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Buying a Franchise in Canada
One of the low-risk ways to invest in Canada is by buying a franchise. By purchasing a franchise, you back your business with an established brand, increasing your chances of success.
A franchise is a method in which the owner of a business grants you the rights to operate a business related to theirs, which has already been developed, under the same brand name (such as McDonald’s).
Note: A franchise is not a purchase or sale; it is a contract formed between two parties. This contract has a limited duration, but it is renewable.
During the collaboration, the main investor is responsible for supporting smaller investors. In return, the smaller investors must follow the central office’s rules and pay royalties, franchise fees, and marketing fees to the central office.
Conditions Required for Buying a Franchise in Canada
1. ارائه بیزنس پلن و طرح تجاری
2.داشتن مهارت و تجربه مدیریتی در زمینه مربوطه
3.بیشتر از 50 درصد مالکیت کسب و کار خریداری شده
4.سرمایه کافی برای خرید و شروع فرنچایز (هزینه بسته به نوع سرمایه گذاری متفاوت است)
To obtain Canadian residency through buying a franchise in Canada, you do not need to provide language proficiency certificates; however, you must show the franchise owner that you have the ability to run the business. Communication skills are required for this.
Advantages and Disadvantages of Buying a Franchise in Canada
To obtain permanent residency in Canada through investment, buying a franchise in Canada is one of the low-risk options available to you. This immigration method has various pros and cons. To make an informed decision, it is better to familiarize yourself with the advantages and disadvantages of buying a franchise in Canada before making your final decision. The most important of these are outlined below.
Advantages of Buying a Franchise in Canada
- Franchise offers higher profits compared to starting a new business due to the established brand.
- When you have the franchise rights to a large, well-known brand, it is easier to gain people’s trust because of their prior positive association with the brand.
- Since you’re using a recognized brand, you don’t have to invest in branding and customer acquisition costs. The brand already has its customer base.
- Internal processes and infrastructure have already been standardized by the brand owner.
- Although franchise investment isn’t free, many costs are covered by the brand owner, making it less expensive than starting a business from scratch.
- With franchise investment, you take on less risk and have higher job security. Both parties thoroughly examine all aspects before proceeding. Additionally, the brand owner has the resources to address and resolve issues.
- The likelihood of achieving success faster through a franchise is higher. The brand is already established in the market, so demand exists from the start. You can also help increase demand further.
Disadvantages of Buying a Franchise in Canada
- When you choose a franchise as your investment option in Canada, you need to keep in mind that your actions must follow the signed contract. You cannot operate outside the model and principles of the parent company. This approach limits your creativity in managing the business.
- You will be restricted by the parent company in choosing the location of the branch, the type of product you will offer, and your suppliers.
- Poor performance by other franchise branches or the parent company can negatively impact your business.
- After the contract ends, the franchisor may decide not to renew the agreement with you.
All the profits you make are not entirely yours, as you will have to share a portion with the brand owner (the percentage is specified in the contract).
Steps to Obtain Permanent Residence in Canada through Buying a Franchise
In Step One, after reviewing the franchise purchase conditions, you need to sign the necessary contracts.
In Step Two, you must prepare a business plan and gather the documents required for the work visa application.
In Step Three, obtain a work visa and enter Canadian territory.
In Step Four, launch your franchise in Canada and gain Canadian experience.
In Last Step, after twelve months of starting your business, apply for permanent residence through Express Entry under the Canadian Experience Class program.
Investment Cost Prediction in Canada Through Franchise Purchase
Franchise Fee
The head office charges a fixed fee for the right to use the brand franchise. This amount can range from a few Canadian dollars to 75,000 Canadian dollars. Various factors such as the brand, business objectives, location of the franchise, size of the business, and more determine the amount of this brand franchise fee. The more reputable and larger the business, and consequently more valuable it is, the higher the fee will be.
Royalty Fee
Franchises are required to pay a percentage of their gross sales to the head office on a weekly, monthly, or quarterly basis. This percentage varies depending on the type of business and its size (ranging from 4% to 8%). In some cases, both parties agree to pay a fixed fee to the head office instead of a percentage.
Advertising Fund
There are two types of advertising: general brand advertising and advertising for the franchise.
Initial Investment
From the start, the business owners ask the prospective investor to invest a specific amount. It is possible that the initial investment is required to be in cash assets. Other costs include purchasing equipment, renting a business location, insurance, and more.
Note: Cash assets refer to assets like money and short-term bonds. Therefore, it is important to ensure that when investing through purchasing a franchise, you avoid getting involved in loans and debt.
If you are looking to invest in Canada through purchasing a franchise and don’t have enough funds, you can seek financial support from banks, the Canadian government, the head office, and other various sources to cover the required costs.
How to Buy a Franchise?!
- Make sure that buying a franchise in Canada is the right investment method for you
You should note that becoming a franchise owner means accepting a lot of commitments and responsibilities. So, it’s best to think about it thoroughly. Also, carefully review your personal situation and this type of investment. Every business comes with its own challenges, and although buying a franchise is considered low-risk, it’s important to enter the path with proper consideration.
- Find the right franchise for you
To find the right franchise, you need to pay attention to certain factors. Below are some criteria to help you make a better choice:
Make sure you will receive appropriate support and assistance from the head office.
Ensure that the chosen franchise is in a growing market.
Choose a franchise that is profitable. To do this, look at the sales history of the brand.
Ensure that the competition in your desired location is not too high. If the market is saturated in your area, it will negatively affect your business.
Ensure that the chosen franchise is socially responsible. People tend to trust businesses with good social responsibility.
- Start the application process
At this stage, submit your application to buy the franchise. The brand owner will review your financial status, educational background, work history, and the location where you want to establish the franchise. They will also want to know why you have chosen their business and what you know about their operations.
- Interview with the brand owner
After passing the previous stages, both parties will meet in a session (in person or online) to get to know each other.
- Secure financial resources
If your finances are already complete, you don’t need to go through this step. However, if your financial resources are insufficient, you can request a loan from the federal government, banks, or other relevant institutions.
- Sign the contract
If you lack experience in signing contracts, it’s a good idea to seek help from an experienced lawyer. The contract will define your future path; if you don’t pay attention to all aspects before signing, many problems may arise later.
- Rent or buy the business location
Choose a suitable location for starting your business and either rent or purchase it.
- Receive necessary training and support
Entering a reputable business with a strong background requires that you receive training from the head office. This training includes sales techniques for the brand’s products, payment processing methods, branding, and information on where to purchase and how to sell services and products.
Which Businesses Are Suitable for Franchise Purchase in Canada
At first, fast food is the franchise that comes to most people’s minds; however, when investing in Canada through a franchise, you are not limited to creating a franchise of a fast food brand. Below are some of the top franchises in Canada.
Tim Hortons
This coffee shop brand is one of the most profitable franchises in Canada.
To obtain a franchise of this brand, you must have an investment of one hundred thousand dollars and a net worth of five hundred thousand dollars.
Canada Bread
This bakery brand has branches in 32 countries around the world.
To establish a franchise of this brand, depending on the business location, you will need between thirty thousand to three hundred thousand dollars.
Marlin Travel
It is a travel brand in Canada.
The initial investment required is between one hundred thousand dollars and one hundred and fifty thousand dollars.
Pet Value
Another profitable brand for franchise purchase is Pet Value, which operates in the pet industry.
For this business, a minimum of 300,000 dollars and a maximum of 600,000 dollars are required.
Belron Canada
This brand, a leader in the automotive industry, has franchises in 30 other countries.
To invest in this brand through a franchise purchase, approximately 700,000 dollars are required.
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