Today we will explore the statistics, current trends, and essential factors that contribute to the strength and success of the franchising sector in Canada, and how you can take advantage, in order to apply for your Canadian PR.
Franchising stands as Canada's 12th largest industry and is globally ranked as the second largest franchise industry. In 2019, franchising contributed $100 billion to Canada's GDP, and since then, it has experienced growth, reaching $120 billion. Despite the challenges posed by a unique public health crisis, the franchise industry in Canada has demonstrated resilience, serving as a robust source of wealth generation. This resilience positions Canadian franchising for further expansion, fostering the potential for sustained, long-term growth.
While Ontario currently holds a majority share in the franchise economy, accounting for approximately 65% of all operating units, there is significant potential for growth in the Prairies, the Atlantic, and the West Coast markets. The most substantial percentage-wise expansion is projected in British Columbia, with a forecasted increase of 1.16% in franchise locations. Conversely, the slower growth expected in Atlantic Canada (0.46% increase) creates opportunities for international franchises to expand and establish a presence in that region.
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The decision to buy an existing or new franchise depends on various factors and individual preferences. Here are some key considerations to help you make an informed decision:
1: Established Clientele: Access an established and dedicated customer base, capitalizing on the advantages of a recognized brand to foster consistent business and customer loyalty.
2: Proven Track Record: Access a business with a successful history, allowing you to scrutinize current sales, margins, and operational trends.
3: Negotiation Opportunities: Unlike new franchises with fixed fee structures, buying an existing franchise offers flexibility in direct negotiations with the seller.
4: Standard Operating Procedures (SOP); These procedures cover various aspects of running the franchise including the daily operation, customer service, training of staff, marketing, etc.
5: Opportunity to visit the franchise location; The "Opportunity to visit the franchise location" for buying an existing franchise allows prospective buyers to
6: assess the physical premises, observe day-to-day operations, and interact with staff and customers.
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1: Uncertain Motives and Liabilities: Unraveling the seller's motives and potential liabilities can be challenging, making it tricky to discern the true reasons behind selling.
2: High Due Diligence Costs: A thorough business audit can be costly, and there's the risk of facing competitio n from other potential buyers.
3: Franchisor Approval Process: The franchisor retains the right to approve or deny the buyer, potentially leading to a prolonged and expensive orientation process.
1: Lower Initial Cost: New franchises often require less financing, as there's no need to acquire existing cash flow or pay for established goodwill.
2: Cutting-Edge Equipment and Design: Enjoy the advantages of the latest technology and equipment, especially crucial in industries like food service where outdated tools can pose challenges.
1: Variable Startup Expenses: Despite estimates provided by the franchisor, unforeseen costs may emerge during the establishment of the new business.
2: Financing Difficulties: Securing financing can be challenging for both new and existing franchises, with lenders often scrutinizing the performance of an operational location.
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Sector
You need to verify the industry you are planning to buy the franchise in. The sector is crucial due to its profitability and whether it is approved by immigration authorities. Some business sectors may be restricted for purchase for immigration purposes.
Investment Amount
It is essential to identify the specific immigration program you plan to choose and apply for. For instance, if you are applying under entrepreneurship programs in certain provinces, you must be prepared to invest a minimum amount as stipulated by that particular province.
Employee Count
A critical factor of great significance to immigration authorities is the potential job opportunities your business can create for Canadians. Consequently, prioritize franchises that necessitate the hiring of at least 2-3 employees to effectively run the business.
The reason we are focusing on this part is that most immigration streams have established criteria related to the business industry, the number of employees, and the minimum investment.
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1: BC PNP (BCPNP)
To qualify for franchise investment in this province, the applicant must show that the intended franchise has a strong and established presence, indicating the capability for expansion, a solid financial history, and a minimum operational duration of 60 months (five years). The BC PNP considers the acquisition of an existing franchise location as an eligible business only if accompanied by an expansion or improvement plan aligning with franchisor stipulations. All additional criteria must also be satisfied.
2: Saskatchewan PNP (SINP)
New and Existing Franchise purchases are allowed.
The SINP may consider eligible operating expenses and start-up costs up to a maximum of the first six (6) months for new businesses and a maximum of the first three (3) months for existing businesses or new franchise locations.
3: New Brunswick PNP (NBPNP)
New and existing franchises are allowed in this province but with more scrutiny and eligibility criteria than in other provinces.
4: Manitoba PNP (MPNP)
New and existing franchises are allowed in this province. However, restrictions apply in terms of the goodwill value of an existing franchise. With a proper valuation report, 1/3 of the goodwill investment amount can be claimed as an eligible investment.
5: Alberta PNP (AAIP)
New and existing franchises are allowed in this province.
6: Newfoundland & Labrador PNP (NLPNP)
New and existing franchises are allowed in this province.
7: Prince Edward Island (PNP)
New and existing franchises are allowed in this province.
That's a wrap on our exploration of the franchising sector in Canada and its impact on your journey towards Permanent Residency!
Your decision could be a game-changer in your immigration process. Investing in the right sector, understanding the immigration requirements, and choosing the most suitable Canadian immigration program are crucial steps on your path to success.
Do you want to become a PR in Canada? At INGWE we could support you! Get a FREE email assessment with one of our licensed immigration consultants. We speak over +8 languages and we have helped applicants from +50 countries in their immigration path to Canada. Fill out our form, click here.
If you’re thinking about immigrating whether permanently or temporarily - you’re at the right place! Our team speaks over +9 languages, and we help applicants from over 50 different countries during their immigration process. Get a free email assessment, click here.
If you’re ready to apply and would like a 1-on-1 session with one of our immigration team members at INGWE, you can also book a session directly using this consultation link.