Preet Pandher was finding out in Edmonton in 2016 when he bought a job washing dishes on the weekend at A&W.
As somebody with an entrepreneurial mindset, he remembers piles of dishes through the breakfast service whereas calculating in his head the tough price per meal.
A decade later, Pandher owns 9 A&W places because the CEO of Elmwood Capital Ltd., with six extra on the way in which.
“I feel top-of-the-line issues concerning the franchising mannequin is it’s actually scalable,” he stated.
Pandher, whose mom is a part-owner within the enterprise, stated he remembers watching his dad and mom wrestle as impartial enterprise house owners of dry cleaners, liquor shops and fuel stations, however by no means discovering these ventures to be “scalable for them.”
Franchising is a big business in Canada and will be worthwhile for a lot of, nevertheless it affords much less flexibility and inventive management than different varieties of small companies. Because of this, some business gamers say it’s best fitted to process-oriented entrepreneurs who wish to work inside an present mannequin.
Daryl Ching, proprietor of Vistance Accounting, which works with franchise purchasers, stated that proudly owning a franchise is so much like shopping for a enterprise construction, the place the franchisee takes on the monetary dangers however positive factors entry to manufacturers which are tried, true and examined.
“As an alternative of constructing a aircraft from scratch, think about that you’ll be able to fly a aircraft that’s already examined and there are already passengers on board,” he stated.
“Nonetheless, there’s a catch. There are restrictions in your flight paths, and the meals you’re allowed to serve is predetermined.”
In working a franchise, Ching stated there isn’t lots of room for adjustments with regards to the menu, costs or suppliers.
“If you’re very sturdy in operational efficiencies, if you happen to’re good at managing employees and getting extra productiveness out of workers, this is a perfect state of affairs as a result of you possibly can take what’s a considerably worthwhile franchise and switch it into a really worthwhile franchise and make extra from it,” Ching stated.
Proudly owning a franchise can typically be extra work than some assume, he stated. When workers name in sick or abruptly give up, oftentimes house owners need to roll up their sleeves and leap in till they will discover a alternative.
There can be vital prices related to beginning such a enterprise.
In his business, Pandher stated the fee to purchase an present franchise is often primarily based on earnings or revenue multiples of the situation. If it’s a new location, he stated, the fee is commonly simply the price of building.
He stated there may be typically a franchise payment concerned, which in his case was a one-time payment of about $55,000 plus tax in 2023 in return for a licence to run that retailer for 25 years. Nonetheless, many franchise methods even have ongoing funds like royalties or advertising and marketing charges, relying on the settlement.
Discovering the proper location is one other key issue.
Pandher stated franchisors will help with figuring out key regional indicators like site visitors, inhabitants density, and native incomes.
When evaluating potential places, he stated eating places in residential or suburban areas might expertise larger demand round dinner and late-night hours, however lunch time will doubtless be gradual with many native residents at work through the day.
If a restaurant is in a non-residential space, like a enterprise centre, Pandher stated it might see extra demand throughout breakfast and lunch.
“It’s crucial to know what elements affect what you are promoting in what approach,” he stated.
Sherry McNeil, president and CEO of the Canadian Franchise Affiliation, stated this sort of enterprise mannequin can scale back uncertainty and dangers related to beginning a brand new enterprise.
“We prefer to say (in) a franchise enterprise, you’re in enterprise for your self, however not by your self,” she stated.
“As a result of in franchising, there’s already established model recognition, already confirmed methods and processes, coaching, ongoing help that the franchisor gives.”
McNeil stated Canada’s franchising business has grown from a $100 billion business in 2019 to a $138 billion business by the top of final yr.
Franchising can also be the twelfth largest business within the nation, she stated, with Canadians interacting with a mean of three to 5 franchise places every day.
One of many largest restaurant operators within the Canadian franchising panorama is Redberry Eating places, with many places throughout the nation, together with 171 Burger Kings, 35 Taco Bells and 21 Jersey Mike’s places. Ken Otto, CEO of Redberry Eating places, stated the corporate introduced a brand new franchise to Canada lately after changing into the grasp franchisee for Jersey Mike’s in 2024.
Otto stated the method took about 15 months, starting towards the top of 2022 and consisted of diving into all components of the sandwich model.
However together with potential upside for franchise house owners, there will be hurdles.
“Like something, you by no means bat a thousand. There’s some places that gross sales could also be a bit of decrease than expectations. What we do is we study,” he stated.
If a location isn’t performing as much as expectations, Otto stated it’s essential to judge points like whether or not the shop was a demographic match or if there was an entry or visibility mismatch and apply the teachings to future shops.
Total, he stated profitable franchising isn’t a “get-rich-quick train.”
“That is the fantastic thing about franchising the place you’ve gotten the flexibility to take a confirmed system … and when correctly executed, the trail to wealth creation is extremely motivating for us and for franchisees,” he stated.