Author: Alistair Vigier
We have a lawyer in Toronto that does Ontario franchise law. We put together this article to provide more information about franchise law.
Franchising is the granting of the rights by a successful company (the franchisor) to another, independent entity (the franchisee) to do business in a according to the rules of the franchisor. The right can take the form of selling the franchisor’s products, using its name, production, marketing techniques, or using its business plan. Usually franchising involves a combination of many of those elements.
Typically, to be successful in franchising, the firm must be able to offer unique products or services. A franchise must also offer a high degree of standardization. This does not require 100% uniformity, but rather, customers or clients being able to recognize your brand anywhere they go. Concurrent with this brand recognition, the franchisor can and should adapt to local circumstances.
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Most franchises have larger goals of expanding overseas or into neighboring countries. Key reasons for the international expansion of franchise systems are market potential, financial gain, and saturated domestic markets.
Ontario Franchise Law
If you have arrived at this page, you have probably done a lot of research into the pro’s and cons of franchising, and you have decided that it is right for you. Now you are looking for the right type of franchise opportunity or you just want to purchase a business.
Before you invest in any franchise, you should look into the following:
Vision and Value Proposition
I don’t like some technology companies because they often have insane evaluations and the millennial founders are cocky. I spoke to an owner of a cannabis store and he was comparing himself to the tobacco industry. This didn’t interest me at all.
Technology is great but you need to have SALES.
The Problem and Solution
It should be clear what problem the company is trying to solve with their service or product. Once the problem has been identified, it should be realistic how the company is going to solve the problem.
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Franchising Is Expensive
New franchise organizations most likely cannot afford to hire a complete team of staff needed to properly grow and maintain the franchise operation. Often the owners will do everything themselves which will make their business suffer because they cannot focus on their regular operations anymore. Most new franchisees find themselves with many questions and concerns. Do you have the time to properly manage these issues while still operating your business?
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Deciding To Franchise Is Hard
Is your company at the “tipping” point? Are you thinking of ways to expand? Franchising could be your next move. One very common approach to growing faster is to franchise by adding new locations. The new owner(s) of these locations are invested, engaged and have the responsibility for staffing, sales, financials, marketing and more.
Franchising is a big industry, and connecting with like-minded business people is an excellent way to grow. At the same time you need to provide independence for those owners who follow your systems. You can expand your company faster, sell your model for a fee and open new locations across different markets.
What questions should you be asking?
- Have you done your due diligence to understand franchising?
- Will your business be a bricks and mortar location?
- Would your brand allow for home-based start-ups?
- What price will you sell your franchises for?
- Will your royalty fees be set at 4, 6, 8 %?
- How will you manage your marketing fund?
- How many locations – in year 1, year 5?
When you create new franchise locations you gain market share. Your franchisees are financially and personally invested and committed to working towards overall success and sustainable growth.
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