How do I choose which franchise to buy in Canada?

There is no single best franchise: the Canadian Franchise Association (CFA) says there is no one-size-fits-all approach to franchising and each franchisor is unique. So choosing one is a matter of fit and of checking. The CFA also says that as you research, it is important to choose an industry that interests you and to look at the different brands franchising in that industry. Here is how to turn that into a short list and then a decision.

Start with the industry, then compare brands

Pick the industry first, as the CFA suggests. Then compare the brands within it on what each one asks of you: the fees, the training, the territory and how much you must follow its procedures. The CFA notes that a franchisee must strictly follow the franchisor’s operating systems and procedures, so choose a system you can live with.

Bring in professionals

The CFA calls it critical to carry out proper and thorough due diligence with the help of franchise professionals, including a franchise lawyer, accountant and banker. Have your lawyer go through the contract. For the points to look for, see what to check in the franchise agreement.

Read the disclosure document

The CFA says franchise disclosure is regulated by the provinces, and that while many elements are similar, there are important differences. Section 5 of Ontario’s Arthur Wishart Act (Franchise Disclosure), 2000 requires a franchisor to give a prospective franchisee a disclosure document, received not less than 14 days before the earlier of signing the franchise agreement or any other agreement relating to the franchise (other than one that only covers confidentiality or designates a location), and paying consideration relating to the franchise (a deposit is excluded only if it meets the Act’s conditions, including being refundable without deductions). Section 5(7) exempts some grants, including certain resales by an existing franchisee that are not made by or through the franchisor, so ask your lawyer whether disclosure applies to your purchase. The CFA also lists Alberta’s Franchises Act as setting disclosure requirements, but not every province has a franchise disclosure law. Compare the disclosure documents of the brands on your short list.

Using a franchise broker

If you use a franchise broker to find brands, ask how the broker is paid and which brands they represent. See whether you need a franchise broker.