Franchise Canada Directory 2022 by Franchise Canada

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A Canadian Franchise Association Publication / www.FranchiseCanada.Online

MORE THAN 1,300 LISTINGS INSIDE

DIRECTORY

YOUR COMPLETE SOURCE GUIDE TO FRANCHISING IN CANADA

FRANCHISE SOURCE GUIDE 2022 $9.99 PM 41043018

DISPLAY UNTIL JUNE 30, 2022

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.

Top-performer experiencing rapid expansion Now accepting franchisee applications. Japanese inspired teppanyaki-style meals made fresh and by hand. Topped with our famous teriyaki sauce. Loved everywhere.

Currently experiencing high sales and economic resiliency. Edo is talking with passionate, ambitious multi-unit and single unit operators. Locations in BC, Saskatchewan, Manitoba, Ontario and more! Apply at edojapan.com/franchising or franchise@edojapan.com

Canadian owned and operated.

FC third page ads.pdf

11/5/21

Connect with the Leader in Home Services Franchising.

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CONTENTS DIRECTORY 2022

Finding the right business opportunity can be a struggle. Look no further…

FEATURES

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

CMY

The Franchise Advantage From support to resiliency, here’s why franchising might be the best model for you

Canadian Franchise Association

The Process Of Opening A Franchise What to expect after you sign the franchise agreement

This advertisement should not be construed as an offer to sell any franchises. The offer of a franchise can only be made through the delivery of a franchise disclosure document by or on behalf of one of the Neighborly brands 1010 N. University Parks Dr. Waco, TX 76707, 254-745-2444. In addition, certain states regulate the offer and sale of franchises. We will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your state. The ﬁling of an application for registration of an offering prospectus or the acceptance and ﬁling thereof by the NY Department of Law as required by NY law does not constitute approval of the offering or the sale of such franchise by the NY Department of Law or the Attorney General of NY. Not all franchise brands are available in Canada.

Business Plan and Financial Management Basics Kick-start your franchising career with these tips to establish a strong business plan

Why Choose a CFA Member? Investing in a franchise committed to excellence Franchising 101: An Introduction to Franchising

Discover which of our franchise brands is right for you. Visit: go.nbly.com/CFAd

10 Reasons to Become a Franchisee Explore the benefits that becoming a franchisee can bring

Meet Your Franchise Match How to prepare for and evaluate your meeting with the franchisor

5 Things You Should Know When Hiring For Your Franchise Tips and advice to help you hire star employees for your franchise

Franchising Formats A guide to the different formats available to expand to multiple locations

Due Diligence Checklist

Checklist For Franchisees

www.cfa.ca | www.FranchiseCanada.Online

FC third page right final.pdf

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

Success Stories: The Faces of Canadian Franchising Meet thriving franchisees across Canada

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

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

Franchising Your Business: A Checklist

Franchise Matters

Franchise Legal Matters

Connect with the Leader in Home Services Franchising.

DEPARTMENTS

Publisher’s Message

CFA Code of Ethics

Finding the right business opportunity can be a struggle. Look no further…

How to Use This Directory

Franchise Brands Listings

231

Franchise Support Services Listings

254

Franchise Brands Index

261

Franchise Support Services Index

262

Advertisers’ Index

CMY

Ask the Experts

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. 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. All information listed for both Franchise Brands and Franchise Support Services/Suppliers in the 2022 Franchise Canada Directory is current as of Wednesday, December 8, 2021.

Discover which of our franchise brands is right for you. Visit: go.nbly.com/CFAd This advertisement should not be construed as an offer to sell any franchises. The offer of a franchise can only be made through the delivery of a franchise disclosure document by or on behalf of one of the Neighborly brands 1010 N. University Parks Dr. Waco, TX 76707, 254-745-2444. In addition, certain states regulate the offer and sale of franchises. We will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your state. The ﬁling of an application for registration of an offering prospectus or the acceptance and ﬁling thereof by the NY Department of Law as required by NY law does not constitute approval of the offering or the sale of such franchise by the NY Department of Law or the Attorney General of NY. Not all franchise brands are available in Canada.

Franchise Canada Directory 2022

11/5/21

PUBLISHER’S MESSAGE

FRANCHISES SURVIVE AND THRIVE

ince March 2020, the COVID-19 pandemic has affected nearly every aspect of our lives and businesses. As we move into a post-pandemic world in 2022, hope is in the air. The businesses most well-equipped for uncertainty— economic and otherwise—and most prepared to quickly come roaring back, are franchises. The franchise model provides entrepreneurial Canadians with opportunities to go into business for themselves but not by themselves, with much-needed support behind them. If you want to make your dreams of business ownership become a reality, then this Franchise Canada Directory is a great place to start. The articles found on pages 12 through 70 provide franchising fundamentals to help you get started, from choosing the franchise that’s right for you, to information on conducting proper due diligence before investing in a franchise, to franchise financing, and hiring your team. 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. The Canadian Franchise Association (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 from our more than 700 corporate members, including emerging concepts and iconic brands in more than 50 different categories. 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. It’s also important to call in the professionals to help ensure you’re making the right franchising decisions. This Directory includes listings for CFA Franchise Support Services and Suppliers, who can play a pivotal role in guiding 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 and beyond. As you read through this Directory, note the CFA member logo that highlights the CFA’s many corporate 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 online exclusive educational articles, Franchise Canada Chats podcast episodes, and Franchise Canada TV learning videos on FranchiseCanada.Online, where you can also sign up for Franchise Canada E-News, a biweekly newsletter filled with content from Franchise Canada magazine, franchising opportunities, industry news, and more. You can also connect with CFA member brands through the www.LookforaFranchise.ca online directory, Franchisor Spotlight webinars available on www.cfa.ca, and through virtual and in-person events. Also be sure to follow the CFA on Facebook, Twitter, Instagram, LinkedIn, and TikTok. Canadian franchising is strong and resilient. The support systems built into the business model will continue to benefit Canadian franchisees in 2022. We hope our Franchise Canada resources, including the tools and member information contained in this Directory, can help you make an informed business decision. With the right tools at your disposal, you can make your business dreams become reality through franchising.

Sherry McNeil President & CEO, Canadian Franchise Association

Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

THE UPS STORE

CFA BOARD OF DIRECTORS BOARD CHAIR Gerry Docherty*, Good Earth Coffeehouse PRESIDENT & CEO Sherry McNeil*, Canadian Franchise Association 1ST VICE CHAIR David Druker*, The UPS Store 2ND VICE CHAIR Ryan Picklyk, A&W Food Services of Canada Inc.

PUBLISHER

TREASURER Lyn Little, BDO Canada LLP

Canadian Franchise Association (CFA)

SECRETARY & GENERAL COUNSEL

VP, CONTENT & MARKETING Kenny Chan

Larry Weinberg*, Cassels Brock & Blackwell LLP

EDITOR Lauren Huneault (on leave),

PAST CHAIR John DeHart*, Hartify Franchise Consulting

Joelle Kidd (interim)

CHAIR, LEGAL & LEGISLATIVE COMMITTEE

GRAPHIC DESIGNER Andrea Lee

Darrell Jarvis*, Fasken

LISTINGS MANAGER Andrew Schopp

CHAIR, FRANCHISE SUPPORT SERVICES

COORDINATOR, CONTENT & EDUCATION

Kirk Allen, Reshift Media

Stefanie Ucci

DIRECTORS

Steve Collette, 3rd Degree Training Chuck Farrell, Pizza Pizza John Gilson, COBS Bread Andrew Hrywnak, Print Three Franchising Corporation Rimma S. Jaciw, CFE, WSI Digital Joel Levesque, McDonald’s Restaurants of Canada Ken Otto, Redberry Restaurants Gary Prenevost, FranNet John Prittie, TWO MEN AND A TRUCK Stephen Schober, Metal Supermarkets Family of Companies Frank Stanschus, Little Kickers Thomas Wong, Chatime Todd Wylie, Master Mechanic *Executive Committee member

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

ADVERTISING SALES Om Mehta AD COORDINATORS

Andrea Lee, Om Mehta PRINTING Premier Printing FOR ADVERTISING INFORMATION:

Om Mehta omehta@cfa.ca

TO SUBSCRIBE TO Franchise Canada

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.

© 2022, 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.

LAW FIRMS:

Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

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

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 contractual

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 that provides 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 www.LookforaFranchise.ca today.

Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

Vancouver here we come!

TWO MEN AND A TRUCK®’s last frontier to complete our coast to coast development in Canada

Why TWO MEN AND A TRUCK? • A professional moving, storage, and junk removal franchise opportunity • Ideally suited for a business professional looking for a significant business opportunity • A proven and successful business model in an essential industry

866.684.6448 twomenandatruck.ca Each franchise is independently owned and operated.

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.

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 these 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 and iconic Canadian brands across the country, including 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 FranchiseCanada.Online. The annual directory is a print publication that’s available on newsstands and in bookstores throughout the country. Prospective franchisees can also learn more about franchising through Franchise Canada E-News, a bi-monthly digital newsletter; the Franchise Canada Chats podcast, now in its fifth season; Franchise Canada TV, which features interviews and educational videos; and more resources that can be found at FranchiseCanada.Online. The Association also offers Canada’s only tradeshows that exclusively feature CFA member franchise systems. After going virtual during the COVID-19 pandemic, live Franchise Canada Shows will be back in 2022, starting with shows in Toronto and Calgary. These shows provide Canadians with the opportunity to meet face to face with franchisors and learn about their proven business opportunities. The CFA’s wealth of knowledge flows, in part, from its prominent role in the nation’s business community.

Franchise Canada Directory 2022

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 a 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 FranchiseCanada.Online) offer valuable information and resources about franchising, as well as detailed listings in its online member directories. These 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.

Trust

We deliver 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 doesn’t 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 and 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 a franchisee and franchisor can 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.

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.

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.

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, FranchiseCanada.Online • Franchise Canada TV • Franchise Canada E-News • Franchise Canada Chats podcast • Franchise Canada Show tradeshows • CFA Starter Kit

Canadian Franchise Association 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.

Credibility

Lead Generation

Education

Networking

Advocacy

Resources

Why Choose a CFA Member? Investing in a franchise that’s 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

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

Canadian Franchise Association 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/franchise 1.800.263.4774

Franchise Canada Directory 2022

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 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 means there’s 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.

Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

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

• Undertake to provide franchisees with operating systems and support services to help their businesses grow in ways that are effective, efficient, and profitable; • Continue to evolve the franchise system through research and development of new products and services; • Handle 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 • Provide 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 Step-by-Step Guide to Franchising resource article on FranchiseCanada.Online takes you through the path to making a franchise purchase, hitting the highlights of finding your franchise fit, building a business plan, understanding franchise finance fundamentals, and navigating the franchise disclosure document, as well as a handy checklist of questions to ask the franchisor and other franchisees.

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Franchise Canada Directory 2022

The Franchise Advantage

From support to resiliency, here’s why franchising could be the best model for you

f you, like many Canadians, dream of running your own business, franchising could be the perfect way to make that dream a reality. Just like the owners of independent businesses, franchisees run their own business, manage their staff and operations, and are involved in their communities. Unlike independent business owners, however, franchisees also have the support of a franchise system, and access to the knowledge and experience of a network of franchisee peers. In fact, there are many advantages to the franchise business model. Supports for success Franchising is about sharing success. The achievements 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 gain access to consumer awareness and loyalty in the Canadian marketplace, be it nationally, regionally, or locally. This instant brand recognition can bring many advantages, including a stronger position when applying for a business loan. As a franchisee, you’ll benefit by being licensed to use the franchise system’s proven branding, trademarks, and proprietary products, services, recipes, etc. 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 risks, if you work hard and follow the system, you can reduce the risk of business failure and increase your likelihood of success. The franchise system can save you time and money by keeping you up to date on what’s happening in your market. Through the franchisor, you can stay on top of things such as business trends, research and development, new marketing initiatives, and changes in customer tastes or behaviours. This allows you (and other franchisees in the system) to focus on the day-to-day operation of your business, knowing that you have this shared knowledge available when you need it.

As a franchisee, you also have strength in numbers. Many franchise systems have an established supply chain in place, along with established 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. It’s likely that they may have encountered the same issue, and will be able to provide the appropriate advice to help you. In many systems, there are opportunities for franchisees to come together to share ideas, experiences, and best practices as part of a franchisee advisory group or at a franchisee convention. With franchising, there’s 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. Weathering the economic storm Franchising has also proven itself to be a resilient business model in difficult economic times. During the Great Recession of the late 2000s, according to Franchise Canada 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. Some franchise systems successfully expanded during that time. More recently, franchises have proven to be some of the most adaptable businesses during COVID-19. No one can deny that the pandemic has changed the way we do business. But franchises have stepped up to those unprecedented challenges and taken them head on.

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THE FRANCHISE ADVANTAGE Because franchisees operate within a proven franchise system, franchise brands can more easily provide much-needed support during challenging times. While an individual franchisee may not have experience with a crisis like the pandemic, 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 market 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. 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 their pivotal first year. During an economic downturn, Canadians who’ve been hit hard by 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 always need, from healthcare and cleaning services to haircare and fitness. Certain franchises also provide essential services, including shipping services and pet care, and remained open during the pandemic. What’s more, tough economic times won’t stop Canadians’ entrepreneurial spirit. For some, the shake-up of the pandemic—whether that meant a job loss, time working from home, or just a break to re-evaluate one’s life—showed them that they didn’t want to go back to the corporate world, and many are now looking to make their business dreams become a reality. For many, franchising is a strong candidate for making that happen.

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Franchise Canada Directory 2022

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 provide 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’s 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. 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. 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.

Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

10 REASONS TO BECOME A FRANCHISEE 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. 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 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.

Franchise Canada Directory 2022

10 REASONS TO BECOME A FRANCHISEE 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’ll 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 naught 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 FranchiseCanada.Online.

Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

Meet Your Franchise Match

How to prepare for and evaluate your meeting with the franchisor

s a prospective franchisee, you understand that carrying out the proper due diligence is critical to your future success. That’s why you’ve conducted thorough research on the franchise brands and opportunities you believe will help you realize the dream of operating your own business. Through this research, you’ve pinpointed the opportunity that resonates with you best, and have been in contact with the head office team to learn more. With both parties enthusiastic and engaged, it’s time to take the due diligence process to the next level. They say a franchise agreement is like a marriage, with two different sides coming together to create something of value for all involved. This makes it vitally important for you, as a prospective franchisee, to meet with the key people you’ll work with if you enter into this franchise relationship. Just as you’re evaluating the company, they’ll also be gauging your fit within the system’s culture to help ensure a good match. The best way to accomplish this is by meeting face-to-face with the franchise support team at their head office, as part of the franchise discovery day. Here are five tips to help you prepare for this pivotal meeting with the franchise team, so you can put your best franchising foot forward. 1. Do your homework. While the franchisor will expect you to have questions about the brand and opportunity, they’ll also want to see that you’ve already done your own research prior to meeting in person. Bring any documentation of your research, along

with notes you’ve made along the way. You should be ready to talk about your experience and qualifications, as well as with what you’ve already learned about the brand. 2. Ask the right questions. Franchisors will be able to learn a lot about you and how well you’ve prepared based on the type of questions that you ask in the face-to-face meeting. Write down any questions you have as you conduct your research and bring them along. Posing thoughtful questions based on the investigations you’ve made shows the franchisor that you’re thorough, proactive, and committed to learning more about their system. 3. Be enthusiastic. Successful franchisees are those who are passionate about their franchise brand and the product or service it provides. Be sure to showcase your knowledge and enthusiasm for the concept in your meeting. Don’t worry about whether you’re an expert yet, because you’ll receive operational training when the time comes. What can’t be trained is a genuine passion for the brand and excitement about providing a high-quality, consistent experience for the brand’s customers. 4. Showcase your professionalism. Franchise systems are looking for franchisees who will act as ambassadors for the brand. This means they’ll be looking for professional candidates who look polished and can communicate clearly. Franchisors want to know that you’re organized, courteous, and would represent their brand well in the marketplace.

Franchise Canada Directory 2022

MEET YOUR FRANCHISE MATCH 5. B e proactive. Choosing to invest in a franchise is a decision that can’t be taken lightly. You can show the franchisor you’re interested and taking the process seriously by enlisting the help of franchise support professionals. In addition to providing you with the support, knowledge, and guidance you’ll need throughout the process, consulting with experts, like a franchise lawyer or accountant, will indicate to the franchise system that you’re a conscientious and serious candidate who’s proactively seeking the support needed to make the most informed decision possible. While each franchise system will have its own unique list of obligations, prerequisites, and requirements, you should always plan to bring along these intangibles, along with the information you’ve gathered as you conducted your due diligence, to all meetings with franchise systems. Evaluating the franchise brand Once you’ve met with the franchise support team at the brand’s head office, it’s time to take stock of what you’ve learned and make a final decision about whether you’d like to move forward with this opportunity. You’ll want

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to review your notes and everything you’ve learned throughout this process. Do you have all of the answers you need to move forward? If not, plan to follow up and ask any further questions so you can make the best possible decision. As you evaluate your experience with the franchisor, here are some questions to consider: • Do you have enough passion for this brand and its offering to act as a brand ambassador for the years to come? • How do you feel about the people you met from the franchise support team? Are you comfortable working with these people, especially as you navigate any challenges? • Does the culture of the system match your expectations? Does it fit with your own personality and unique requirements? • Do you have any “gut” feelings that are telling you this is the right opportunity for you? Are there any “red flags” that are causing you to rethink any elements of this partnership? Beyond your meeting with the franchise team, you should also have conversations with existing franchisees to get their take on being a part of the system. It’s important to ask them questions so you can learn about how their experience compares with what you’ve discussed with the franchisor. You should speak with several franchisees as part of this validation process and should include franchisees who are performing at different levels (i.e. speak with those who have lower sales, along with the top performers). Before you sign the franchise agreement, you need to be 100 per cent ready to move forward with your franchise purchase. Take the full 14 days to review the agreement and all supporting materials, and don’t forget to enlist the help of your team of franchise support professionals.

Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

MEET YOUR FRANCHISE MATCH

The Importance of Franchise Due Diligence Investing in a franchise is a major decision, and not every franchise will be right for every individual. That’s why it’s essential for you to fully investigate the franchise systems in which you’re interested. Part of the due diligence process will likely include meeting with representatives from franchise systems. Here are a few critical questions that you should be able to answer or have answered to your satisfaction about the franchise system as you research the brand and meet with key members of the head office team: - What makes the franchisor’s product or service unique? - How many years has the franchisor been operating? How many units do they have? - How does the franchisor choose franchisees? How are qualifications reviewed? - What kind of support, including initial and ongoing training and operational assistance, does the franchisor provide? - Is the franchise system a member of the Canadian Franchise Association (CFA)? Visit FranchiseCanada.Online for more resource articles to help you conduct the proper franchise due diligence. You can also find more information about CFA member franchises at www.LookforaFranchise.ca.

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Franchise Canada Directory 2022

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 back in January 2020, John Leavitt, partner at BDO, shared information that prospective franchisees can use 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 can 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 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. It’s important to build a business plan because you want to map out and ensure your business is going to succeed. This is a crucial part of the due diligence process that can improve your chances for building a profitable franchise business. Your business plan should include: 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; and • 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.

Canadian Franchise Association 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; and • 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 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; and •O utline how you’ll 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; •O utline your current competitors and future prospects; • Itemize strengths and how you’ll use them; • I temize weaknesses and how you’ll address and strengthen them; • Estimate the market share you plan to achieve; and •D escribe 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’ll operate; •E xplain how you’ll produce your products or services; and •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 or 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 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 2022

BUSINESS PLAN AND FINANCIAL MANAGEMENT BASICS should provide as many details as you can about your location and the role it’ll 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; and • Leases/contracts and other legal documents, as they pertain to the franchise you’re 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; and • 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 on previous page) 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.

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; • Accounting fees to prepare the appropriate financial projections; • Marketing costs including plans, website, print materials, tradeshows, etc.; • Inventory purchases; • Land and/or building and equipment; • Staff; • Working capital reserves to cover operating losses until the business is capable of generating sufficient revenue;

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• Monthly overhead for six to 12 months; • Personal living expenses for six to 12 months; and • 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’s 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; and • Most importantly, that the franchise you’re buying is financially viable and that you can repay the loan!

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Franchise Canada Directory 2022

THE PROCESS OF OPENING A FRANCHISE

What to expect after you sign the franchise agreement

ranchising is a great way to make your dreams of owning a business come true, but there are several essential items to consider before putting pen to paper. Carrying out proper due diligence ensures the success of a business and signing the franchise agreement is only the beginning of the work needed to get a franchise started. Here, you’ll find the list of steps that franchisees normally take before opening their own business to the public. These steps begin after signing the franchise agreement, and take business owners on the path to the grand opening day, when they can begin serving their customers and community. SITE SELECTION: Finding the perfect location in their community ensures that franchisees can reach a steady and loyal clientele. The site selection process can work differently across different brands. For example, if the site has been secured prior to signing the franchise agreement, the site details will be included in the franchise disclosure document. These details include demographics, traffic counts, information from the landlord, and any other relevant information pertaining to the location.

If the site has yet to be selected, the franchisee may sign a commitment agreement instead of a franchise agreement, and then the site selection process will take place. When the site is found, they’ll then sign the franchise agreement, which will include the site details. Alternatively, some franchisees will sign the franchisee agreement before the site is selected, and when the site is found, will sign an addendum outlining the location details. In both cases, the franchisee will receive a new disclosure document including the site details, and will sign the acknowledgement of receipt for the site. After that comes signing the lease, or a sub-lease if the location will be rented by the brand’s head office. If the franchisee is responsible for building out their new location, they’ll look to hire a local engineer or architect who ideally has experience with building a similar type of business in their community. This ensures that the builder has knowledge of the building requirements according to their municipality. As the site is under construction, the franchisee will be working with the architect, engineer, general contractor, and various tradespeople to get the site built to the specifications outlined by the franchisor. The next step

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THE PROCESS OF OPENING A FRANCHISE is to start to work with the franchisor to hire staff and ensure the key staff are trained. HIRING: As small business owners, franchisees are responsible for staffing, and get the final say in who they hire to join their new team. However, the hiring process can vary depending on the company involved. A franchisor may provide general advice and hiring criteria for who to look for, such as the type of experience in prospective employees. In other situations, a job fair can be used for the hiring process, which will consist of the franchisee and a team member from head office interviewing candidates together. The hiring process is vital for franchisees because they should onboard staff who will represent their brand respectfully while helping to grow the business through providing excellent customer service and building repeat clientele. As franchisees make the staffing decisions, they’re also responsible for keeping the ship afloat and ensuring that their staff numbers are maintained, and team members are satisfied. This includes making important decisions regarding training, disciplining, firing, and wages while ensuring that they’re not under or overstaffed. Additionally, since they’re a small business owner, franchisees should be educated in the provincial employment standards and labour laws that outline how much their employees are legally entitled to earn. Wages are more than just the pay cheque that employees receive, and include taxes, benefits, and workers compensation. TRAINING: The training process kicks off when the franchisee attends and graduates from training school with the franchise brand, which can last anywhere from a few days to a number of weeks or months, depending on the industry and size of the brand. The next step is to train the franchisee’s employee team up to the standards and guidelines of the brand. This is usually done by the franchisor, who has a training team that will go on site to educate the new staff about day-to-day operations and policies. This can take one week up to one month. Most often, brands use a “train the trainer” technique, which consists of selecting key staff members to train, who then use their learning to educate the rest of the team. Training is all done before the business’ grand opening, during which supplies will continuously arrive to the site. The staff and training team work together to organize the location and get it ready for its big day. Once the employees start working, it’s up to the franchisee and their key staff, often the manager and/or assistant manager, to provide guidance and support to

their team about how to operate, rather than the franchisor being on site to oversee operations. The goal of training is to ensure that customers receive the same experience and high-quality product that they know and love at every franchised location. Thorough training equips franchisees and their team with the knowledge of the brand that they can replicate to provide successful results for their business. MARKETING: To ensure continued success, franchisees will need to work with the franchisor to develop a strong marketing plan for their location. Larger brands normally have a national advertising and marketing plan created by the head office team in collaboration with the Franchise Advisory Council (FAC) that outlines the overall brand marketing plan. The franchisee is typically responsible for their own local store marketing, as they’ll have a connection to their community. An established franchisor will often provide franchisees with a local store marketing tool kit, which can typically be accessed through the franchisee intranet. This tool kit can include checklist items to complete such as approaching a local school to set up a new program or joining a Business Improvement Association on behalf of the brand. When it comes to smaller brands, there will generally be more collaboration between the franchisor and franchisee to come up with a marketing plan that’ll work for the franchisee’s location. While it’s ultimately up to the franchisee to create their local store marketing plan, head office can also provide assistance. For example, they can send someone trained in operations or local store marketing for a day to help with community outreach programs and other marketing techniques. Additionally, a marketing manager can work with business owners to create a grand opening plan, including organizing a “Friends and Family” event before opening to increase customer outreach. It’s important to remember that every franchise is unique and may have different steps, people to meet along the way, and rules and regulations to follow during the opening process and while the business is up and running. The steps to opening a franchise may seem long and daunting, but franchisees are provided with abundant support from head office during the process to ensure they have the tools they need to succeed. Once a solid location is picked, staff are hired and trained, and marketing promotions get underway, then franchisees are set up to find success with their new business endeavour!

Franchise Canada Directory 2022

5 THINGS YOU SHOULD KNOW WHEN HIRING FOR YOUR FRANCHISE Tips and advice to help you hire star employees for your franchise

s a franchisee, you’re responsible for the hiring of all staff members in your franchise. These employees will represent your brand and interact with customers every day, so it’s important that you onboard people who are an ideal fit for your team. While skills and qualifications are the first step to the hiring process, you should look beyond those to consider the candidate’s personality and performance. You should also examine where you want to post your job openings to ensure you attract the right candidates, and keep in mind that you always have your franchisor and fellow franchisees as support. Throughout the hiring process, you should consider how a candidate will work with your existing staff and customers, and you can get the second opinion of a colleague before onboarding a new employee. Here are five tips that you should know when hiring for your franchise. 1. Brainstorm realistic qualities and skills for your ideal candidate There are many qualifications that you’ll be looking for when you hire team members. When thinking about who would make the ideal candidate for a position, it’s important to think beyond the job title and responsibilities. You should consider what type of skills, qualifications, and personality traits you’re looking for. But keep in mind that there’s more to a candidate than just the skills and experience written on their résumé, and you’ll find out more about their personality during the first phone call or interview. For example, for management positions, you may want a motivating leader who’s also a team player that can

positively influence and inspire other staff. For customerfacing positions, you could look for a social personality who isn’t afraid to approach customers and strike up a conversation to make a sale. Some positions may require staff to be able to work independently or as part of a team. You should also think about your skills in reading people from a first impression. Ask yourself whether you’re able to gauge whether a stranger will be a good or bad addition to your team. The first interview will allow your candidates to delve into their personal skills and qualifications, but it also gives you a chance to see how they interact with people, their general demeanour, and if they talk about themselves with passion and can represent your brand well. 2. Diversify your job posting process Today, most jobs are posted online to a variety of websites, which helps promote postings to a wider range of candidates. However, this may overwhelm you with many applications that can take a while to sort through. The key is to post your job openings on websites that ensure you receive applications from the most suitable candidates. You should also tailor the description, duties, and qualifications to include the technical and experience-based skills that you’re looking for, to ensure that you’re getting applications from those who are most qualified. You can also consider participating in job fairs, but should keep in mind that you’ll need to do adequate promotion beforehand in order to ensure that your target candidates will show up. When hiring for your franchise, you can ask friends and family for referrals. They may know young students

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5 THINGS YOU SHOULD KNOW WHEN HIRING FOR YOUR FRANCHISE looking for a part-time job or adults looking for a new management position, and are likely to recommend hard-working and reliable people to help support you in your new endeavour. Once your franchise is up and running, you can then ask your best employees to recommend candidates for open positions. As a star employee, they probably know people similar in personality and work ethic and will know what type of person would help your business thrive. As for social media, you’ll likely use it for the marketing and advertising of your franchise. It’s also a great place to post job openings to prospective candidates. Since your followers will include some loyal customers, you can reach a network of interested applicants who know your brand. 3. Don’t be afraid to consult your franchisor and fellow franchisees As a franchisee, you consistently have the support of your franchisor behind you. If you’re stumped about what to include in a job description or what skills and qualifications to look for in candidates, consider reaching out to your franchisor for help. After all, they built the brand and know what type of person they want to represent it. Plus they’ve likely seen hundreds of employees from various stores and know what work experience and personality works best. Your franchisor may also have job description templates that they can offer to help get you started in the hiring process. You can also contact fellow franchisees, some of whom have likely hired dozens of people during their franchising careers. They’ve hired for the exact same positions and know what qualities made for the best candidates. They may have learned from hiring mistakes and can offer advice for you to avoid making the same errors. While you can reach out to any franchisee in the system, you should also meet with owners in nearby territories. They could have recommendations for employees who are looking to move closer to your franchise location, or can offer referrals from their star employees for friends or peers looking for a job in your area. 4. Create a two-step hiring process during interviews After posting the job and drumming up applications, it’s time to sort through the résumés and narrow it down to a short list of applicants to interview. Your first interview will allow your candidates to shine a spotlight on their skills and experience, while also giving you a feeling for their personality and cultural fit with your franchise. During the interview process, you’ll likely narrow down your short list once more to a small group of candidates who you think would thrive in the position.

However, before you decide to pick an individual, you might want to consider a two-step hiring process to get the opinion of another staff member. This will eliminate any biases you may have and allow you to discuss the pros and cons of each candidate together. During this second interview, you and your teammate can sit down and ask deeper questions to candidates you’re seriously interested in. You can also consider having one person lead the interview while the second person focuses on the candidate’s body language to determine how confident they are in their responses to different questions. As always, references can also shine a light on candidates and can provide additional information about the person from a former supervisor’s perspective. They can tell you about the person’s work ethic and personality. One of the most important questions you should ask a reference is, “If you had the opportunity to hire this person again, would you?” The answer should always be a resounding “yes!” 5. Examine candidates through the lens of a customer While the focus during the interview process should be on whether a candidate will be a good fit within your team, you should also consider their skills and personality through the perspective of a customer. After all, the new hire will consistently represent your brand while on the clock, and you need to consider how they will interact with consumers. Everyone within the franchise system contributes to the customer experience, so it’s important that each person has the skills and knowledge it takes to create a good one. If the candidate seems timid and shy during your interview, it’s possible they’ll be the same way when approaching and interacting with customers. Someone with a bubbly and outgoing personality during the interview will probably also be that way when greeting and serving customers. Having years of customer service experience doesn’t necessarily mean they have the gogetter skills it takes to close a sale and create satisfied and loyal customers. Happy customers will share positive feedback with friends, family, and colleagues. However, unhappy customers may share negative feedback with their network or could turn to the internet and social media to express their concerns. You should consider what customer experience each candidate seems likely to create and use reference checks to verify their skills. Also keep in mind that some individuals can be trained to develop their skills over time, so a candidate with minimal customer service experience but an ambitious attitude can grow into a star employee for your franchise.

Franchise Canada Directory 2022

FRANCHISING FORMATS

A guide to the different formats available to expand to multiple locations

ranchising provides a way for everyday Canadians to realize the dream of building their own business, by allowing you to go into business for yourself, but not by yourself. As a franchisee, you own and operate your own franchise business with support from the franchisor, which will outline the systems you’re required to follow to ensure consistency from one franchise location to the next. While franchising offers entrepreneurial-minded people the opportunity to open a business, it also provides different avenues for franchise growth. Most franchisees start out by signing a single-unit franchise agreement. They’ll own and operate this franchise location, often working on the front lines to ensure the business finds initial success. Once the franchise is established, you may decide to build on this success by investing in more franchise locations. There are three different methods you can use to expand your franchising enterprise to more locations: 1. M ulti-unit franchising: A multi-unit franchisee expands through multiple single-unit franchise agreements, which may or may not be in the same geographical area. 2. A rea development: An area development agreement is an agreement to open a specific number of franchise locations within a specific geographical area over a specified period of time. As an area developer, you’ll typically receive exclusivity for your assigned area, as long as you meet the timelines outlined in your development agreement. You’ll

enter into a new single-unit agreement for each new location as it opens. 3. M aster franchising: A master franchise agreement provides the master franchisee with the ability to sub-franchise and grant franchises to other franchisees within the assigned territory. This is different from area developers, who are responsible for opening these locations on their own. If you enter into a master franchise agreement, you’ll usually be required to open at least one franchise location that you operate, and to provide support for the other franchisees in your assigned territory. You’ll receive a portion of the franchisee’s loyalties as compensation for providing this support. Franchisors will often look for master franchisees in new markets that they’re looking to develop, including international and remote locations. Expansion is great! There are many benefits of expanding to multiple locations: • The more franchises you own, the greater the opportunity to make more money! • You’re diversifying and increasing your chance of finding success – if one location isn’t performing as well as you’d like, this can be offset by other more successful locations. • The franchisor will often provide discounts on the initial franchise fee to encourage the purchase of more units within the system.

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FRANCHISING FORMATS • There’s an opportunity to incorporate economies of scale for the administrative costs across multiple locations because you can share training expenses, employees, and management. • You don’t have to go through a steep learning curve with each location you add, as you’ve already completed the training and are familiar with the franchisor’s operating system. • A s you expand, there are opportunities for volume discounts and rebates that will help in lowering costs. Proceed with caution • If you’re looking to invest in multiple franchise locations, you’ll need to have the financial capacity to do so. While the higher investment can be offset by greater returns, you’ll need to have the initial resources in order to make this investment. • You’ll usually need to provide proof that your first franchise business is performing well before financial institutions will lend you additional funds to expand. • You need to make sure you’ll be able to meet the terms and schedule outlined in an area development or master franchise agreement, or the agreement could be terminated, with you losing out on any upfront fees, and possibly losing exclusivity for your territory. • There’s more risk involved in owning and operating multiple locations, and you need to have the entrepreneurial chops to overcome the many challenges that will come your way.

the brand evolves, it can get expensive with multiple locations. • You’ll need to invest in the necessary infrastructure and technology to help you efficiently manage multiple locations. • A s a master franchisee, you’ll have the challenge of finding sub-franchisees while still operating your own franchise. As with any franchise opportunity, it’s important to do your research and due diligence to see if these multiunit franchise formats are the right fit for you. Take the time to thoroughly review, with expert help, any singleunit, area development, or master franchise agreements. Also take the time to talk with other franchisees in multiunit agreements so they can share their experience with the format and provide the necessary context to help with your decision-making process. Expert help! Looking for franchise professionals who can help you in assessing your franchise expansion plans? Turn to page 231 for a full list of Franchise Support Services suppliers.

Other things to consider • A s you go from operating one location to multiple locations, you’ll likely no longer be working in your business, and instead be working on your business, as you can’t be in all locations all the time. • Multi-unit operators should have strong leadership and management skills, as you’ll need to hire others and delegate tasks. • If you need to make updates or renovate as

Franchise Canada Directory 2022

DUE DILIGENCE CHECKLIST

hen you invest in a franchise, it’s important to keep in mind that you’re investing more than just money — you’re also investing your time, passion, and hard work. With the resources required to start and maintain your franchise venture, you’ll want to have a complete picture of the franchise opportunity before you sign on the dotted line of the franchise agreement. That’s where due diligence comes in. Lyn Little, partner with BDO Canada LLP, says the due diligence process also allows prospective franchisees to determine whether they’ll be investing in a bona fide franchise opportunity, with all legal and financial requirements in order. “It’s important for a prospective franchisee to conduct proper due diligence, as this may allow the franchisee to identify potential red flags in the business, or indicators which may suggest that the franchisee should look at an alternate franchise system, or request reductions in the franchise fees, royalties, or other fees to the franchisor,” says Little. When you’ve checked off every item on the following list, you should be ready to make an informed decision and be prepared to invest in the perfect franchise opportunity for you. Don’t forget to ask lots of questions, so everything is as clear as possible at every step of the investment process. For questions to ask the different people you’ll meet along the way, consult the Checklist for Franchisees on page 43. Research the franchise system You should undergo a self-assessment, outlining your skills, assets, and abilities, before looking into specific franchise opportunities. Once you have a good idea of what you can contribute to your franchise business, you can create a short list of franchise systems that you want to research further. These systems should take the

aforementioned strengths and abilities into consideration, along with your interests and passions. You can start by heading online to review the system’s franchise website and any other information about the system available online. You can also conduct this research in-person by attending a franchise-specific tradeshow, where you can meet and speak with representatives of the franchise system, and/or by visiting one of the brand’s established franchise locations so you can see firsthand how the franchise operates in its market. Some key factors to look for when researching franchise systems include franchisee selection, training, communications, marketing, problem-solving, rewards, and corporate culture. You’ll also want to evaluate the market, consumer demand, location, resale value, whether it’s an established or new and emerging system (and the pros and cons of each), and whether it’s a resale location into consideration. Submit a completed franchisee application form to the franchise system Once you’ve started researching specific franchise systems, you can fill out and submit a franchise application form, which will provide the franchisor with important details about your background and experience, your financial information, and the skills you have to offer. Keep in mind that as you’re conducting your due diligence, the franchise system will also be carrying out their own research to determine whether, based on their experience, you’ll be a good fit as a franchisee of their system. Meet with current franchisees of the franchise system “You’ll want to talk to eight to 10 existing franchisees of the franchise concept that you’re most interested in. You’ll want to learn, from their perspective, what is required to drive success. You’ll also want to know a lot

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DUE DILIGENCE CHECKLIST about their relationship with their franchisor,” advises Gary Prenevost, president of FranNet, Southern Ontario and Eastern Canada. These franchisees should have different levels of experience, and should be chosen from franchise locations at different performance levels. Meet with franchise system representatives You’ll get to this stage if you’re almost ready to make a purchase. You should be prepared to fly to the franchisor’s head office for a Discovery Day, where you’ll meet with their leadership team and get a final sense of whether the culture will be a good fit. “Essentially, you’re going there to look for reasons to say ‘no’ and hope that you don’t find any. You won’t make a purchase decision while you’re there, but usually within one to three weeks after you return, you should be ready to sign a franchise contract and pay the initial franchise fee,” explains Prenevost. Most established franchisors have a franchise review process in place that clearly defines their practices and procedures to help prospective franchisees make informed decisions, so you can follow this process, asking any questions that come up along the way. Build a comprehensive business plan A business plan lays out the goals of your franchise business, providing banks, investors, and lenders with an idea of the scope and specifications of the project in which you’re investing. This plan should include cash flow projections for the first three to five years your franchise will be in business, outlining the earning potential of your location and the strategy for achieving these goals. Your business plan should start with a summary of the franchise you intend to purchase, including essential background information about the franchisor and their track record. The financial section of the business plan should

include your personal financial information, along with financial projections for your franchise. A realistic budget should also be provided, with details about the cash flow projections and profit and loss forecasts. The business plan should also analyze the marketplace, and should contain information about the products and services you’ll be providing, consumer demand, and the customers who’ll be looking for these products and/or services. Consult with franchise professionals As you contemplate your franchise investment decision, you’ll want to enlist the help of franchise professionals who can provide you with the guidance you need to make the right decision. • A franchise consultant can help you identify your objectives as you carry out a self-assessment, help you understand the franchisee/franchisor relationship, introduce franchise opportunities that you may not have considered, assist in evaluating and analyzing opportunities, and introduce you to other franchise experts. • A franchise accountant can help you pinpoint the profitability of the venture, and can also help you calculate the start-up costs, assist you in reviewing

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DUE DILIGENCE CHECKLIST documents from the franchisor, advise you on the advantages and disadvantages of a franchise investment opportunity, and help you put together your business plan. “In preparing to purchase a franchise, the prospective franchisee should look at fixed and variable costs to determine the break-even sales figure required to turn a profit. Understanding this figure, and the prospective market the franchisee will operate in, will allow the franchisee to determine whether the franchise location has the potential to generate sufficient revenues to cover costs,” notes Little of BDO. • A representative from the franchising division of a bank can help you determine the financing plan that works best for you and your business, providing financial solutions that are tailored specifically to your franchising situation. A franchise banker can also be an asset when it comes to figuring out your financing requirements so you’ll be able to sustain your business in the long term. • It’s also critical for prospective franchisees to enlist the services of a franchise lawyer, who can explain and elaborate on the details of the franchise agreement, and review and explain the disclosure document, specifically outlining what each party is expected to provide. A franchise lawyer can also help in negotiating any terms or conditions of the franchise agreement as required.

Review the franchise disclosure document In addition to speaking with the franchisor, existing franchisees, and franchise professionals, prospective franchisees should receive a franchise disclosure document once they reach a certain point in their investigation. As an important part of a proper due diligence process, disclosure documents contain a summary of information on the franchisor, its executive team, and its franchise agreements. In Canada, franchise systems are required by law to provide a disclosure document to prospective franchisees in provinces where franchise legislation is in place (currently British Columbia, Alberta, Manitoba, Ontario, New Brunswick, and Prince Edward Island). It’s important to fully review the disclosure document with your franchise lawyer and financial advisors to ensure that you understand the information it contains, including your obligations as a franchisee. Trust your own judgment Ultimately, you’ll be the owner-operator of your franchise system, so it’s essential that you be the one to make the final decision before signing the franchise agreement. “Don’t allow yourself to be sold or unsold by anyone else. Rely solely on your own research and make a decision to proceed only when you can justify how and why this business meets your criteria, and why you know you’ll be successful at running it (or to eliminate the opportunity when you can logically identify why it’s not right for you),” cautions Prenevost.

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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’s 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? • 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, 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?

Franchise Canada Directory 2022

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?

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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? Is pick-up, delivery, or drivethru an important component of the service offering? 13. How often does the franchisor require your premises to be renovated or upgraded and what’s the estimated cost of these renovations/upgrades?

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?

Franchise Canada Directory 2022

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’s 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, location, and 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 don’t 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’re 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?

Canadian Franchise Association www.cfa.ca | www.FranchiseCanada.Online

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’s the length of the postterm covenant and what’s 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?

30. A re you allowed to operate your own website or social media accounts? 31. W hat’s 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 haven’t 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?

Franchise Canada Directory 2022