there be another wave of the virus or similar situation in the future.” “Finally,” they add, “be patient. In this period of uncertainty, the road to success may be less clear, but those who are well-capitalized, have a plan, and stick to it will emerge from the period of uncertainty as strong players moving forward.” “Take advantage of the benefits provided by a post COVID-19 business environment,” adds Maillet. “Do your homework and find a franchisor that is providing a high level of support and is adapting to the new marketplace. Have the confidence of knowing that the pandemic will come to an end. Now is a great time to explore franchise opportunities.”

Franchise Canada Directory 2021 29

10 REASONS TO BECOME A FRANCHISEE

franchise provides you with the advantage of a tried-and-true system and an operations manual that fully explains how you’re to replicate the franchise’s system at your location. While it’s impossible to eliminate all risk, if you work and follow that system, you can reduce the risk of business failure and increase your likelihood of success. Each year, thousands of people across Canada invest in franchise opportunities for a multitude of personal, financial, and vocational reasons. Here, we give you 10 of the many benefits that becoming a franchisee can bring. 1. NO ‘REINVENTION OF THE WHEEL’ REQUIRED A franchise prides itself on the system that it has developed and tested over time. When you invest in a franchise, you gain access to and use of its operations systems, products/services, logos, and more. If you were starting your own independent business, the onus would be solidly on you to figure out all the aspects of the business, including what works, and what doesn’t.

30 Canadian Franchise Association

With a franchise, you’ll have the road map to recreate the brand’s success at your location – providing you follow it to the letter.

2. TRADEMARKS AND PATENTS A good franchisor will have already secured the trademarks and patents related to its brand. Franchisees are then licensed to use the franchise’s branding, trademarks and proprietary products, services, recipes, etc. This can save you time and money during the start-up process, as there will be no need for you to go through the legal and governmental processes to secure the appropriate rights. You can also rest assured that your rights to make use of your brand’s trademarks and patents are enshrined in your franchise agreement.

3. TERRITORY RIGHTS In most cases, you, as a franchisee, will be awarded an exclusive territory, giving you exclusive rights to offer your product or service within your designated area.

www.cfa.ca | www.FranchiseCanada.Online

10 REASONS TO BECOME A FRANCHISEE The territory is designed to reduce competition, and can vary in size and scope. (A territory can be small, like a specific shopping centre, or large, like a geographic region.) Your territorial rights should be set out in and protected by your franchise agreement.

4. START-UP COSTS ESTIMATED In an independent business, you would be charting new waters. With a franchise, others have gone before you and can provide you with an example of what to expect in terms of start-up costs. Though each franchisee’s experience can vary and there’s always the possibility of unexpected or unforeseen expenses, your franchisor should be able to provide you with start-up cost estimates that are specific to the system.

5. FRANCHISOR SUPPORT AND TRAINING As a franchise system requires consistency in quality and service from location to location, most systems will train new franchisees on the basics of operating their location. The duration, breadth, and depth of the initial training may vary by system, but most will offer education on aspects such as operational procedures, accounting, marketing, computer systems, and more.

6. CONSUMER AWARENESS Any business that opens in a new area, be it a franchise or an independent business, would expect to have to conduct local marketing initiatives to introduce the business to local consumers. A franchise, however, can bring with it pre-existing consumer awareness; though the business may be new to the area, potential customers may already be familiar with the brand, whether through other locations or through its regional or national marketing. While local marketing and community outreach will usually factor into your franchise location’s marketing mix, having an established base of consumers who have experience with your brand can give you a leg up. A brand’s history of success may also give you an advantage when applying to a financial institution for a business loan to finance your location.

7. STRENGTH IN NUMBERS Another advantage of a franchise system is working with suppliers and other merchants that have already been vetted for quality, pricing, reliability, and consistency. As a member of a growing franchise network with group purchasing power, you can gain immediate access to established relationships with vendors and may even enjoy perks such as preferred pricing or special delivery.

email away. If you’re experiencing an issue or challenge with your business, chances are there are other franchisees in your system who have encountered the same or a similar issue, and who will have firsthand advice for overcoming it. Some franchise systems have more formalized ways for franchisees to interact, such as online forums, franchisee advisory councils, or franchisee meetings and conventions.

9 . RESEARCH AND DEVELOPMENT Through the franchisor, franchisees can be kept up to date on business trends and consumer tastes and behaviours. They can also benefit from their system’s research and development initiatives for things such as new products and services, technology, and marketing. With the franchisor looking after this side of things, franchisees can focus on the day-to-day operation of their location while knowing that they will still be on the leading edge in their industry and marketplace.

10. SMALL BUSINESS OWNERSHIP In addition to the reasons already mentioned, don’t forget that you’ll also be a small business owner, operating your own business with the brand and support of the franchisor backing you up. As the saying goes, in franchising you’re in business for yourself, but not by yourself.

EXPLORE, INVESTIGATE, AND EVALUATE As wonderful as these reasons are (and there are more that could be added to this list), all these advantages may be for nought if a prospective franchisee doesn’t fully investigate the franchise system before signing on. Franchising is a business model that brings with it many benefits and challenges, so it’s important to make sure you have all the facts and information available before taking the plunge. For more on the franchise investigation process and conducting proper due diligence, visit www.FranchiseCanada.Online.

8. PEER NETWORK AND SUPPORT Being part of a franchise system also means you have a pool of knowledgeable peers who are just a phone call or

Franchise Canada Directory 2021 31

9 Rules for Finding Your Optimum Franchise

ith so many franchise opportunities available in Canada, it can be overwhelming to try to pinpoint the franchise brand that will allow you to make your dreams of business ownership become reality. That’s where the experts come in. At the Franchise Canada Show in Toronto in February 2020, Gary Prenevost, franchise consultant and presi dent of FranNet of Southern Ontario and Eastern Can ada, outlined his top nine rules to help prospective franchisees find the right franchise match. Here, we share the highlights from his presentation to help you make the best possible franchise investment decision. RULE #1: Know Thyself! Before you get too far into the research process, it’s important to undertake a self evaluation, so you have a better understanding of your skills, interests, resources, and circumstances. You should ask yourself: • W hat types of work do you excel at, love to do, and that you want in your business? • W hat types of work do you dislike doing that you don’t want to do? You should also take stock of your financial resources, including what initial investment you can make, the business working capital you’ll need to break even, and the personal working capital you’ll need to break even (the point where revenues are high enough to cover operating expenses). It’s also important to examine the ‘why’ of your franchise plan; the lifestyle you want and how you plan to get there. What financial and lifestyle goals are you trying to solve, that can’t be solved through corporate employment? RULE #2: Ride Only One Horse! The first 12 months of business ownership are critical, and it’s during this time that the business will need the most from you. There will be a steep learning curve in the first year, where you’ll learn: the franchisor’s systems and processes; how to market your business; who your

32 Canadian Franchise Association

customers are (and aren’t); how to hire, train, coach, and manage staff; how to manage inventory and schedules; how to manage revenue and expenses; and the difference between profit and cash flow. Perhaps most importantly, you’ll also be learning how to manage your work-life balance throughout this ‘sacrificial’ year that will be devoted to getting your business up and running. During this time, you’ll need to be completely focused on your business, and won’t be able to be distracted by other major commitments, including any other part-time work. RULE #3: Avoid “Shiny Things” Don’t get ‘seduced’ by the opportunity and make a decision too quickly, or that isn’t right for you: just because others have found success with this opportunity doesn’t automatically mean that you will, too. If the following are true in your case, you need to slow down and do more research: • You’ve only talked to the franchisor and are excited about the concept • You want to buy an existing franchise and are only looking at that unit’s performance • It looks like a good concept, but you can’t substantiate your income goals with existing franchisees It’s imperative that you research, research, research, and investigate before investing! Remember, it’s totally normal to be afraid of failure as you get started. You can manage and reduce this fear, however, by doing your research and making fact-based decisions. You can’t allow fear to drive your decisions; don’t make judgments based on your perceptions or any uneducated opinions. Make sure you have the facts! Gary’s franchise success formula: “A”: The franchisor’s systems and processes “B”: The franchisor’s initial AND ongoing training and coaching “C”: Your strongest transferable skills “D”: Your passion for this type of work “E”: Degree of financial and lifestyle success AxBxCxD=E

www.cfa.ca | www.FranchiseCanada.Online

9 RULES FOR FINDING YOUR OPTIMUM FRANCHISE RULE #4: “Date” a Little, Not a Lot! The search for business “love” is complex and takes time. Passion is an essential component of franchise success, but it’s the passion for the types of work that drives success, not a passion for the product. When you meet your franchise match, you’ll have: •C onviction for the value proposition of the product or “solution suite” (not just loving the product) •C onfidence in the franchisor’s ability to support you through launch, as well as ongoing support •C ulture fit with franchisor •C ulture fit with the majority of the franchisee base You need to avoid the trap of making an emotionally charged decision, and then trying to justify that decision logically thereafter. You also shouldn’t immediately put all your eggs in one basket. You need to see what else is out there before you commit to one franchise, so investigate multiple concepts at the same time to ensure you’re not missing out on an opportunity that could be a better match. RULE #5: Do Some “Dancing” Before you make your investment decision, you need to talk to at least eight to 10 existing franchisees to learn more about their experience with the system. You can’t, however, just talk to the top-performing franchisees: one third of calls should be to those top performers, while one third should be to middle performers and the last third should be to unhappy franchisees. Through these conversations, it’s important to get their perspectives on their relationship with the franchisor, what it takes to drive success, and what a day, a week, and a month in the life look like as a franchisee in this system. Once you’ve carried out this validation process, you need to ask yourself: Can I do it? Will I do it? RULE #6: “Fall in Love” Before you move forward with your decision, you need to make sure that the logical and emotional components are aligned. Logical components: •F inancially affordable •C an enable you to meet your financial goals •G oals can be achieved in the timeline you need •T he business can run effectively in the weekly time available Emotional Components •Y ou love the work (critical roles) it takes to drive success •Y ou have conviction in the value proposition (not just love of the product)

• You like, trust, and respect the franchisor’s leadership team • You like and relate to most of the franchisees you spoke with RULE #7: “Meet the Parents” Don’t just base your decision on the franchise salesperson; you also need to meet with as many members of the franchise team as possible to get a more complete picture of what it will be like to join the brand. You should attend a Discovery Day, where you’ll meet the leadership team, along with the training and support team. Through this day at the franchisor’s head office, you’ll also be able to assess the infrastructure they have in place and be better able to determine if the culture of the company fits well with your expectations and needs. All decision-makers should attend this Discovery Day, as this is where the final negotiations will take place. Throughout this process, remember that you’re looking for reasons why you should say ‘no’ to this opportunity, and hoping that you don’t find any. You won’t be making a final decision while you’re there – you’ll be able to return home and take any final considerations into account before signing the franchise agreement. This decision is usually made within five to seven days after attending the Discovery Day. RULE #8: “Prenuptial Review” It’s essential that you enlist the help of franchise professionals in reviewing all documentation from the franchise, including the disclosure document and overall franchise agreement. You need to work with a franchise lawyer, not a regular business lawyer, because they have an in-depth understanding of franchise law, and will be able to advise you on: • your rights and obligations • the franchisor’s rights and obligations • a ny legal deficiencies in the disclosure document • negotiation recommendations RULE #9: “Get Married” Signing a franchise agreement means that you’re entering a “business marriage” with the franchisor. This is a longterm relationship that involves a lot of work from both parties, with multiple options for renewing the agreement in the future. You wouldn’t enter into a personal marriage without being one hundred per cent certain that you were marrying the right partner, so don’t sign your franchise agreement without doing your research and ensuring that you feel completely confident in your business future.

Franchise Canada Directory 2021 33

Business Plan and Financial Management Basics

egardless of the franchise opportunity you choose to pursue, you need to map out your path to business success before getting started. By establishing a business plan, you’re signalling to lenders, and the franchise system, that you’ve established and understand the tools you need to succeed. You’re ready to work hard and do what it takes to make your business dreams become a reality. At the Franchise Canada Show in Calgary in January 2020, John Leavitt, a partner at BDO, shared information that prospective franchisees need to establish a strong business plan and kick-start their franchising careers. As the national franchise industry leader at BDO, Leavitt has extensive experience working in the franchise industry, helping clients with their accounting, tax, and advisory needs. Here, Leavitt shares what you need to know as you look to build the business plan that will put you on the path to franchising success. Who should write the business plan? When you realized that your bank requires a business plan to provide you with financing options, your immediate thought was likely that you don’t know where to begin. You may be tempted to find someone to do this for

34 Canadian Franchise Association

you, but ultimately, this responsibility lies with you. You can seek assistance from franchise professionals, but you need to understand and present what your plans are for the business, rather than someone else’s. Remember, you may need to build a business plan because the bank has asked for one. It’s important to do so because you want to map out and ensure your business is going to succeed. This is an important part of the due diligence process that will improve your chances for building a profitable franchise business. So, what needs to be included in your business plan? YOUR BUSINESS PLAN 1. Executive summary The executive summary should: • describe the franchise you intend to purchase • include the background and track record of the franchisor and other existing franchisees • include a background of your products and services, while identifying your core market If you’re looking to join an established franchise, you’ll likely want to focus on that. If it’s a newer franchise system, you should focus on the market trends and opportunity available.

www.cfa.ca | www.FranchiseCanada.Online

BUSINESS PLAN AND FINANCIAL MANAGEMENT BASICS 2. Management team profile This is the most important part of a business plan for many lenders. The management team profile should: • describe your skills and experience •e xplain why you’re suited to own and operate this franchise • i nclude the same information for any other members of your management team This is the place to highlight any attributes that make you particularly suited for this franchise, and to share any details about any previous business success. The more the lender believes in you, the more likely they are to provide the financing you need. 3. Description of products and services The description of your products or services should include: • featured benefits •e xplanation of how your product or service differs from those of your competitors •o utline how you will deliver these products and services at ground level Here you should provide the specific details about the product or service that your franchise will be providing, along with what sets your offering apart from others in the market. 4. Core market information This section should: • describe your core market sector • outline your current competitors and future prospects • itemize strengths and how you will use them • i temize weaknesses and how you will address and strengthen them • estimate the market share you plan to achieve • describe your existing customer base While the bank will want this information, it’s also important for you to have the answers to the following questions: Who’s your competition? What do they do well? What do they not do well? How are you going to stand out? Is your market trending up or down? 5. Description of operations The description of operations should: • describe the premises where you will operate •e xplain how you will produce your products or services • r efer to location, property, facilities, leases, employees, insurance, technology, equipment, and suppliers These are all crucial details that need to be determined before you get started. Location can be a particularly important one, and if this is the case for you, you

Cash flow forecasting: A key tool for the business plan and beyond The base of a cash flow forecast is the anticipated income and expenses of the franchise. If you’re purchasing a new franchise location, you can determine the expected revenues and costs by doing your research, including talking to the franchisor and other franchisees in the system. Once you start to get a picture of the numbers, you can do a sensitivity analysis, wherein you carry out multiple cash flow scenarios: one based on high sales, one based on low sales, and one in the middle. This helps you determine what targets you need to hit and what sales are required for you to make vs. lose money. Along with a complete accounting of cash requirements for the franchise, identify the sources of funding, as well as the relevant financing terms. •F inancing for most new franchise companies comes from the owners, supplemented by friends and family members, along with some bank financing. Investors or lenders expect owners to personally assume some of the risk with a solid self-financed capital base of 30 per cent to 50 per cent of the total debt. •T o secure the funds, lenders may require a second-charge mortgage on residential property or personal guarantees up to the maximum amount of the loan. This points out the importance of reducing the risk of undercapitalization, and why the business plan should detail the amount of funding required, how the funds will be used, and when investors and lenders can expect a return on their investment.

Franchise Canada Directory 2021 35

BUSINESS PLAN AND FINANCIAL MANAGEMENT BASICS should provide as many details as you can about your location and the role it will play in your success. 6. Other supporting documents Other supporting documents to include are: • your resume, and those of the key members of your management team • job descriptions • credit reports • letters of reference • letters of intent • leases/contracts and other legal documents, as they pertain to the franchise you are purchasing 7. Financial information Most businesses fail because they run out of cash. If you don’t want to follow suit, you need to make sure that you complete a thorough financial analysis to ensure that you have a viable plan based on reasonable assumptions. This is not only for your own sake, but also because the bank will need to have total confidence to move forward, and they’ll find that with reasonable financial forecasts that show how you’re going to become profitable.

Your financial advisor can be particularly helpful with preparing and itemizing this part of your business plan. The financial section should: • address the financial potential viability of the business • include monthly budget and cash flow projections/ analysis • describe your current financial situation • include a personal net worth statement that lists all of your personal assets and liabilities The financial section needs to show that your business is viable, which means that it’s going to be profitable. It should include cash flow projections (see sidebar) and information about your financial situation. Some terms that will come up as you complete the financial section are: Pro forma financial statements (including balance sheet, income statement, and cash flow statement) should be prepared for the short term (monthly statements for 12 months) and long term (three to five years; quarterly for the first year). These should be based on realistic assumptions to account for the typical delays and challenges experienced by every business start-up.

PEACE

OF MIND WITH A COBS BREAD BAKERY

Franchise with a business that provides a product that’s essential to every day life – with a trusted franchisor. Learn more about owning a local bakery with COBS Bread at COBSBread.com/franchise

36 Canadian Franchise Association

www.cfa.ca | www.FranchiseCanada.Online

BUSINESS PLAN AND FINANCIAL MANAGEMENT BASICS Breakeven analysis that demonstrates what the company must sell to cover costs. Relevant financial ratios that serve as benchmarks for management to monitor the financial performance of the overall franchise and that of individual franchisees. These ratios will be used to identify both performance strengths, as well as emerging problems that could threaten the health of individual franchisees or of the entire franchise system. When purchasing a franchise system, the key costs that should be considered in the financial section of the business plan include: • legal fees •a ccounting fees to prepare the appropriate financial projections •m arketing costs including plans, website, print materials, tradeshows, etc. • inventory purchases • land and/or building and equipment • staff •w orking capital reserves to cover operating losses until the business is capable of generating sufficient revenue

• monthly overhead for six to 12 months • personal living expenses for six to 12 months • financing costs It’s important to remember that it often takes months for income to come in regularly. This means it’s essential to have adequate capitalization to reduce the risk of franchise failure. Your business plan should include a comprehensive section on financial requirements, including detailed estimates of all anticipated start-up costs until the projected breakeven point. The bottom line Ultimately, your business plan should assure investors that: • there is a market for your products or services • you and your management team are capable • you have the necessary physical and financial resources • you know where you’re going, and how you’re going to get there • you’re able to provide appropriate security • most importantly, that the franchise you’re buying is financially viable and that you can repay the loan!

Franchise Canada Directory 2021 37

Franchise Financing Fundamentals

hen you’re investigating the wide range of franchise opportunities available, it’s easy to get caught up in your search. With so many new concepts and exciting brands to explore, the possibilities can seem endless. But before you delve too far into your research, remember that you need to consider the cost involved. It’s important to know your financial capabilities and limitations before you get started so you can set realistic expectations for your franchising future. Here are some of the important financial questions you need to address so you can make your franchise dreams become reality. Can I afford this? This is one of the most important questions you need to ask before you get started. It’s crucial that you can not only afford the total cost of the franchise, but also that you have a cash buffer. The franchisor can provide you with a summary of the typical costs required to open the franchise. Take a good look at these costs and make sure that once you pay the franchise fee, purchase or lease equipment, order initial inventory, and take care of any other start-up costs, you still have money left over. You need to ask yourself whether you have the funds to buy a franchise and support yourself and your fam-

38 Canadian Franchise Association

ily during the critical start-up period. A common reason why new franchisees might fail is because they didn’t have enough money going into the franchise. If you put every cent you have into acquiring the franchise, you won’t have the additional funds needed to support yourself during this time. A good cushion would include about three to six months of personal expenses, enough to cover living costs – rent or other home payments, food, and other bills. You should have a complete picture of your financial situation at the ready, including a personal net worth statement, personal tax assessments for the most recent two years, and your credit rating, to find a franchise with the right financial fit. Where is the money? Once you’ve gathered this information, you need to delve into the details of your assets. Many franchisors and banks have requirements for the unencumbered equity a franchisee needs to have. Unencumbered equity is any cash you have that isn’t tied up in any way and doesn’t need to be repaid to anyone else. Most franchisees will finance their franchises with a combination of equity (either personal equity invested by the franchisee or outside equity obtained by selling partial ownership to investors) and debt (loans). The

www.cfa.ca | www.FranchiseCanada.Online

FRANCHISE FINANCING FUNDAMENTALS amount of personal funds you’ll be required to contribute is usually based on a percentage of the total cost of the investment. Typically, between 30 and 50 per cent of the investment should be your unencumbered equity. Remember, taking on too much debt can be detrimental, because you need to be able to focus on growing your business and not on making debt payments. What are lenders looking for? Once you sort out how much equity you’ll be supplying and how much debt you’re prepared to take on, you’ll need to approach a bank to help with the financing. A solid business plan is a major asset in securing financing. It helps you determine what financing you need, and how you’ll pay it back. A well-thought-out business plan should cover all the questions your banker might have about your franchise business and how it will operate. A business plan consists of a business model and a financial plan. The business model will outline the qualities of your business – the customers, the industry, the competition, and your qualifications. It should also identify any weaknesses and explain how you plan to overcome them. The financial plan should include a projected balance sheet, income statement, and cash flow statement. It should also answer any “what if...?” questions: what if sales drop by 25 per cent? What if they increase by 50 per cent? While there are many business plan templates available, you should put your plan together and then consult with others, such as an accountant and existing franchisees in the system, to ensure the financial aspects are realistic and accurate. To learn more about business plans, check out the Business Plans and Financial Management Basics article on FranchiseCanada.Online.

How can I improve my chances of securing financing? Once you have a full understanding of your personal financials and financing requirements and have crafted a great business plan, there are a few things you can do to help secure that loan when you meet with your lender: •E stablish a good relationship with the banker. Approach the same bank you use personally or find out whether your franchise system already has banking relationships in place and can give you an introduction. •B e prepared to answer any questions the lender might have during your meetings. Be open and honest. Know all the information contained in your business plan in detail and be ready to support your assumptions. •P resent yourself well and dress professionally when meeting with your lender. •P lan ahead and approach your bank as early as possible. Even with an amazing business plan, if you leave financing to the last minute, the deal might not get completed. This can also indicate a lack of organization and preparedness on your part. • Offer a resume of your previous experience. Even if your background isn’t in franchising or the industry in which you’ll be operating your franchise, showing a history of success can help.

What are some unexpected costs I might encounter? Though you’ll try to account for all expenses in your franchise investment process, inevitably there are things that may come up depending on your exact circumstances. While it’s important to focus on the hard costs, including the location and equipment, you can’t forget about the soft costs involved. These include financing costs (interest on loans); working capital to use until the business breaks even; security deposits (paid to utility companies, for example); professional fees to retain lawyers, accountants, and others; and any required licences, permits, insurance, and training costs. You should plan ahead so you’re not strapped for cash a few months into your venture. These costs should be included in your business plan, so you can ensure that you find the funds to cover them.

Franchise Canada Directory 2021 39

CHECKLIST FOR FRANCHISEES

nvesting in a franchise is a major investment decision, and not every franchise will be the right fit for you. That’s why it’s important to ask the following questions if you’re considering the purchase of a franchise. You may need to ask many more questions to properly conduct your due diligence, and it’s also very critical that you retain franchise professionals to assist you through the process of determining whether to purchase the franchise. This workbook has been prepared with the assistance of the following franchise experts: Franchise Lawyer: Joseph Adler, Hoffer Adler LLP, Franchise Consultant: Gary Prenevost, FranNet, Franchise Accountant: Lyn Little, BDO Canada LLP *Note: The Franchisee Checklist is a public resource of general information which is intended, but not promised or guaranteed to be correct, complete, or up to date. It is not intended to be a source of legal advice. Readers should seek the advice of competent legal, accounting, and business counsel.

SECTION 1: The franchisor – identity & experience Questions to ask the franchisor: 1. Who are the officers, directors, and shareholders of the franchisor? 2. What is the business experience of the franchisor’s shareholders, directors, and officers? For how many years have they been in the current business category? How many years in the franchise industry? 3. Is the franchisor a subsidiary of another company (i.e. private equity company purchasing the franchisor system)? • If so, who is the parent company? Who are the shareholders of the parent company? • Has that franchisor or any of its affiliates ever franchised other concepts? • If so, which concept(s), and how successful are they? 4. What other companies are related to the franchisor? What role do these companies have in relation to the franchised business? • Will any of the franchisor’s affiliates be your suppliers under the franchise agreement? 5. Are the units franchised under a master franchise agreement? What are the terms/timelines of the master franchise agreement? How are you impacted if the master franchise agreement is terminated? Does the master franchisee have experience with franchising? 6. Has the franchisor and/or any of its associates, or any of their respective directors, officers, or shareholders been: • convicted of fraud, unfair or deceptive business practices, or a violation of law that regulates franchises or business or been subject to an administrative order or penalty?

40 Canadian Franchise Association

• bankrupt or insolvent in the last six years? Has there been a charge pending against such persons involving such matters? 7. For how many years has the franchise been operating? 8. For how many years has it been offering franchises in Canada? Outside of Canada? If a U.S. franchisor is coming into Canada, what work has been done to adjust for the Canadian market, i.e. supply chain, Canadianizing the marketing messages, PIPEDA, and e-marketing laws, etc.) 9. How many franchised and corporate units are currently operating in Canada? In the U.S.? 10. Is the franchisor a member of the Canadian Franchise Association? If not, why not? 11. W hat is the franchisor’s reputation with the Better Business Bureau? With the Chamber of Commerce? With D&B Canada (Dun & Bradstreet)? 12. W hat is the franchisor’s financial condition? Have you reviewed its most recent financial statements, and have they been prepared in accordance with the applicable franchise legislation in your province? If the franchisor is permitted to simply disclose an opening balance sheet or is exempt from providing financial disclosure, do you have sufficient financial information regarding the franchisor to make an informed decision? SECTION 2: The franchisor’s relations with its franchisees 1. What is the franchisor’s reputation for relations with its franchisees, customers, and suppliers? 2. How does the franchisor qualify, screen, and choose its franchisees? • Have your qualifications been reviewed? • A sk yourself: why do you feel you’re a good match?

www.cfa.ca | www.FranchiseCanada.Online

CHECKLIST FOR FRANCHISEES 3. What are the franchisor’s plans for future development, including product, service, and/or technology innovation? • For expansion and/or diversification? • How will these plans affect your dealings with the franchisor? 4. How does the franchisor monitor franchisee operations to help improve performance? How much is by automated CRM and how much by manual reporting? • Does the franchisor periodically inspect all of the franchises? • W hat are the franchisee reporting requirements? • Does the franchisor subject the franchisees to periodic audits of books and records? 5. Is there a franchisee association or advisory council (FAC)? • If so, who belongs: how many members are voted by the franchisees, and how many are appointed by the franchisor? • Does the franchisor relate well with the association or council? 6. Does the franchisor keep advertising funds in a separate account/entity? • Will the franchisor regularly provide franchisees with a statement of how the advertising funds are disbursed? • Will the franchisor use the advertising fund to promote existing locations or fund expansion efforts? • Has the franchisor documented how the advertising funds will be used? 7. Does the franchisor solicit franchisee input into marketing strategies, new product development, etc.? What amount of control does the FAC have regarding how the ad fund revenues are deployed? 8. Does the franchisor account for the unique needs of different marketing (geographic) areas as it implements its marketing strategies? 9. Do all franchisees and corporate stores pay into the advertising fund at the same rate? 10. Has the franchisor provided you with a list of all of its franchisees? 11. W hat is the failure/turnover rate for franchisees? • Has the franchisor terminated any of its franchise agreements in the last three years? If so, how many, and for what reason? • W hat are the reasons for the failure/turnover? 12. Has the franchisor litigated with any of its franchisees in the past? • W hat was the outcome of such litigation? 13. Is there any pending litigation by or against the franchisor or any of its associates? • W hat is the status, nature, and likely outcome of such litigation? 14. How does the franchisor describe its corporate culture and will you be comfortable with this culture?

15. Does the franchisor have a recognition program for exceptional performance and if so, what does this program involve? 16. How innovative is the franchisor? • How important is innovation to the franchisor’s industry? • W hat successful innovation has the franchisor introduced since it began its business? • How has the franchisor responded to technological change or innovation in its industry? SECTION 3: Required investment 1. How much is the initial franchise fee? 2. Is there a deposit? If so, when is the deposit due and how much of the deposit is refundable, and under what circumstances? 3. What is the minimum recommended operating cash requirement at start-up, in addition to the original investment? 4. Is there a training fee, a site development fee, or a management or administration fee? 5. What is the anticipated cost of leasehold improvements, equipment, signage, and start-up inventory? Does the franchisor supply any of these items? Is the price reasonable? 6. What is the anticipated occupancy cost of the premises? • Rental payments or purchase cost of real property? • A nticipated construction costs for the premises? 7. What is the general timeline between site selection and opening? 8. What other costs may be incurred? 9. Does the franchisor assist in the financing of the franchise? 10. W hat assistance, if any, does the franchisor provide to assist with site selection/lease negotiation? If there are no in-house resources, how closely do they work with external real estate professionals to assist with site selection/lease negotiation? 11. W hat is the anticipated period of time between start-up and profitability? 12. W hat are the anticipated franchise earnings, and has the franchisor provided you with any financial performance representations? If so, have you been provided with the underlying assumptions that substantiate the representations? 13. W hat is your anticipated “personal” working capital required through the launch period (the amount you need monthly to cover living expenses, multiplied by the number of months before you can draw income from your franchise)? 14. Do you have the resources to finance the initial investment? Has the franchisor negotiated any franchise finance programs?

Franchise Canada Directory 2021 41

CHECKLIST FOR FRANCHISEES SECTION 4: Franchised product or service 1. What makes the franchisor’s product or service unique? • Does it satisfy a need? • Is it marketable in your territory? • W hat is the size of the market in your territory? 2. Is the franchise system easily replicated, and if so, how will the franchisor differentiate itself from its competitors? 3. Is there any goodwill attached to the franchise system? 4. How long has the product/service been on the market? 5. What is the competition for the franchisor’s product or service in your market? 6. On a scale from 1 to 10, how competitive is the pricing of the franchisor’s product or service? 7. Is the sale of the product or service subject to certain legal restrictions? If so, what are the applicable federal and provincial standards and regulations, and does the franchisor comply? 8. Is the product protected by patent, trademark, or copyright? • W ho owns the trademarks, copyrights, or patents? • A re the trademarks, copyrights, or patents registered in Canada or have trademark applications been filed for their protection? • If the trademarks are in the process of being registered, is there any opposition or other barriers to the registration of the marks? 9. Are there product warranties and if so, who is responsible for such product warranties – the franchisor, the franchisee, or a third-party supplier? 10. W hat products must be purchased from the franchisor or designated suppliers? • On a scale from 1 to 10, how competitive is the cost with third-party suppliers? • If supplies are interrupted, can purchases be made through alternate suppliers? • Will the franchisor be receiving volume discounts or rebates? If so, will these savings be passed on to the franchisees? 11. Innovation: • How often does the franchisor update product/service offerings? • Do the innovation advances come from the franchisee base, or from head office? • How are the innovations field-tested to prove viability? 12. W hat are the franchisor’s policies with respect to gift cards and certificates, online orders, and food delivery applications? And is pick-up, delivery, or drive-thru an important component of the service offering? 13. How often does the franchisor require your premises to be renovated or upgraded and what is the estimated cost of these renovations/upgrades?

42 Canadian Franchise Association

14. Will you be able to renew the franchise agreement without completing renovations? SECTION 5: Sales territory and location 1. Is your franchise territory exclusive? • If not, would there be some other form of territorial protection? • If so, what are the parameters of the exclusive territory granted to you? • Will there be other outlets opening near your territory which may undermine your sales? • Would these be company-owned or owned by other franchisees? • Can you get a first right of refusal for any adjoining territories? • Does the franchisor sell its products through other channels of distribution? • If so, what are these channels, and how will they impact the profitability of the franchise? 2. Can you decrease or expand your sales territory? If so, under what conditions and at what additional investment level? 3. Has the franchisor conducted a site selection analysis of the location of the franchised business and the territory, and provided you with information that substantiates the viability of the location and territory? If not, how could you obtain this information? SECTION 6: Questions to ask current franchisees 1. What was your total investment in the franchise? 2. Were there any unexpected costs? If so: • W hat were they for and how much were they? • Were they unique to that individual, or is it something several franchisees experienced? 3. Are the royalty, advertising, and other fees charged by the franchisor reasonable in comparison to your profits? 4. On a scale from 1 to 10, how good is the quality of the products or services supplied by the franchisor or its designated suppliers? How satisfied are you with the price-quality relationship? How reliable are these deliveries from the franchisor or its designated suppliers? Are you allowed to use alternative suppliers? 5. On a scale from 1 to 10, how effective was the franchisor’s initial training? How long was the training? 6. What is the franchisor’s initial and ongoing training program? On a scale from 1 to 10, how effective is the: i) initial training? ii) ongoing training? iii) group training calls? iv) mentoring by the franchisor? v) mentoring by other successful franchisees?

www.cfa.ca | www.FranchiseCanada.Online

CHECKLIST FOR FRANCHISEES 7. On a scale from 1 to 10, how effective is the franchisor in responding promptly and helpfully to questions you have or advice you seek? 8. What are the most important things a new franchisee needs to know about business generation (prospecting, digital and traditional advertising, networking and community engagement, etc.)? 9. What type of ongoing support and advice (including advertising, marketing, and promotional assistance) do you receive from your franchisor? On a scale from 1 to 10, how satisfied are you with this support? 10. On a scale from 1 to 10, how profitable is your franchise as compared to initial expectations? 11. How long did it take for revenue to cover operating costs? 12. How long did it take for you to break even? 13. W hat have you done to make your franchise successful, and would you recommend this franchise? 14. Does the franchisor have a dispute settlement board with both franchisee and franchisor representatives? On a scale from 1 to 10, how effective is it? 15. Have you ever had a serious disagreement with your franchisor? What was the disagreement about? How was it settled? 16. If you have experienced financial difficulty in operating the franchise, how has the franchisor supported you through the difficult time? 17. W hat is the time investment for the franchisee (high amount of owner involvement, or more self-sufficient operations)? 18. K nowing what you know now, what are the three most important things you would tell new franchisees that they must do? And that they must avoid doing? 19. K nowing what you know now, would you do it over again? Why or why not? 20. How effective are the marketing and advertising programs implemented by the franchisor? • Does the franchisor provide a periodic report on the marketing expenditures? • A re you satisfied with how the marketing contributions are spent? 21. Do the corporate outlets contribute to the marketing fund? 22. A re you aware of other franchisees who are not happy with the system or who are struggling with their franchise? 23. How involved is the franchisor with the day-to-day operations of the franchise? Do you feel that you have the autonomy you require to operate your franchise as you see fit?

SECTION 7: The franchise agreement 1. Have you retained a franchise lawyer with expertise in reviewing franchise agreements? 2. Are the franchise, the location, and the territory clearly described in the agreements? 3. If the premises is not identified, by what date are you or the franchisor, as the case may be, required to locate a premises and obtain a lease? 4. Is there an opt-out provision that gives you the right to terminate the franchise agreement if you do not find a suitable premises within a certain period of time? 5. Does the contract clearly describe the duration, type, and cost of the training to be provided by the franchisor? 6. Does the contract clearly describe the support to be provided for the grand opening? 7. Does the contract clearly specify the type, amount, method of payment, and timing of all payments to the franchisor? This includes the franchise fee; any deposits and the conditions for any refunds; royalty payments based on a percentage of gross sales; local, regional, and/or national advertising contributions; fees of continuing services provided by the franchisor; and any other payments. 8. Does the contract clearly describe the rules around digital marketing and social media? 9. Are you required to purchase supplies from the franchisor or other designated suppliers? • If so, what and how much? • A re there any minimum purchase quotas? • If the franchisor receives rebates from the suppliers, are they reasonable in light of the cost of the products or services being purchased? 10. Can you use alternate suppliers (provided the franchisor’s quality standards are maintained) if the franchisor’s supply deliveries are interrupted or for other reasons? 11. Do you have the right to use any innovations developed by the franchisor? 12. A re there sales quotas that you are required to meet? If so, are they attainable and what are the consequences if you fail to meet them? 13. W hat is the length of the contract term? • Is the term renewable, and on what basis? • A re the renewal conditions reasonable? 14. W hat types of records and reports are you required to provide to the franchisor? How cumbersome are the requirements? 15. A re you leasing your location directly with your landlord, or will you enter into a sublease with the franchisor?

Franchise Canada Directory 2021 43

CHECKLIST FOR FRANCHISEES

• Is the lease for the same period as the franchise contract? • Can the lease be renewed, and on what terms and for what time period? • Can you change locations? If so, on what conditions? • Does the landlord have the right to demolish your premises or require you to relocate? 16. A re you required to build, or can you renovate existing franchise premises? • Will the franchisor provide design and construction specifications, and/or monitor the construction? • Can these specifications be changed? 17. Do you choose the location or sales area of the franchise, or does the franchisor? 18. Can you operate more than one franchise in your sales area? Do you have any development rights? 19. Can you sell your interest in the franchise? • Does this require the franchisor’s consent? • W hat are the conditions of such consent? • How is the sale price determined? • Is there a pre-determined valuation formula? 20. Can you terminate the contract? • If so, what are the termination conditions? • W hat are the costs and/or penalties? 21. On what basis can the franchisor terminate the contract? 22. If the contract is terminated, will you be compensated for any component of the goodwill that you have built up in the business? 23. Is there a post-term non-competition covenant, and is it a reasonable one? What is the length of the post-term covenant and what is the geographical boundary? 24. If you violate any provision of the agreement, do you have adequate time to correct the situation? 25. Does the contract provide for arbitration or mediation as a pre-requisite before litigation is commenced? If so, how will the arbitrator be selected? How are the costs of the arbitration/mediation to be divided? Are there any rights of appeal? 26. W hat happens if you suffer a prolonged illness or death? • Will your survivors, for example, be entitled to operate and maintain ownership of your franchise in such event? 27. Can you engage in any other business enterprise during the term of the contract or are you required to devote your full-time efforts to operating the franchise? 28. Are you required to provide any personal guarantees? 29. Can you enter into the franchise agreement personally, or are you required to incorporate? If required to incorporate, are there any requirements for how your corporation is to be organized?

44 Canadian Franchise Association

30. A re you allowed to operate your own website or social media accounts? 31. W hat is the effective date of the franchise agreement? Have you diarized the expiration of your possible two-year rescission period, during which time you may be able to rescind the agreements if you have not been properly disclosed? SECTION 8: Disclosure document 1. For franchisees in provinces where legislation mandates the provision of disclosure documents – currently British Columbia, Alberta, Manitoba, Ontario, New Brunswick, and Prince Edward Island. • Has the franchisor provided you with a disclosure document that complies with the applicable franchising disclosure statute? In particular, does the disclosure document contain all disclosure required by the relevant franchise disclosure statutes, including the franchise agreement, all other agreements, and the franchisor’s financial statements for its most recently completed fiscal year? • Was the disclosure document provided as one document at one time and fully up-to-date as of the date of disclosure? • Have you retained a franchise lawyer with expertise in reviewing disclosure documents? • Have you retained an accountant with expertise in franchising matters to review the franchisor’s financial statements? • Is the disclosure made by the disclosure document consistent with the terms of the franchise documentation and the representations made by the franchisor’s salespersons? • Has the franchisor complied with the disclosure requirements of the relevant disclosure statutes by providing you with at least 14 days in which you could review the documentation before paying the franchisor any monies or before you signed any agreements? • Did the franchisor include a signed certificate of disclosure in its disclosure document and if so, was it signed by two officers or directors or an officer and a director, if there are in fact two such persons? 2. For franchisees in provinces without legislation mandating the provision of disclosure documents. • Has the franchisor provided you with a disclosure document in accordance with the Canadian Franchise Association’s (CFA) voluntary disclosure rules? Please visit www.cfa.ca/About_Us/Disclosure_Documents for more information.

www.cfa.ca | www.FranchiseCanada.Online

Don’t climb the

CORPORATE LADDER

CREATE ONE!

Many people don’t know where to begin in their franchise search. There are so many opportunities, the choices and the process can be overwhelming. But, you don’t have to do this alone—FranNet can help. We will evaluate your personal capabilities, lifestyle needs, and investment abilities to match you with carefully-chosen business concepts. We’ll educate you through the entire selection and purchasing process, easing your transition into entrepreneurship.

The best part—it’s at no cost to you! With over 30 years in business, FranNet is North America’s most respected leader in the franchise broker industry. We bring only the most qualified clients to our elite group of franchisors, and we represent only the best franchisors for our clients.

Kickstart your dream of business ownership! Schedule a consultation today!

FranNet Canada Locally Owned & Operated

frannet.com