When you sign up for your new Canadian franchise, it...
Here's What to Consider First.
In Canada, franchisees have a long-standing history of bringing US brands into the country. However, this does require vision and certainly a bit of an appetite for risk. It's not always easy to gauge whether a foreign brand will work in a local Canadian market when you don't have any past track records to draw from. Extending a US brand into Canada requires successfully handling many factors, including timing, operations, support, real estate, market research, a business plan and capital. Before you decide whether trying to bring a new US brand into Canada is the right move for you, here's what to remember.
Adjust your due diligence
Due diligence is needed for success in any franchise endeavour, and it's especially vital when bringing a new brand into the market. When you are considering an emerging brand that has no real proof of extension in Canada, you'll need to compensate for that knowledge gap by putting together a team that can support the areas where your franchisor may be lacking.
A solid business plan that lays out your responsibilities and the obligations of your franchisor will also help ensure expectations are managed properly. The plan should essentially stress test the ad fund, applicable royalties and other fees so you can forecast your finances accurately.
Know the market and any legalities
As always, take a very close look at the franchise disclosure document (FDD). It's best to have an experienced franchise attorney review the document and help you with the negotiation of any legal terms. As part of your due diligence, make sure to take the time to talk to the past and present franchisees in the system, who should be listed in the FDD. Although they are not in Canada, they can still shed light on the franchisor's culture, support levels and the business as a whole.
For your market research phase, confirm that the demographics that have made US locations successful are also present in the area of Canada where you'll be located. You should also check the level of saturation for businesses similar to yours in the same area.
Being the first to bring a US brand into Canada is a risk, but it can also reap you several rewards. Since there are more unknowns than usual in this franchise scenario, be sure to consider all the possible factors involved before you make your move.