SPOTLIGHTON:CANADA
the challenges of expanding into the larger and more complex US market. But that is only part of the story. Over many decades, our immigration and other policies have resulted in Canada becoming one of the most multi-cultural countries in the world, particularly in the highly populated urban centers. This has resulted in a greater awareness of products and services from other countries, as well as a built-in demand among the populations with roots in the countries and regions where the franchise system originated. Frequently, this allows foreign franchisors to penetrate the Canadian market more quickly and much deeper than would be the case in other countries.
“Proximity to the US makes Canada the franchise gateway to North America for many good reasons”
Added to all of this is the uniqueness of our province of Quebec, which has a French language and cultural heritage that is
particularly friendly towards European, African and Middle Eastern concepts.
Succeeding with a franchise expansion to Canada has its challenges, however. To begin with, Canada is a vast country geographically, but its population is concentrated in a few, widely scattered cities. This can drive up the costs of marketing franchises, monitoring system compliance and supporting franchisees. Adding to this challenge is the fact that Canada has a number of distinct regions, which can require adaptions to the concept or how the franchise system is run from region to region. Some say that Canada is really more like four or five countries. So the standard advice is to consider recruiting several masters or developers, for the various regions, rather than one countrywide master or developer. Another matter that has to be dealt with is the Canadian characteristic of conservatism in business. This translates into longer and more expensive franchise sale cycles and a resistance to change once a franchisee is established. Finally, Canada has 10 provinces, five of which have franchise disclosure legislation, so there is an extra layer of legal compliance that is required. The good news is that all five statutes are remarkably similar, so it is possible to create and use one national franchise disclosure document. An added bonus is that
there are a lot of similarities between the Canadian provincial franchise statutes and US statutes, and a well-drafted Canadian franchise agreement is useable in the US, with some tweaks.
All of these challenges can be overcome and the benefits of expanding a franchise system in Canada easily justify the effort. Whether the foreign franchisor is looking to Canada as a good market for expansion or as a stepping- stone to conquering the US market, Canada is the right place, at the right time. n
*Canadian Franchise Association, ‘What are the Hot Trends in Franchising for 2013?’ (7 January 2013)
NED LEVITT
NED LEVITT is a certified franchise executive, a partner at Dickinson Wright LLP, Toronto, Canada, and provides legal services to Canadian and international clients on all aspects of Canadian franchise law. Ned is a long-standing member of International Franchising Centre Global network and works closely with Farrah Rose – director of international development. For further information please contact
Farrah@thefranchisingcentre.com
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