Ontario Wage Hike Won't Deter Franchise Growth, Says the Canadian Franchise Association


Mar 07, 2018

The Canadian Franchise Association (CFA) recently said it believes franchises in Canada will grow more this year, even with the introduction of a higher minimum wage in the Toronto area, reports CBC News (http://www.cbc.ca/news/canada/toronto/ontario-minimum-wage-franchise-1.4550996).

On January 1 of this year, the minimum wage in Ontario was increased to $14 per hour. This jump of 21 percent makes it the highest minimum wage in the country. Some franchisees found it necessary to cut paid breaks and benefits to keep the lights on. Other employers and workforce advocates, however, labeled those measures as punitive, suggesting that larger corporations could help franchisees handle the increase in labor cost.

Many franchisees used cost-cutting measures to help ease the burden of the hike. Everything from price increases and staff cutbacks to reduced operating hours has been seen in response to the new wage. However, as many franchise experts have pointed out, franchisees receive several advantages when they're part of a franchise business system that independent business owners simply don't have. A franchisee has access to a brand that is already proven in the marketplace in Canada, a system that is well-established (in an ideal franchise), and a network of other franchisees under the same banner that are experiencing the same obstacles together.

Naturally, not all franchises have been impacted by the Ontario wage hike. Some franchisees were already paying above the minimum wage as this varies by operational sector. Franchisees can also turn to their franchisor for ideas and work with their employees to handle the strain from the wage increase together.

A minimum wage boost puts more money into people's pockets, and this a potential boon for businesses in the future, including franchise locations. When people are earning a higher wage, they have a little more to spend on area businesses. In the long run, the CFA's estimation that franchise growth will go on this year doesn't appear to be overly optimistic given this fact.

Franchises, like other businesses, still have to deal with legislative and regulatory changes that could impact the bottom line and provide operational challenges. As a prospective franchisee, it's crucial that you stay on top of emerging changes that could have a significant effect on your future business. Keep in mind that choosing a system with a strong support structure in place will also help you in this area.