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Buying a restaurant franchise in Canada is a serious investment and a big step that will impact your life and your finances for years to come. Before you sign any agreements, you'll need to do some homework and your due diligence.
If you have a list of Canadian food franchises that you are interested in, here's what you need to do next to narrow it down.
Consider the format
Restaurant franchises in Canada come in various formats, including sit-down/full service, quick service and fast casual. Identify the type you are truly interested in, as this will help guide you to the right opportunity. There are pros and cons to consider for each type - full service tends to be more expensive than quick service, for example - so it's important to evaluate all the format options before you commit to any one type.
Look into the company
It goes without saying that you need to learn about the franchise operation's background and study the franchise disclosure document. However, you will need to dig deeper, especially when it comes to a food franchise, where both great food and a great reputation really matter and will impact your bottom line on a daily basis. Visit some locations of the brands you are considering in the area you want your location. Sample the food and observe the customer service. Research the brand on the internet. Have they ever come under fire for food safety issues or other problems? Gauge their reputation with the general public by checking reviews and social media.
On the financial side, take a look at average system sales growth. Make sure you look at franchisors and company-owned locations. Lack of growth in the company stores is generally not a good sign.
Speak to franchisees
Talking to current and former franchisees will give you insight you can't get from research alone. Ask the franchisees about their experiences. While some may be hesitant to talk about money, you can get an idea by asking about costs. Also ask them what they would change about the franchise or its operations if they could, as their answer can give you some clues when it comes to potential problems. If you talk to former franchisees, find out why they left.
Decide what type of role you want to have
Different franchises have different rules in the food sector. Some will allow you to hire a manager to run your location, while others expect you to run day-to-day operations, at least at the start. Decide what type of owner you want to be, and make sure the brands you're considering will allow you to have that role in your franchise.
Becoming a Canadian restaurant franchisee may just be the right move for you, but you will need to invest some time into research and consider your options before you make a decision. When you make the most informed choice possible, you will stand the best chances of success.
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