Franchising In Canada

Finding a franchise that's perfect for you can be a slow and difficult task. That's why we've organized the most comprehensive franchise directory in Canada in a few different ways, to make your search as simple as possible. Search our franchise directory alphabetically, by category, by your investment level or by province, and discover why so many Canadians are using Buy That Franchise today.

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Questions that need to be asked

The questions will vary from franchise to franchise

The questions that need to be asked will vary from franchise to franchise. For example, if the franchised business involves bricks and mortar there will be questions regarding the premises such as: (a) control of the premises (e.g. does the franchisee lease the premises directly or do they enter into a sub-lease with the franchisor), (b) the franchisor’s site selection criteria (rent, square footage, location etc.), (c) initial inventory requirements, and (d) tenant improvements.

If the franchised business is home-based the questions will probably be limited to what type of phone lines, Internet supply, computer specifications are required. If the franchisee is required to purchase or lease a vehicle, they will need to know the franchisor’s vehicle specifications.

The purpose of the questions below is to give the prospect general information about the franchise system and the integrity of the franchisor.

Disclosure Documents are a Wealth of Information

The good news is that often the information is relatively easy to obtain if the franchisor is required to provide Disclosure Documents in any jurisdiction. If the franchisor is required to provide a Disclosure Document in Canada or a Uniform Franchise Disclosure Document in the United States, the prospect should ask for a copy of the document(s) even if the franchisor is not required to provide these documents in the franchisee’s geographic area. Disclosure Documents offer a wealth of information and can provide answers to many of the questions listed below and the franchisee can rely on the information, as the franchisor’s directors are required to certify in writing that the information is correct and complete. If the franchisor is reluctant to provide a disclosure document, even if they are not legally required to do so, you need to seriously consider why they are reluctant.

If the franchisor is a member of the Canadian Franchise Association (CFA), they are required to provide a disclosure document in the format stipulated by the CFA. In particular, Disclosure Documents can provide the following:

Franchisor’s Financial Statements prepared to Engagement Review Standards in Canada and Audited in the United States.
Contact information for franchisees both past and present.
A list of any company owned and operated outlets.
A list of any franchisees or company owned and operated outlets that have been terminated, cancelled or closed.
How long the franchisor has been in business.
When the franchisor commenced their franchise program.
A summary of the total initial investment that a franchisee is required to make.
All initial and ongoing fees, and any advertising contributions (including any investment in opening promotions).
If the franchisor has offered franchises in any other line of business.
Backgrounds and relevant experience of the principals and management.
Description of the initial training program, ongoing training and support provided by the franchisor.
If the franchisor or any of its principals has had previous convictions, pending charges or filed for bankruptcy.
If the franchisee provides any earnings projections and the basis for any assumptions.
Restrictions on what the franchisee may sell.
Restrictions on what equipment, products and supplies the franchisee can purchase.
If the franchisor provides any financing programs to its franchises.
How much working capital the franchisee is required to have available.
If the franchisee is given an exclusive territory and the franchisor’s proximity policies (i.e. how close can they place another franchise to the exclusive territory).

If the franchisor is not offering franchises in an area that requires them to provide Disclosure Documents, a prospect will have no alternative but to ask the franchisor for answers to their questions.

Questions to ask

The following questions are meant to provide a guideline and are by no means exhaustive.

Does the management team have specific experience in the type of business being franchised?

How long has the franchise company been in business?

Is the franchisor properly capitalized or are they relying on the sale of franchises to generate revenue?

How long has the franchise concept been tested?

How long have they been offering franchises?

What is the total initial investment?

What are the initial and ongoing fees?

What type of initial training and ongoing support does the franchisor provide?

How many franchises or company owned and operated outlets have failed?

Have premises been selected? If not, what is the process for finding and securing premises?

What happens if you are unable to find an acceptable location?

What is the franchisor’s policy regarding the control of premises?

Does the franchisor have a reputation for honesty and fair dealing among its franchisees?

Does the product or service have a widespread consumer demand?

Is the product or service marketable in your area?

Is the product or service seasonal?

If the franchisor is the only source of supply for the product, what alternatives are there if the franchisor should fail and the supply of product is terminated?

Is it protected by a trademark or copyright?

Is the consumer pricing competitive?

Is there a fully developed business format (system) for you to follow e.g. manuals and training?

Will you enjoy operating the type of business being franchised?

Canadian Franchise Statistics
Most people don’t understand the impact that franchising has on an economy and would be surprised to learn that around 45% of all retail sales in Canada are generated by franchised businesses.