A new report shows why you should consider Canada as a franchising base and where you might locate
You’d be hard-pressed to find a Canadian neighbourhood devoid of a franchise business serving its residents. With franchise systems operating in more than 50 different sectors, Canadians from coast to coast are interacting with the franchise business model on a daily basis. And yet, there had been no quantifiable reports conducted to measure the industry’s contribution to the Canadian economy.
The Canadian Franchise Association (CFA) commissioned this historic undertaking in the summer of 2017. Partnering with The Canadian Centre for Economic Analysis, the CFA has brought the franchise industry’s economic contributions to the forefront with the first-ever Economic Impact Study of the Canadian Franchise Industry.
This study found that not only has the industry grown 22 per cent over the past five years – jumping from 1,114 to 1,357 units – but it has become Canada’s 12th largest industry by GDP. Producing 1.8-million jobs, $61-billion in household wages, and $16-billion in federal tax revenue, the franchise industry’s $96-billion contribution to the economy represents nearly 5 per cent of Canada’s GDP.
Zeroing-in on franchised businesses in each province and territory, the report shows that Canadian franchises are contributing to economies in nearly every corner of the nation. For any franchisor thinking of expanding to Canada, here are four key takeaways from the study:
Growth across the board: 520 new franchise units to open in Canada
Canada is forecasted to be home to 75,765 franchise units by the end of 2018; an annual growth of 520 new franchises across the country. The accommodation and food services sectors in particular are expected to grow significantly, representing 21 per cent of the franchise industry’s total growth.
From coast to coast, new franchise units are forecasted to grow throughout all of Canada’s provinces and territories, and in every major industry sector. In Ontario, despite recent minimum wage increase legislation worrying business owners throughout the province, healthy growth continues, with an additional 263 franchise units expected.
The numbers don’t lie: franchising is small business
A common misconception about franchises is that they operate as part of a larger corporate machine. The fact is, however, that franchise establishments are just as much a part of Canada’s small business fabric as the local butcher or barber shop. Franchising has quickly become the new “mom and pop” business in Canada.
With over 1,300 brands and 75,765 franchise establishments forecasted for 2018, franchising truly is built by small business entrepreneurs in every corner of this country. These business owners are active members of their communities, and in 2018, employed an average of 19 staff members per unit. Fuelled by small business owners, the franchise industry as a whole ranks in the top 12 largest industries in Canada. This accomplishment is only made possible through the collective contributions of the 75,000+ franchise units across the country.
Western expansion: significant growth in Saskatchewan and Manitoba
Population growth in Saskatchewan and Manitoba continues to surpass the national average, fuelling the rise of franchise systems in the Prairies. What’s more, considerably less labour and employment uncertainty in the region compared to other provinces makes this region a rising destination for franchises.
Government representatives from both provinces have already taken notice of the increase in franchise establishments, and there is an opportunity to work closely with them to ensure a continued favourable business environment and to incentivize additional franchise investment in the region.
East Coast flavour: Atlantic Canada is fertile land for franchises
While the Prairie Provinces are experiencing unprecedented growth, such cannot be said of the Maritimes. Atlantic Canada’s economy suffers from both an aging population and a lack of domestic and international immigration. With investment, entrepreneurship, and a diversified economy needed to boost the economy, franchising might just be the ticket to shift Atlantic Canada’s economic resurgence into high gear.
Although GDP growth above the national average is projected in Newfoundland and Labrador, the other three Atlantic Provinces – New Brunswick, Nova Scotia, and Prince Edward Island – lag behind. Much like the Prairies, the proven positive impact of franchising in other parts of the country can be leveraged to create a business environment in Atlantic Canada that attracts additional franchise investment.
With growth expected across all provinces and industries, plus untapped markets in the East and West, there’s never been a better time to expand your franchise into Canada. If you’re planning to franchise in Canada, the Canadian Franchise Association can help. In addition to the latest statistics and research on franchising in Canada, we offer lead generation, advocacy, networking, educational events, and more. For membership information, contact Ruth Stuart Moore at rstuartmoore@cfa.ca or 800-665-4232 ext. 247.
About the Author
The Canadian Franchise Association (CFA) helps everyday Canadians realize the dream of building their own business through the power of franchising. CFA advocates on issues that impact this dream on behalf of more than 700 corporate members and over 40,000 franchisees from many of Canada’s best-known and emerging franchise brands. Beyond its role as the voice of the franchise industry, CFA strengthens and develops franchising by delivering best-practice education and creating rewarding connections between Canadians and the opportunities in franchising. For more information, visit cfa.ca/franchise-in-canada.
