Three tips for franchise buyers

Online directory of business opportunities offers practical advice to franchisees

Western Investor
June 5, 2017

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Canada is home to a large number of franchises. The Canadian Franchise Association reports that there are currently around 1,300 brands operating in the country across multiple industries. With all those choices, it’s only natural to be interested in and research multiple opportunities without thinking too much about finances. However, crunching your numbers now can help avoid some sticker shock later. 

Here are three common areas you need to consider, from


1) How much is needed for startup?

One standout feature of franchising is the relatively low startup cost when compared to starting a business entirely on your own, but remember there is no one universal fee to get your location off the ground. Don’t just stop at the information on the franchisor’s website or its information handouts to potential franchisees. Take that information and cross-reference wherever you can. Take a look at business reviews, speak to unaffiliated consultants and talk to current brand franchisees as much as you can.


2) What is needed to get to the break-even point? 

Even if customers come pouring through your door on your very first day, you still have expenses already that probably won’t be fully covered. This means you need to plan to have a money reserve that will keep you going until revenue starts coming in. With a quality franchise that has solid marketing, this shouldn’t take long, but there will still be a gap you must account for. There is no magic savings number, as that depends on many factors, but it’s good practice to go with the high end of your estimate, just in case.


3) What are the financing options?

You don’t need to wait until you’ve saved up all the money you need to open your franchise. You may be able to take out a loan through a local financial institution or family and friends. Innovation, Science and Economic Development Canada also offers loans through participating lenders via its Canadian Small Business Financing Program.

Many franchises qualify, and while the money can’t be used to pay the franchise fee, it can be used toward expenses such as your equipment and the costs to improve a leased property to make it suitable for your location.

By running your numbers as many ways as possible, you’ll save yourself potential struggle and frustration down the road. 

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