In 2023, Canada’s economy began to slow down due to factors such as rising interest rates and a challenging labour pool. Despite these difficulties, the Canadian franchise industry has continued to flourish. In fact, franchising in Canada is the 2nd largest franchising industry worldwide, and it represents more than $120 billion of Canada’s GDP (2023 Industry Overview).
The Canadian Franchise Association (CFA) interviewed FranNet franchise consultants, Gary Prenevost and Grant Bullington about the various influences that will affect franchising in Canada in 2024.
Popular Canadian Franchises in 2024
- Health & Wellness – The popularity of these franchises are due to a “growing societal interest in well-being and the desire for healthier living options.” It’s important to keep in mind that the health & wellness industry can be a crowded sector meaning that potential franchisees will want to ensure they find a strong location. Franchises in this category include: fitness studios, physiotherapy, massage businesses, health food outlets, and more.
- Education – While the demand for tutoring will remain, it’s the supplemental education sector that’s expected to see larger growth as “franchises help our kids be better prepared to use the evolving technology of the future.”
- B2B Franchises – These types of franchises provide services that address ongoing business needs such as digital marketing, IT support, business coaching, property maintenance, and more. B2B franchises “are often lower cost because they don’t require a prime retail location.”
Is Franchising a Good Option in Canada’s Current Economy?
Opportunity to Get a Head Start
It’s true the economic downturns often result in fewer people opening businesses. However, aspiring entrepreneurs can take advantage of this and get ahead of the competition. While starting a franchise business in a slower economy will require franchisees to be more “strategic in implementing their business model”, it will inevitably result in a stronger and more robust foundation.
Proven Business Model
Furthermore, franchising isn’t the same as starting an independent business from scratch. Rather, it comes with a proven model, which reduces the risk of starting a business. The franchisor can provide data and guidance so that the franchisee can know what to expect and “there isn’t the same potential for costs to run out of control”. This level of safety is a huge benefit to franchise ownership.
3 Factors Influencing the Franchising Landscape in 2024
#1 – Demographic Shifts
When it comes to younger generations there’s a preference for experiences over material possessions. As a result, franchises in the entertainment and hospitality sectors will continue to grow. Younger consumers are also more tech savvy and “seek fast information and solutions”, which increases the demand for services that offer convenience. Franchises that cater to this include residential cleaning, home improvement, dry cleaning/laundry, and more. These services also appeal to the older generation who can no longer do them independently.
#2 – Emerging Technologies
Emerging technologies such as artificial intelligence (AI) virtual reality (VR) will likely have a “profound impact on the franchising landscape in 2024.” Prospective franchisees should evaluate how franchisors are utilizing these technologies to improve customer experience and make their processes more efficient. AI has great potential to “streamline operations and enhance decision-making through data analysis.”
At first, it might seem to take more time for franchise systems to adapt to the newest technology. However, as “key trends prevail” franchises will be “in a great position to quickly implement the best AI solutions that offer the biggest (proven) impact.”
#3 – Consumer Behaviors
Service-based franchises such as digital marketing and remote IT services have benefited from the rise of remote work. Consumers have also shifted “towards online shopping and delivery services”, which has led franchisors to enhance their service levels in order to accommodate for this behavior.
In addition, many people have grown accustomed to the idea of remote work, which has led to many opportunities for franchise businesses that can be run from home. Most often, this is a B2B franchise or a service-based franchise.
You Can Be a Successful Franchisee
While the status of the economy will certainly impact businesses, the “success in franchise ownership rests with how well the franchisee can execute the business model of the franchisor they’ve aligned with.” Franchising is the perfect opportunity for aspiring entrepreneurs who want to run their own business without taking on as much risk as independent business ownership.
The first step is finding the right franchise. FranNet is here to help with that. Our expert franchise consultants will evaluate your personal goals and skills and match you with a brand that fits. They will be there to walk you through the process of joining a franchise from start to finish. Schedule your free consultation today to get started!