Starting a franchise in Canada can be a challenge for entrepreneurs that have never attempted to work with a franchisor. Not only do franchisors offer a wide range of contracts and caveats, but businesses success in the competitive franchise world is dependent on plenty of research and smart moves at just the right time. So if you are harbouring the idea of starting a franchise of your own, here are several tips when looking for the right company and starting up the business.
1. Know Your Skillset:
While it may be tempting to pick the franchise industry with the highest growth rates or the best current returns, this is not a good idea for long-term franchise investment. Remember, you may be in this industry for a decade or more: A more successful strategy is to study your experience and passions before picking a business that matches up with your own skill set. If you do not like pets, avoid the pet industry, even if it is booming. If you have no experience in the restaurant market, do not assume you can find and run a successful fast food franchise. Think about your abilities and make a practical choice.
2. Study the Competition:
Franchises are a sign that an industry is large, well-developed, and highly competitive. For the highest returns, study market conditions and the competition that each potential franchise is facing. Your dream company may be a little behind the times when it comes to technology or supply chain management, which will affect your bottom line. On the other hand, extra-popular franchises may have already beaten the competition soundly and reached saturation levels, making it more difficult to win over customers that already frequent other branches.
3. Focus on Growth Areas:
Picking out a location (or multiple locations) is one of the most important steps in starting a franchise. If you are ready to pick out a spot, consider where you will earn the most money. Generally speaking, it is most profitable to focus on BC, Ontario, or individual cities like Quebec where most of Canada’s urban activity is located: More people mean more potential customers with reach. However, many suburbs and certain rural areas also see high growth in the right industries – it all depends on what you choose.
4. Look for Reinvestment:
Reinvestment refers to how much money a franchisor is willing to spending its franchise owners. For example, the popular restaurant Harvey’s reinvests four percent of franchise sales revenue into a fund that franchisees can use for marketing, brand campaigns, and special promotions. In addition to reading the fee requirements, pay attention to special forms of compensation like this. The more flexible and helpful a franchisor is, the more it can help you.
5. Remember What Canadians Love:
When in doubt, look to both the newest trends and the oldest classics. Brands like Canadian Tire and Tim Hortons have staying power: A lot of people are already used to visiting them and know what to expect. This can make it much easier to grow your customer base – in non-saturated areas – than investing in potentially risky, brand new company.