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How do I Open a Franchise in Canada?

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  • Written By: Carol Francois
  • Edited By: Heather Bailey
  • Last Modified Date: 02 December 2016
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In order to open a franchise in Canada, there are a series of important steps that must be completed. A franchise is a business arrangement where the franchisee pays the parent company for its trademarked image, products or techniques. In return, the parent company provides business support, training, service enhancements, and access to resources and support staff.

The first step to open a franchise in Canada is to research the different options. The number one reason for franchise failure is location. Take the time to physically visit the proposed locations and walk around. Look for the anchor business that will draw people to the location on a regular basis and determine if those people would be interested in the goods or services offered by your business.

Remember that weather patterns have a huge impact on consumer activity, and will impact the success of a franchise in Canada. For example, a restaurant location that is a 15 to 20 minute walk from a busy office tower is a great location for the business lunch trade in the summer, but is unlikely to attract much business in the winter unless there is an underground walkway. Look at the availability of parking, and determine if clients will have to walk past the competition from the parking garage to get to your proposed location.

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Determine if the proposed location is in a rural or city center by reviewing the population data from Statistics Canada. This government agency provides free access to a wide range of information on the population, such as median income, household distribution, family structure, and local industry. This is especially important when looking at the size of a community and evaluating its ability to sustain local businesses.

The size of cities and communities in Canada is not comparable to the United States, due to the difference in overall population size and density. Almost 85 percent of the population of Canada lives in medium-size cities. The largest city in Canada is Toronto, Ontario, and it is comparable in size and industry to Detroit, Michigan.

Some franchise operations have a community commitment component. In general, most firms require owners to either live in or near the proposed business location. The purpose of this clause is to encourage community involvement and active participation in the business operation.

In order to open a franchise in Canada, you will need to register the business with the Canada Customs and Revenue Agency (CCRA). As part of this process, a business number will be issued to you, in the name of your registered business, as well taxation numbers and payroll deduction numbers. There are two primary sales taxes in Canada, the goods and services tax (GST) and the provincial sales tax (PST). Some provinces have combined these two taxes into one, called the harmonized sales tax (HST).

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