Frequently Asked Questions


Can any business be franchised?

No. "Business Format Franchising", commonly referred to as simply "Franchising" these days, is perhaps best represented by the McDonalds or Tim Hortons of the world. Franchising is a business model with its own best practices, policies and procedures, honed and perfected by entrepreneurs just like you over time. As a start, you need to have an existing, profitable business. You can't franchise an "idea".

Other business are better suited to distributorship models or licensing agreements. While all of these models include the licensing and use of a trademark including some form of licensing fee, it often comes down to the extent of the on-going relationship between the licensor and its licensees. 

How do I know if my business is "franchisable"?

This is a short question with a long answer. In short, it's a business. A would-be franchisee needs to feel comfortable that they can a) see themselves working in a particular business, b)  afford the level of investment required, c) generate the level of income they desire, d) achieve a reasonable return on their cash investment, and e) they like, trust and respect the people they will be working with. There are over 1,300 franchise systems in Canada to choose from. Over 4,500 in the US and more than 17,000 aound the world. There is no lack of choice or variety. Today's franchisors are competing against thousands of other concepts for the best and brightest candidates.

As a general rule, a franchised business should be able to generate enough cash so that the franchisee can hire a full time manager AND generate a 30% to 35% return on invested cash (or "ROI"); thereby achieving a 3 year "payback". In the end, we are licensing the use of a business model that has a reasonable expectation of generating a desirable financial return. 

Do I need a lawyer?

Sure you do. Franchising, licensing or distribution models are all predicated on clear, concise agreements. The best of these contracts are drafted by specialists in the field with experience - not a part-timer or  "dabbler". This doesn't mean they have to be "bay-street". There are great boutique firms that generate excellent work. Any of them that are worth their salt are members of the Canadian Franchise Association or the International Franchise Association (see below) or both. 

My lawyer says I need an Operations Manual. Why?

Would-be franchisees or licensees are expecting to mitigate the risk of their investment by piggy-backing on your experience. They presume you know what you are doing and that your success is no accident. You need to prove it. Operations Manuals represent written documentation of your policies, procedures, on-the-job experiences, anecdotes and war stories learned over time as you built the business. It doesn't have to be elaborate to begin. But you need to have soemthing in place.

Operations Manuals also serve as the basis or standard to which you train your franchisees or distributors in how to set up and run a successful business just like yours. They can then be held accountable to these standards and - if something goes sideways, you are in a better position to figure out what went wrong. This suggests that well crafted manals include "managerial" best practices, policies and practices as well as "operational". There is more to running a successful business than knowing how to turn the lights on or flip a burger.

Similarly, international franchisors need to adapt their documentation to Canadian English or French. Various taxation matters, permits, registrations and other jurisdictional requirments must be captured and reflected in Canadian documentation. Area Representatives or Master Franchisees must be trained and held accountable to best practices of recruiting and supporting third-party franchisees. 

The same may be said of the Franchisor's Home Office management and operations for similar reasoning. Management and staff may turn over, but best practices, policies and procedures should not.

How soon can I start selling franchises or distributorships?

That's like asking "How long is a piece of string?" It depends how complex your business model is and how developed your infrastructure may be. Generally: two to three months for development of the legal documents, operations and training manuals, collateral marketing materials and marketing plan. Then two to three months from launcing the marketing and recruitment strategy to the grant of the first franchise. If we've done it right and haven't dropped any balls, it snowballs from there. 

(By the way, we don't use words like "sell" or "buy". Being a part of your franchise system or distribution network is a "priviledge" not a "right". It's kind of like a driver's license. Too many demerit points and it's taken away. We use expressions like "granted" or "awarded" instead. The phraseology differentiates between amateurs and franchise professionals!)

How do I find out more?

Call us, of course. The Canadian Franchise Association (the "CFA", or the International Franchise Association ( the "IFA", ) are also great resources.