How to Compare Canadian Franchises in Crowded Sectors

When you are considering franchises in sectors that are very crowded, it can be difficult to decide which type to invest in. For example, if you think you may want a pizza franchise, there are several brands operating in Canada. How do you decide which franchise is the right fit for you when there are so many options?


Consider the franchise from the small business owner's perspective

Looking at each franchise through the lens of a consumer won't get the job done, especially when you are in the early research process. Instead, you need to look at the metrics. Learn about the operations from behind the counter and the desk. Explore how the marketing works. Ask the franchise representative you are talking to how the franchisor will help you find new customers.


Discover the Unique Selling Proposition (USP)

The USP is what sets each opportunity apart in a crowded field. Ask the franchisor how their brand is different from other brands in the same space and what they believe their USP is. Once you have the USPs of each brand you are evaluating, you can discover whether they do, in fact, have something that sets them apart from the competition.


Ask the real questions

When you are looking at a franchise category that is highly competitive, you need to ask some deep questions before making a decision, including the ones below.

  • What is the failure rate?
  • How many franchises have you sold this year?
  • How many franchises did you sell last year at the same time?
  • What would be the top reason you would tell me to invest in this franchise if I were your family member?
  • What areas does your franchise need to work on?

You may find some of these questions tough to ask, but you need to know the answers. A franchise is a significant financial and time commitment, and you don't want to make that commitment until you are certain you have found the right opportunity.

Never invest in a franchise in a crowded sector simply because that sector is popular right now. You need to join a brand that is a good match for your skills and your goals. While it may take a little extra time to perform due diligence on a franchise in a popular sector, the things you will learn along the way are certainly worth it.