How do I Buy a Franchise in Canada?

It's important to know how to buy a franchise.

Canadians looking to jump right into business may find the idea of purchasing a franchise appealing, but they may not know how to go about doing it. A franchise offers you the ability to own a business that is known to Canadians, like Tim Horton's, Swiss Chalet or Boston Pizza. These are established Canadian brands with a reputation that has been formed over the years. This means that you have less of a risk than if you were to start up a business from scratch. The process of buying a franchise may seem daunting, but it is relatively easy if you follow some simple steps.

Instructions

1. Research your franchise options. There are thousands of franchise opportunities available to Canadians from both domestic and foreign companies. Franchises are available in different industries and can require vastly different investments. Some franchises can be excellent investments, while others are not. The Canadian franchise association offers a search function on their website (see Resource section). Go to this site and search for an appropriate franchise. You can search on the basis of several criteria, including start-up costs and industry. The CFA only lists members in good standing.

2. Discuss your potential franchise with the franchisers. You should pick a few potential franchises and discuss their offerings with them. The CFA website offers a set of questions that you should ask a franchiser. These include how long the franchise has been in business, what are the future plans for the franchise, what size investment is required and when you should expect to start making a profit. Discuss these matters with the franchisers and select the business opportunity that fits your wants and needs.

3. Raise the money you need to invest in the franchise that you have chosen. There are a variety of ways to do this. If you have the money, you can simply invest it directly into the franchise. Alternatively, you can borrow money, privately or via a business loan, or you can find others to invest in the franchise with you. Entrepreneurs often rely on investments from what are referred to as the three Fs: friends, family and fools. These are people who are willing to take a risk on your business idea in the start-up phase.

4. Pay the franchise fee to the franchiser and sign the franchise agreement. It is advisable to hire a commercial lawyer to look over the agreement before signing it. When you have paid your fee and signed on the dotted line, you are an official franchise owner.

References

• CFA: Find Your Franchise
• CFA: What questions should I be asking franchise systems?
• BCS: The Capital Well