Just how big is franchising in Canada?

The “franchise industry” is often spoken of in Canada, but the truth is that franchising stretches across nearly every industry. It plays an integral role in the Canadian economy and employs loads of people in this country.

But, just how big is it?

Let’s take a look at the numbers from the Canadian Franchising Association (CFA).

Gross Domestic Product & Employment

According to the CFA’s Canadian Government Primer publication, franchising generates $96 billion annually for the country, which represents 5% of the Canadian economy. Over 1.8 million Canadians are either directly or indirectly employed by the franchising industry, which includes more than an estimated 1,300 brands. Those brands have about 75,000 franchise units within the country.

Those franchises are responsible for generating $61 billion in household wages that help keep the Canadian economy moving and they bring in $16 billion in federal tax revenue (6.4%) and $10.6 billion in provincial tax revenue (4.2%).

Here is what franchising is worth to each of the provinces and the three territories in terms of GDP:

  • Alberta – $11 billion
  • British Columbia – $13 billion
  • Manitoba – $2 billion
  • New Brunswick – $1.3 billion
  • Newfoundland & Labrador – $640 million
  • Nova Scotia – $1.6 billion
  • Ontario – $49 billion
  • Prince Edward Island – $200 million
  • Quebec – $15 billion
  • Saskatchewan – $2 billion
  • Northwest Territories/Nunavut/Yukon – $208 million

Franchising is Small Business

As politicians are wont to say, small business is the backbone of a country and franchising isn’t an addendum to small business, franchising is small business. When an entrepreneur opens a franchise, they are opening a small business, even if it happens to be part of a national or even an international brand. The majority of the money generated is staying within that community and the jobs generated by that franchise business are going to locals.

This is the message the CFA espouses when it lobbies the federal, provincial and territorial governments with its six-part policy plan for governments:

1. Ensuring the Independent Nature of the Franchisor-Franchisee Relationship is Recognized

The CFA wants all levels of government to recognize that franchisees are not employees of franchisors, but rather independent business owners who are contracted to use the franchise’s brand assets and business model.

2. Ensuring Best Practices and Uniformity in Franchise Disclosure Legislation Across Canada

Franchise disclosure legislation is often lengthy and confusing, the CFA says, and it differs significantly throughout the country. The organization would like to see disclosure legislation become more uniform throughout Canada.

The CFA also believes that the Uniform Franchise Act and Regulation created by the Uniform Law Conference of Canada, and which acts as a guide for much of the disclosure law across the country, should be updated to be more contemporary.  

3. Supporting the Function and Importance of the Entrepreneur

Governments should work with the CFA, the organization says, to develop programs that help certain employment groups such as youth, new Canadians and military veterans to open franchises.

They also call on the various levels of government to keep small business and corporate tax rates low to encourage entrepreneurs to go into business.

4. Reducing Red Tape and Regulatory Burden for Small Business

To put it simply, the CFA wants to work with governments to cut down on red tape and regulations that hamper business growth, as the organization says many of its members struggle with compliance of the numerous regulations they must follow.

5. Ensuring a Fair Playing Field for Franchised Businesses Under Product Stewardship Legislation

The CFA contends that current legislation pertaining to product stewardship — where organizations that design, produce, sell or use a product take responsibility for minimizing the product’s environmental impact throughout its lifecycle — unfairly targets franchised small businesses.

Product stewardship legislation should be revised or written in a way that does not make it unfair for franchised businesses when compared to non-franchised small businesses, the CFA says.

6. Maintaining a Reasonable, Predictable and Fair Minimum Wage

While it understands the need to raise minimum wage, the CFA wants governments to adopt wage increases that are predictable and phased in over an appropriate amount of time and eschew wage increases that are dramatic and sudden, which they say negatively affects small businesses like franchises.

Not only is franchising huge in Canada, but the lobbying group for the industry is organized and vociferous and constantly working on behalf of all franchisors and franchisees in the country. If you are ready to take the leap into franchising, sign up for a free FranNet franchise search and consultation today. We would be thrilled to help you.

Jul 11, 2018