Franchising FAQs
What is a franchise?
A franchise is a business model where an individual (franchisee) buys the rights to operate a business under the branding and guidance of a franchisor.
How does franchising work?
Think of a franchise like buying a ready-made business package. You pay to use a well-known brand name, products, and processes. In return, you follow their rules and pay fees. You get to run your own store, but you're part of a bigger company's network, which provides support and benefits from your success.
What are the benefits of franchising?
A franchise allows the franchisee to benefit from the established brand, products, operations and marketing of the franchisor and, while following business guidelines, run their own business.
How much does it cost to open a franchise?
Costs vary significantly as it depends on what is required to build your location, the equipment required and the inventory required. You will need to consider these costs: Franchise fee, construction and design fees, initial rent + security deposits, launch expenses + working capital and your own professional fees (legal and accounting).
How can I buy a franchise in Canada?
To buy a franchise in Canada, start by researching opportunities in your desired industry and that are within your budget. Consider attending franchise expos to learn more about available options and reach out to franchisors directly. Once you have a franchise you are seriously interested in, most provinces require that the franchisor provide you with a Franchise Disclosure Document – which is a legal document that includes detailed information about the franchise company. After 14 days of receiving this agreement if you would like to proceed then you can sign your franchise agreement. Please note that rules and regulations vary between provinces and you will need to seek legal advice before entering into any franchise agreement.
Why do franchisees pay royalties and marketing fees?
Franchisees pay royalties to the franchisor as a percentage of their sales to continue using the brand, support, and resources. The brands in turn invest ongoing in product development and operations which benefit all franchisees. Marketing fees are used to design and create content and deliver marketing campaigns that benefit all franchisees by promoting the brand.
