What about franchising in Canada?

The interesting thing about the Canadian market (which I experienced first hand when working out of our Toronto office in May/June this year) is how understated it is – and the key reason for this is the United States.

Despite the obvious similarities between our two countries, Canada’s close proximity to, and heavy trade dependence on, the United States keeps their focus close to home. On the other hand, Canada is often overlooked as a market by Australian exporters – including Australian franchisors – whose focus tends to be on the larger and seemingly more lucrative United States market.

When it comes to franchising, however, Canada is one of the most developed markets in the world, hosting around 1,300 systems and generating in excess of $115 billion annually. Some statistics:

· 45 per cent of retail businesses and 35 per cent of restaurants in Canada are franchised;

· 85 per cent of franchise outlets are situated in the provinces of Alberta, Ontario, British Columbia and Quebec;

· Franchise chains are smaller in Canada than the United States, averaging 60 outlets per system; and

· The Canadian franchise sector is supported by well-developed infrastructure, intellectual property protection, government and court recognition, flexible labour markets, and strong investor interest.

Sixty per cent of franchises in Canada are foreign – mainly American. However, the country is developing an increasing appetite for non-American concepts. This presents good opportunities for Australian systems, which are slowly starting to forge a presence in the market as they realise that doing business in Canada makes a lot of sense.

In the past few years, systems like Cobs Bread (Bakers Delight franchise ), Cartridge World franchise , Jim’s Group franchise and Aussie Pet Mobile have all made the jump from Down Under to the ‘Great White North’, and the gate is open for more. In a country keen to differentiate itself from the United States, the Australian ‘brand’ is well received in Canada, and the franchising business model is well honed and accepted. Despite a few minor cultural differences, the market similarities between Australia and Canada are hard to dispute – big geographies, small populations, healthy economies, multicultural communities, similar legal and taxation systems and, of course, longstanding ties via the Commonwealth.

In the words of Braedon Lord, Director of Bakers Delight Holdings in Canada: “It was the market most similar to our home market of Melbourne. It was the market where we could most likely see ourselves picking up an Australian bakery and plopping in down and seeing it succeed”.

This ‘plopping down’ has proven to be a great success and today, Bakers Delight boasts 24 locations in Canada. While most of these are still company owned, a solid franchising base has been established and the business model refined and proven. (Note: Cheesymite scrolls can warm up even the coldest winter’s day).

Like any foreign territory, however, there are differences and these need to be taken into account when seeking to enter the market. The weather extremes, for instance (it freezes for four months of the year), and distinctive language differences which generally need to be adjusted for local marketing and promotion (a hood will never be a bonnet and a trunk will never be a boot) are just two examples.

Expanding to Quebec (the French Canadian province) adds another layer of complexity. Here, French is the official language of business, government and law – hence disclosure documents, franchise agreements and other business documents must be in French. This is also the case for packaging, labelling, marketing materials and signage. Unlike Australia, Canada does not currently have a national franchising code.

While Master Franchising has been the preferred approach of American systems establishing in the market, there is no ‘one size fits all’ model.

For more information about buying a franchise, or running a franchise, read on.

The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.