How Franchising in Canada can be a Good Opportunity?
Brands today wish to expand their business to countries outside their home country. But, Franchising across countries has its challenges. Not every product or service works well within countries with cultural differences or legislation differences. Here is where the role of a consultant comes in. Consultants bridge the gap between the franchise brand and the countries overseas.
In the current pandemic, the franchise businesses are the first to reform because if in the case of an equity business, there is a lot of assets involved, and manpower is stilled. There are a lot of things to be managed in this case. While franchising is entrepreneur-led and network plays an important role. In India, franchising grows in every adversity because there are job losses, smaller cities have lower opportunities and there is diversification from the business as people were already running something. All this encourages franchising. There has been a tremendous rise in the new entrepreneurs in franchising in India.
Coming to global franchising, Gareth Parry, President, InnoFran Consultants from Canada, in an exclusive conversation with Franchise India, discusses the best practices to expand the brands internationally, especially in Canada.
According to Gareth, the current scenario in Canada shows a rise in conversion opportunities for small businesses in almost all areas. Right now, the focus is on which industry is thriving rather than on which one is dying. QSR, fast-casual market, technology-based sectors, senior care, health-related products have a very good scope of growth. Personal fitness is now suffering but in the future, it is expected to grow tremendously since the markets are slowly opening up.
Gareth views this situation as a conversion opportunity. Canada is already witnessing small businesses converting. Franchising companies are looking for smaller chains that will absorb into their systems. India is a country where there are a large number of small businesses. Hence, there is a wonderful opportunity for them in Canada.
A conversion opportunity is only good when it has a dollar plus effect. This can happen only if the supply chain is more complimenting and the brand gets more customers. Also, fresh capital is required in conversion franchising which the brand has to support to rejuvenate the small business that is out of money.
Location and Asset
Location plays a very important role in the retail environment unless it’s a destination brand. But, sometimes even the best location becomes a hindrance. For example, the malls charge a huge rent and with the shutting down of malls in lockdowns, the landlords become edgy.
The government of Canada is supporting the rent scheme, where the government pays 50% of the rent, while the rest 25% is waived off by the landlord and the remaining 25% is given by the tenant.
Market Entry in Canada
Before entering the Canadian market one must understand that it is very necessary to have the proper preparation. International brands look for different brands in different regions. Test markets are done in regions where there is less legislation and then moved to cities like Toronto and Montreal.
Canada follows strict criteria to reduce the arbitration of failure, especially in franchising. Proper documents and disclosure agreements are all needed before entry. Canadians take time to trust other brands and other people. That is the reason one needs to pay a consultant to get themselves ready to enter the market.
When talking about the brands in Canada, the majority of them are quite strict about financial qualifications, background, and competitive brands. A lot of brands give a list of competitive brands. People who owned these franchisees are disqualified for their franchisees. Also, the companies look for someone who can invest their own money and who has a good credit score.
Growth Sectors for International Franchising
On the industry side, Canada is a multi-ethnic country and the demand for restaurants and hospitality is high. Again, the service industry is large mostly dominated by American brands. There is always going to an opportunity but one has to face strong competition.
There is going to be a huge demand in the education industry. Supplement education especially is expecting demand, since the immigrant population is large and they want their kids to have better qualifications and jobs to outwit others.
Another market is the senior care market. There is a huge senior population in Canada as well as an immigrant who has seniors in their home country India. This market is still unexplored and areas like senior care, meal delivery, and other services would develop.
Fitness will grow in the future. Tech-based, smart technology and AI are all areas of growth in the future.
Edited By: Vaishnavi Gupta