Challenge and control misinformation in the fast food industry
Now more than ever, the fast food franchise industry...
The news might have you believe that being in business right now is all doom and gloom, but we don't see it that way. In fact, it is possible that the tariff war could yield exciting new opportunities for domestic franchise brands.
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The impact of tariffs
With US President Donald Trump introducing tariffs of up to 25% on Canadian-sourced goods, the cost of being in business as part of a US franchise in Canada could grow exponentially, harming the viability of these franchises. It is possible that franchisees, particularly those operating in the food, fitness and retail sectors, will incur extra costs in sourcing their products from America, while the exchange rate will make franchise fees and royalties more expensive.
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Why domestic franchises are the safer option
In stark contrast, however, domestic franchises are masters of their own destiny, able to source their products from the local market and operate on a stable economic base free from fluctuating exchange rates and non-discretionary import duties. Additionally, domestic businesses are afforded a level of government protection, insulating them against much of the impact of external market forces, while the franchise association advocacy and targeted marketing efforts can broaden their reach and increase their profitability.
It is becoming clear that remaining in business as we move forward will require a concentrated effort from franchisors and their franchisees to shorten and secure their supply chains, seek the support of local customers and focus on providing local products from local businesses for local people.
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Advice for prospective franchisees
For those considering joining a franchise this year, let the events of the last few months be a warning to you of the dangers inherent in joining a foreign franchise brand. Although the chance to benefit from global brand recognition is often seen as an appealing prospect, now is not the safest time to join a business that relies on stable cross-border policies and practices. Instead, consider Canadian brands operating within your preferred sector and speak to franchisors to determine whether their offerings will represent a more cost-effective and stable platform from which you can become a successful entrepreneur.
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Advice for Canadian franchise brands
If there was ever a time to shorten and secure your supply chain, this is it, so carefully assess your sourcing policies and aim to bring manufacturing and production to local shores wherever possible. By strengthening your supply chain in this manner, you not only insulate yourself against external market forces but become more resilient and better able to meet the needs of your customers.
