Buying a franchise in Canada
Buying a franchise in Canada can provide good opportunities for immigrants, especially those who lack experience in starting a new business and establishing a new brand in a new market. It can be an attractive and less risky option for immigrating to Canada.
Individuals who can pursue buying a franchise in Canada include:
– Canadian citizens or permanent residents.
– International students.
– Individuals with a study permit and accompanying work permit.
– Individuals with a tourist visa (after purchasing a franchise, it is necessary to change the tourist visa to a work permit).
– Individuals residing outside Canada.
If you’re interested in immigrating to Canada through buying a franchise, it’s important to understand the conditions and requirements. The ISS immigration group’s article on buying a franchise in Canada can provide answers to most of your questions in this regard.
Table of Contents
What is a franchise?
If you, like the majority, want to be your own boss and start your own business, but you are not sure where to start or what resources you need, one of the solutions for such issues is the use of franchise businesses. It is in Canada.
What does franchising mean?
Franchise is a method of business development in which the owner of a business, called the franchisor, gives investors, the franchisees, the right to start a business. gives Of course, in the manner and style that that company has already developed and the brand name of that company should be maintained.
Usually, when the discussion of franchise is raised, one of the most common examples that comes to the mind of every knowledgeable person in this field is “McDonald’s Company”. But franchising is not limited to fast food businesses like McDonald’s; Rather, it exists everywhere and in almost every industry.
Franchising is a comprehensive business relationship and not just a buyer-seller relationship. This relationship is formed by a “contract” for a certain period, usually from 5 to 20 years and can be extended.
During the contract period, the representative company or in other words the franchisee, usually pays certain fees to the franchiser or franchisor for continuous access to the business system, training and marketing support of the central company.
Why ISS Group
iss immigration organization is made up of the most experienced official immigration lawyers and trusted advisors, and with more than 2000 successful cases, it is by your side at all stages from immigration to residence in Canada. We will be with you in this difficult path so that you, dear ones, only think about the growth, dynamism and well-being of the life ahead in an environment full of opportunities for progress and peace.
Buying a franchise in Canada offers several advantages, which are listed below:
- Growth Opportunities: One of the benefits of buying a franchise in Canada is the potential for business growth in an established industry where there is existing market demand. This demand can continue to increase over time.
- Lower Risk: Both the franchise owner and the franchisee have evaluated potential risks to ensure the sustainability of the brand’s expansion. The franchisor provides processes and resources to help mitigate employee and company issues, reducing risks for the franchisee.
- Lower Startup Costs: While franchises require personal investment and capital, the costs associated with opening a new location and starting a business are typically borne by the franchisor. Therefore, the initial costs of buying a franchise are generally lower compared to starting a business from scratch.
- Established Infrastructure and Processes: The franchisor has already established employee management, infrastructure, and standardized internal processes. Franchisees benefit from the ready-made systems and training provided by the franchisor.
- Established Brand and Elimination of Brand Building: New businesses often require time, energy, and capital to build their brand and attract customers. Franchisees can bypass this stage as they operate under an established and recognized brand.
- Easier Market Penetration: Franchise businesses benefit from the established popularity of recognized brands, making it easier to open new locations or enter specific markets where the brand is already known.
- Higher Profitability: Due to the brand’s recognition and easier market penetration, franchises can often generate higher profits compared to new businesses, which may take years to become profitable.
Disadvantages of buying a franchise in Canada
Limiting creativity in business
One of the advantages of buying a franchise in Canada is that according to the contract signed between the main owner of the business and the buyer of the franchise, the way of operating the business must be according to the principles and business model of the parent company.
Limitation in choosing the place of agency, selling products and suppliers
Usually, the main owner of the business determines where the branch of the company should be established, or what products should be sold and which suppliers should be used.
Your dealership’s reputation is damaged by the bad performance of other branches
If some agents do not do their job properly and provide inappropriate services or products, this will also have a negative impact on the reputation of your agency.
Sharing business profits with the main business owner
Buying a franchise and taking the franchise of a brand means that you have to pay a percentage of the sales revenue to the franchisor or brand owner.
The possibility of not renewing the contract
At the end of the contract between the franchisor and the franchisee, the original business owner may no longer wish to renew the contract.
Buying a franchise in Canada depends on the following conditions:
Having enough capital to buy and start a franchise (its amount varies depending on the type of business)
Experience and high management skills in the desired business field
Ownership of more than 50% of the purchased business
Presentation of business plan
Having physical health and no bad history
No need for a language score (but you must be able to convince the owner of the business brand, whose brand franchise you intend to buy, that you have the necessary language skills to communicate with employees and understand the specialized topics of the work, and you can start the business.)
Costs required to set up a franchise business in Canada
The average capital required to buy a franchise in Canada is between 50,000 and 500,000 dollars, the exact amount of which depends on the industry of the franchise and its size or smallness.
If you are planning to start a franchise business in Canada, there are several costs to consider. A part of these costs is given to the owner of the commercial brand; Such as the cost of the right to use the trademark, training costs, marketing support costs and a percentage of sales revenue.
Another part of the costs is related to the investment to start the business; Such as the cost of supplying raw materials, purchasing supplies and equipment, insurance, legal and accounting services, as well as the cost of hiring and training employees.
Normally, the head office or franchisor receives a fixed fee from the representative office or the franchisee for the right to use its brand franchise. This amount can vary from a few thousand dollars to more than 75,000 dollars, which depends on various factors such as the franchise industry, the size or smallness of the business, the brand, the location of the representative office, and the goals of the franchisor in developing their business.
The more famous and prestigious the brand you are going to work under, the more you need to pay for its brand value. For example, the Franchise fee for an internationally known brand such as Taco Bell is one and a half times what you pay for a brand that is only known in Canada such as Tim Hortons.
Franchise Fee can include other costs such as the cost of attracting, selecting and training investors who are going to open a representative office as a franchisee.
Dealers must pay a percentage of their gross sales (between 4% and 8%) to the head office on a weekly, monthly or quarterly basis. This percentage varies depending on the nature of the business. Royalty fees are usually higher for service franchises than for retail businesses. Sometimes, instead of a percentage, the franchisor is usually paid a fixed fee.
In business systems where dealers must purchase most or all of the supplies and materials they need from the head office, franchisors add an amount as profit to the product costs, which is called product pricing.
Advertising for franchise businesses is done at two levels:
For the main brand in general
For agencies as separate units
In the first case, advertising is done with the participation of the head office and the representative office and through capital, part of which is provided by the franchisor and the other part by the franchisee or representative office. The advertising fee paid by the representative office is usually calculated as a percentage of its gross sales (between 2 and 4%).
In the latter case, dealers must advertise their franchises independently. In the contract between the head office and the representative office, it is usually stated that the creditor must allocate an amount for advertising every month.
The main business owners or the franchisors usually ask the investors who intend to start a franchise under their brand name to invest an amount in order to start their business.
Some of this initial capital may be required to be liquid assets such as cash and short-term bonds. Therefore, it is very important that you do not get too involved in loans and debts to buy a franchise in Canada.
Among other costs, we can mention the cost of renting a business place, property renovation, purchasing equipment and supplies, labor costs, insurance costs, legal services and other costs.
Why ISS Group
iss immigration organization is made up of the most experienced official immigration lawyers and trusted advisors, and with more than 2000 successful cases, it is by your side at all stages from immigration to residence in Canada. We will be with you in this difficult path so that you, dear ones, only think about the growth, dynamism and well-being of the life ahead in an environment full of opportunities for progress and peace.
Essential tips for buying a franchise in Canada
If you intend to participate in a business through the purchase of a franchise in Canada and take over the representation of one of the commercial brands, you must first carefully research that commercial brand and its owners.
Considering the following points before buying a franchise in Canada will give you a better perspective to make a decision.
1. Evaluation of the desired franchise system
When evaluating the core system structure, always check 4 things:
Services/Products: What is being sold to the customer? How is the quality of that product or service from the customer’s point of view? Is the product or service offered in the market distinctive? Is the product or service protected by copyright or patent laws?
Price: Are the products or services priced well for their value?
Location: Are the products or services sold in profitable locations?
Advertising: Is the product well advertised and its nature known by consumers?
2. Knowing the owners of strong brands
Personality: Is the brand owner or franchisor famous for something? Are they good members of relevant trade and industry associations such as the Canadian Franchise Association?
Track record and relationship quality: Are the company’s current representatives successful? Has it ever happened that one of the agencies was left out of the system? What made them leave the system? Have the terms of their departure been satisfactory for both parties?
Financial strength: How strong is the brand owner financially? Can you check his financial information? Is this information audited or provided from outside the system?
Management: Given the brand owner’s tenure, expertise, and experience, how strong is the brand owner in terms of management? Does it have proven ability and skill to deliver?
3. Considering the key success factors in the franchise system
Great care in selecting agents: Does the central office have a special system for selecting its agents? Are the agencies still in the system? Have the company’s agencies had unusual turnover? Have the agencies achieved an acceptable return on their capital and are they satisfied with their investment?
High accuracy in monitoring and controlling the system: Does the central system have the necessary financial and management controls to identify signs of danger in its overall business and in the individual activities of the agents? Does it work effectively and efficiently with its agents so that they can act properly when problems and challenges arise?
System track record: Has the franchise system in question been successful to date? Have the dealerships been profitable? What is the rate of failure in this system? What is the rate of failure in franchise-related and non-franchise-related businesses? What is the quality of the system’s communication with key service providers such as suppliers or banks?
4. Assess your overall capital
What is the total cost of your investment? How much input stock is required?
What are the current financial obligations, including the cost of using the brand franchise, renewal program or amounts and minimum stock purchase?
When does the business become profitable? What is the business’s potential for profitability?
Does the franchise system have a package of financial services for dealers?
5. Examining the franchise purchase agreement in Canada
Does the contract protect your rights and the rights of the brand owner? Are the rights and obligations of both parties clearly stated?
Does the contract cover all the verbal commitments of the brand owner in detail?
What are the conditions for renewing the contract? Are there provisions for negotiation? Does it cover cancellation terms?
Does it cover purchasing materials from headquarters and parties outside the system?
How to buy a franchise in Canada
If you have come to the conclusion that immigrating to Canada by buying a franchise is the right choice for you, follow the steps below to buy a franchise in Canada:
Step 1: Be clear about your reasons for becoming a franchise owner
Becoming a franchise owner is a big responsibility and commitment. Before you buy a franchise, think about your reasons for wanting to do so. If you think that owning a franchise is easier than owning any other type of business, you should know that every business has its own challenges. Therefore, act with solid and well-thought-out reasons to buy a franchise in Canada.
Step 2: Research what type of franchise is right for you
Just because a franchise is popular doesn’t necessarily mean it’s right for you. Do your research on the franchise carefully and spend at least a few weeks looking for the following criteria:
Excellent sales history: It is recommended to choose a franchise that can be proven to be profitable.
Growing Market: To be successful, the franchise you choose must be in a growing market.
Social responsibility: People tend to do business with companies that are socially responsible. Research what your target franchises are doing for this purpose.
Local Competition: A little competition can be good, but too much competition in a close-knit area can ruin your business.
Opportunities to upsell products and services: McDonald’s is a great example of a company that excels at upselling products and doing so with options within its business, such as adding fries to its hamburgers.
Get support and support: Make sure you get good support and marketing services from the head office.
Step 3: Start your application process
When submitting your application to buy a franchise and start a new branch of the main business, having an experienced lawyer can help you a lot. At this stage, the franchisor or brand owner will check your conditions from the following aspects:
It checks your financial situation to make sure you have enough capital to open the branch.
It examines your educational, work and reasoning for starting a business.
Checks where you are going to set up the dealership.
You need to answer the question why are you interested in their franchise and how much do you know about it now?
Step 4: Interview the owner of the desired brand
After the preliminary investigations have been done by both parties, you as a party to the transaction must have a face-to-face meeting with the franchisor known as “Discovery Day”.
In this meeting, both parties can get to know each other better and before committing to buying a franchise, you can ask all your questions in this field.
Step 5: Apply for financing your business
If you don’t have enough capital to buy a franchise in Canada, you can ask for help from sources such as banks, the federal government, and other related institutions to finance it and apply for a loan.
Step 6: Sign a contract and check its terms carefully
The content of contracts is usually long and confusing. In order to avoid possible mistakes, it is better to consult with an experienced lawyer before signing the contract.
Step 7: Rent or buy a place
You have already chosen the city of your business location, so at this stage you need to rent or buy a place in the city and set up a franchise agency there.
The final step: get the training and support you need
By buying a franchise in Canada, you are entering a trusted brand that has a logo, instructions and products. It is necessary that you receive training from the central office in the following areas:
Why ISS Group
iss immigration organization is made up of the most experienced official immigration lawyers and trusted advisors, and with more than 2000 successful cases, it is by your side at all stages from immigration to residence in Canada. We will be with you in this difficult path so that you, dear ones, only think about the growth, dynamism and well-being of the life ahead in an environment full of opportunities for progress and peace.
Procedures for obtaining Canadian residency through the purchase of a franchise
If you are outside of Canada, you probably think that by buying a franchise in Canada, you can have a safe business for yourself that will be a source of income and go through the process of obtaining permanent residence in Canada.
Well, fortunately, we have to say yes, you are right, and here we introduce you to the steps of obtaining a Canadian work permit visa and obtaining a permanent residence in Canada in the method of buying a franchise.
The first step: checking the conditions of buying a franchise and concluding the necessary contracts
Second step: preparation of business plan and preparation of documents for work visa application
The third step: obtaining a work visa and entering Canada
Step 4: Setting up a franchise in Canada and gaining Canadian experience
Step 5: After 12 months of work experience, start applying for permanent residence in the Canadian CEC experience method
The benefits of obtaining Canadian residency through the purchase of a franchise
You start an active business that generates Canadian income.
The processing of franchise work visa cases is much faster than other immigration programs.
You can extend the franchise work visa up to 7 years.
You apply for a companion visa for your spouse and they work in Canada without restrictions. Your children will have free education in Canadian schools.
After entering Canada through you or your spouse in various immigration programs, it will be possible to apply for permanent residence in Canada.
ISS immigration group services in buying a franchise in Canada
If you are a manager or business owner in Iran and after reading this article you are eligible to buy a franchise in Canada, but you don’t know where and how to start, don’t worry! We are by your side in this process from zero to one hundred.
To take action in this field, we will help you in the following steps:
1. Assess the situation
2. Accurate calculation of the necessary costs for buying a franchise
3. Introduction of suitable franchises
4. Communication with Canadian banks to finance the desired franchise (people who buy a franchise from outside of Canada have tougher conditions for financing from banks, but we will advise you properly in this regard)
5. Introduction of experienced accountants for business
6. Research about the franchise owner and its business system
7. Preparation of business plan
8. Review of the franchise purchase agreement by the company’s legal counsel
9. Applying for a work visa and finally a Canadian permanent residence visa
ISS immigration Organization is made up of the most experienced immigration attorneys and trusted advisors, with over 2,000 successful cases in all stages from immigration to residency in Canada
