As a firm that provides franchise development services in both the United States and Canada, it doesn’t take long to realize how much of a difference there is between franchise development in the United States and Franchising in Canada. Even with two cultures and business environments that have so many similarities, in franchise sales, you pick up on enormous differences in how people approach business and franchising after only a few interactions with potential franchise investors.
- Canadian franchise law has similarities to the United States, but they ARE different and require Canadian legal counsel to affirm that the franchise is being offered according to Canadian franchise disclosure laws. Each province has unique laws and regulations and Quebec requires documentation to be completed in French to adhere to the French Language laws for the province. Long story short, make sure you have the correct and accurate disclosures in place before you present a franchise to a Canadian citizen.
- Canadian brands have been on the rise in the recent 10 years. In the early 2000’s and before that time, the most attractive franchise brands to Canadian investors tended to be American brands. In the recent decade, there has been a marked change in trends where more and more Canadian franchise brands are taking market leadership positions and not only expanding throughout Canada, but also taking market share in the United States. This means that American brands need to offer more value and a stronger value proposition to compete with local brands.
- Canada uses a different currency than the U.S. Be aware of the exchange rate and how this affects a transaction when crossing the U.S. – Canadian border. Some U.S. franchises are offered in the Canadian markets without accounting for this and many times it makes an investment either attractive or not appealing just with the currency exchange rate. At the time of this article, the U.S. dollar is worth about 1.30 Canadian dollars meaning that a franchise investment of $1 million U.S. would actually be a $1.3 million investment in Canadian dollars.
- Canadian franchise buyers tend to be a bit more conservative than U.S. franchise investors. The market requires that a slower, more methodical franchise presentation takes place before someone will make an investment. A lot of time that bridge to trust and credibility is longer with Canadian franchise buyers is longer and requires an extra bit of investment in face time and meetings to help people feel confident that what you are saying is true. This also means that in many cases, the Canadian franchise sales cycle is much longer than a U.S. franchise sales cycle.
- Make sure your messaging, presentation and overall franchise value proposition specifically talks about the Canadian market. In our experience presenting franchises to the Canadian markets, buyers are concerned whether a franchise or business system has taken into account the unique aspects of a Canadian operated business and whether the franchise will work in their province. Do the research and planning so that you can address these questions and objections from Canadian franchise buyers.