Opening a franchise in Canada requires researching different options, visiting proposed locations, considering weather patterns, and reviewing population data. Franchisees must also register their business with the Canada Customs and Revenue Agency and obtain tax return and payroll deduction numbers.
To open a franchise in Canada, there are a number of important steps that must be completed. A franchise is a commercial arrangement in which the franchisee pays the parent company for its image, products or techniques. In return, the parent company provides business support, training, service enhancements, and access to support staff and resources.
The first step in opening a franchise in Canada is to research the different options. The number one reason for franchise failure is location. Take the time to physically visit the proposed locations and walk around. Look for the anchor business that will draw people to the place on a regular basis and determine whether those people would be interested in the goods or services your business offers.
Remember that weather patterns have a huge impact on consumer activity and will affect the success of a franchise in Canada. For example, a restaurant that is within a 15-20 minute walk of a busy office tower is a great location for the business lunch trade in the summer, but is unlikely to attract much business in the winter unless there is no underground walkway. Check parking availability and determine if customers will have to outrun the competition from the garage to reach your proposed location.
Determine whether the proposed location is in a rural or urban setting by reviewing population data from Statistics Canada. This government agency offers free access to a wide range of information about the population, such as median income, household distribution, household structure and local industry. This is especially important when looking at the size of a community and assessing its ability to support local businesses.
The size of cities and communities in Canada is not comparable to the United States, due to the difference in overall population size and density. Nearly 85% of Canada’s population lives in medium-sized cities. Canada’s largest city is Toronto, Ontario, and is comparable in size and industry to Detroit, Michigan.
Some franchise operations have a community engagement component. In general, most businesses require owners to live in or near the proposed business location. The purpose of this clause is to encourage community involvement and active participation in the business operation.
To open a franchise in Canada, you must register your business with the Canada Customs and Revenue Agency (CCRA). As part of this process, you will be issued a business number, in the name of your registered business, as well as tax return numbers and payroll deduction numbers. There are two major sales taxes in Canada, the Goods and Services Tax (GST) and the Provincial Sales Tax (PST). Some provinces have combined these two taxes into one, called the harmonized sales tax (HST).
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