Franchise Interest in Canada Still Strong Despite Economic Woes
While tougher economic times may not seem like the best moment to start a new venture, the reality is that franchises with a successful brand stand as a possible exception.
The Canadian Franchise Association hosted a second franchise exhibition in the Big Four Building in Calgary on the weekend of February 6, 2016. According to organizers, the pre-registration and attendance numbers showed a significantly stronger interest than in 2015 despite economic uncertainty in the country. The exhibition features representatives from franchisors who have opportunities available, expert consultations, and educational seminars aimed at helping people who are interested in becoming a franchisee.
An expert attending the show said this trend wasn't surprising at all. Spikes in interest in franchises commonly appear during an economic downturn, with people gravitating toward franchises with "recession-resistant" business models. These types of franchises can show prospective franchisees that their franchisees have stayed strong even when there are dips in the economy, and they typically include restaurant chains and coffee shops.
Franchises that offer services to businesses, such as training or accounting, also may stay strong during an economic downturn because companies are often looking to cut costs and outsource.
While franchisees do pay a franchise fee and other start-up costs, this arrangement allows them to start off with an established business model and brand. Having a proven system and brand that is recognizable to the public can reduce the risks associated with starting a business from the ground up.
Mount Royal University Associate Professor of Business Wendelin Fraser, points out that in a franchise, someone has already figured out what has to happen to make the business run smoothly and efficiently. When a franchise can demonstrate it has real value and is solving problems for its target customer group, it can still be a viable business opportunity even when the economy isn't flourishing.
With layoffs a natural part of any economic troubles, it's not surprising that so many people are looking for a solid business of their own. When it comes to franchising, researching the business model and franchiser itself carefully is one of the keys to success, according to experts. They recommend prospective franchisees have a completely clear understanding of what the total investment is, know where they are getting the money from, and identify their own skill sets before making a final decision and signing an agreement.