| For small, medium and large Canadian businesses that | | | | the franchisor that their brand and reputation will not be |
| are doing well, franchising in Canada and beyond may | | | | ruined. The agreement also details what fees will be |
| be a viable business strategy. The following guide will | | | | paid, what royalties the franchisee will pay the |
| outline the basics that any potential franchisor needs to | | | | franchisor and so on. |
| know for success in North America. | | | | Get Started |
| Why Franchise? | | | | The Canadian, U.S. and Mexican governments have |
| If demand for your product and/or service has | | | | many regulatory and legal hurdles you must overcome |
| reached a certain level of success; unharnessed | | | | in order to get started. Often these rules require |
| growth can get a little tricky. Perhaps you've attained a | | | | registration with local or federal agencies as well as |
| level of growth that has essentially tapped out your | | | | adherence to certain policies and procedures. |
| local market. Franchising can provide an additional | | | | Familiarizing yourself with the governmental red tape |
| revenue stream while expanding on your brand. It's an | | | | surrounding franchising in North America should be |
| excellent way to continue to grow your business in this | | | | your first step. |
| economy without assuming additional risk. Since | | | | Next, you must prepare a document describing your |
| franchisees make the startup investment, you've got | | | | franchising opportunity. This document is called the |
| little to lose. | | | | Uniform Franchise Offering Circular (UFOC). The |
| How Does Franchising Work? | | | | document will be received by potential franchisees |
| A franchise basically describes a relationship between | | | | before any agreements are made or monies paid. |
| two parties. The franchisor is the owner of the initial | | | | In order to sell your franchise, you'll need to prove that |
| business upon which the new venture's business | | | | the business model is financially viable. Financial |
| model will be based. The franchisee is an entrepreneur | | | | statements will be necessary to prove your case. You |
| who wishes to build a new business based on a | | | | will also need a significant amount of capital to get |
| proven and successful model, brand name, product | | | | yourself set up as a franchisor. You will need to pay |
| and/or service. When a franchise agreement is made, | | | | attorneys to help you draft your UFOC document. |
| certain terms are laid out. Some of the factors that | | | | You will also spend a significant amount of cash in |
| may be determined by the franchise agreement | | | | order to attract franchisees. Paying accountants to |
| include: | | | | prepare your financial statements will also take a |
| - Business plan | | | | chunk out of your wallet. Finally, the additional |
| - Operational standards and manual | | | | investments you'll need to make in marketing and |
| - Marketing and advertising | | | | advertising your brand will also require substantial |
| - Products and service delivery | | | | capital. |
| - Vendor agreements and accounts | | | | All in all, franchising in North America can be done |
| - Store design and layout | | | | easily if you have access to capital, to professional |
| - Staffing and training | | | | assistance, and to a market that is hungry for your |
| The franchise agreement also provides confidence to | | | | products and/or services. |
| the franchisee that they will not be left alone, and to | | | | |