Frequently Asked Questions | Canadian Franchise Association
#FranchiseAwareness | Canadian Franchise Association

Frequently Asked Questions

Franchising is a method of doing business in which one person, the franchisor, grants another, the franchisee, certain rights contained in the franchise agreement. These rights govern the way in which the franchisee will conduct their business. The franchisee gains access to the franchisor’s proven business system, including the operations manuals which will outline the systems and processes used to operate the franchise.
While many people may think of franchising as limited to ‘fast food, ’ businesses that operate using the franchise business model can be found in all sectors and industries – automotive, travel, senior care, education, and health and fitness just to name a few.

Franchising can help businesses expand by having franchisees invest in the concept and open and operate locations under the business’ brand. A business that is suitable for franchising, no matter its product or service offering, has a history of success and a tried-and-true formula that will allow it to replicate that success in new location.

While system-specific responsibilities required of the franchisee will be outlined in the franchise agreement, there are a few key responsibilities that are generally required of the majority of franchisees.

The franchisee should:

  • follow the franchisor’s standards, methods, procedures, techniques and specifications to ensure consistency;
  • pay a fee (typically an initial franchisee fee and ongoing royalties) to the franchisor for the right to use the franchisor’s trademarks (brand) and business system;
  • take care of accounting, local marketing, staffing and the other administrative aspects of operating a business;
  • invest their time, particularly during the start-up phase, by working hands-on in their business to fully understand the operational side of the franchise;
  • work in partnership with the franchisor, allowing for effective two-way communication between the two parties and a mutually-beneficial relationship.
While the franchise agreement will outline the specific responsibilities and obligations of the franchisor, there are a few key responsibilities of the franchisor that generally apply in most scenarios.

The franchisor should:

  • undertake to provide franchisees with operating systems and support services to help their businesses grow in ways that are effective, efficient and profitable;
  • continue to evolve the franchise system through, for example, research and development of new products and services;
  • handle all brand advertising and (usually) provide franchisees with assistance for their local marketing activities;
  • protect and manage the brand and its trademarks while ensuring consistency and quality standards are maintained by all franchisees in the system;
  • provide initial and ongoing training and support.
Franchising is an attractive and powerful way for Canadians to achieve success as small business owners.

Through the proven business concept and support provided by the franchisor, franchisees are able to be in business for themselves but with the support and assistance of the franchisor, the advantage of the franchise system’s past success, and access to the knowledge and experience of a network of franchisee peers.

Franchising is about sharing success. The success of a franchisee leads to further success of the franchisor and the franchise system as a whole. When you invest in a franchise, you align yourself with a brand that may already enjoy established consumer awareness and loyalty in the Canadian marketplace, be it nationally, regionally or locally.

A franchise also provides you with the advantage of a tried-and-true system and an operations manual that fully explains how you are to replicate the franchise’s system at your location. While it is impossible to eliminate all risk, if you work and follow that system, you can reduce the risk of business failure and increase your likelihood of success.

Conducting proper due diligence and research is your first step in becoming a successful franchisee. The franchise system listings on LookforaFranchise.ca are a good place to start the process. All companies listed on the website are Canadian Franchise Association members in good standing and voluntarily agree to adhere to the CFA Code of Ethics. You can peruse CFA member franchise systems alphabetically or by industry category. Each listing will give a brief overview of the system and provide you with ways to request additional information from the individual companies.

Some questions you may want to ask as part of your due diligence include:

  • Is the franchisor a member of the Canadian Franchise Association?
  • How many years has the franchisor been operating?
  • How many franchisees does the franchisor have?
  • Can the franchisor provide a list of all franchisees?
  • How does the franchisor choose its franchisees?
  • How much is the initial franchise fee?
  • What are the franchisor’s plans for future development?
  • What is the competition for the product?
  • What kind of support does the franchisor provide to franchisees?
  • Will you be provided with a disclosure document? Does it comply with provincial laws or CFA’s minimum disclosure requirements?
The Canadian Franchise Association (CFA) is the only national trade association serving the franchise industry and the recognized authority on franchising in Canada. With 600 corporate members representing many of Canada’s best-known brands and 40,000 franchisees nation-wide, CFA is the indispensable resource for the franchise community and advocates on behalf of franchisors and franchisees in Canada to enhance and protect the franchise business model. CFA promotes excellence in franchising and educates Canadians about franchising, specific franchise opportunities and proper due diligence through its many events, programs, publications, and websites (www.cfa.ca and www.LookforaFranchise.ca).