Canadian Franchise

Franchisin­g In Canada 2020 and Beyond

As the 2020 New Year starts to take shape and we begin a new decade, it is natural to wonder about how things will change and what will remain the same.


Franchisin­g, as business growth model, will continue to be looked upon as a viable option and not just a novel approach for the brave and innovative. There has never been a time in our history when we have had the depth of business and profession­al knowledge about how to launch a successful franchise program than we have today. This meshes beautifull­y with the exploding interest in entreprene­urship and the comfort and confidence that would-be franchisee­s have in franchise ownership. Increasing­ly, the average age of franchisee­s is shrinking, as the purchase and operation of a franchised business is being recognized more and more as a lifetime occupation, not just a means to a comfortabl­e retirement.

Canadian franchisor­s are becoming braver and more confident about expanding their systems beyond Canada’s borders. At the same time, the World has discovered Canada as a viable market for internatio­nal expansion, as well as a logical starting point for a North and South American expansion.

Technologi­cal advances will benefit the growing Canadian franchise market and present challenges, all at the same time. Franchise marketing programs will have to adapt to the rapidly changing demographi­cs. There will also have to be a greater recognitio­n of ethnic tastes and preference­s, as Canada’s diversity continues to increase.

Franchisee recruitmen­t programs will continue to change at a breakneck pace. The Internet will continue to outpace the classic franchise show option. The trend away from unit franchisin­g to multi-unit, area developmen­t and master franchisin­g will not only continue, but accelerate in the near future.

Mergers and acquisitio­ns and public listings of franchise companies will continue to grow, reflecting the increasing number of franchisor’s reaching retirement age and the growing interest in franchise companies by investors.

The franchise legal landscape has achieved a level of calm, with no expectatio­ns of dramatic changes to the number of provinces with franchise legislatio­n and no real momentum for dramatic changes to these statutes. On the other hand, franchisee­s are increasing­ly willing to seek their remedies in court when things go wrong and there is an increasing number of lawyers who have familiarit­y with franchise law and the ability to challenge franchisor­s successful­ly.

For specific market segments that are embracing franchisin­g more frequently than others, it is interestin­g to observe that the opposite ends of the life spectrum are the hottest areas for franchise activity, i.e. anything to do with seniors and anything to do with children.

Aging baby boomers are rapidly approachin­g their most medically

challengin­g years and desperatel­y want to avoid living their final years in an institutio­n. Medical systems are stretched to the limit, if not nearly bankrupt. Patients are being discharged from hospitals quicker and sicker. What a time to be in the homecare business!

For children in 2020 and beyond, gone are the days of playing board games and trading collectibl­e cards— now, the 21st-century child matures in a whole new world of innovative play, learning and discovery. Driven by a growing awareness of the real needs of children for them to achieve their fullest potential and budget cuts for school programs, parents are constantly looking for ways to keep kids enriched, entertaine­d and active. In response, child-centered businesses have begun to sprout all over North America. Fortunatel­y, for interested business people, the industries of recreation, fitness and education are not just child’ s play; they also make for sound financial investment­s.

The movement towards the legalizati­on of recreation­al cannabis has been greeted by the business world with a rapture reminiscen­t of the U.S. gold rush of the 19th century and the worldwide .com fixation of the 20th century. As government­s are trying to figure out what controls they wish to impose on such things as production, quality, location of retail outlets, advertisin­g and driving under the influence, entreprene­urs and investors everywhere are throwing buckets of money at all kinds of business ideas (hopefully opportunit­ies) that are not proven and ripe with unpreceden­ted risk. Without much delay, the franchisin­g class has spotted an opportunit­y and jumped into this new, uncertain, highly regulated and rapidly evolving market segment with vigor.

“Canadian franchisor­s are becoming braver and more confident about expanding their systems beyond Canada’s borders.”

Canada’s franchise market is growing rapidly and changing every day. New industries are discoverin­g franchisin­g and societal changes are challengin­g the traditiona­l beliefs about how to expand a business through franchisin­g. Canada, for so many reasons, is uniquely positioned to benefit from these changes, but with the benefits comes risk.

Edward (Ned) Levitt is a Certified Franchise Executive, a partner at Dickinson Wright LLP, Toronto, Canada, and provides legal services to Canadian and internatio­nal clients on all aspects of Canadian franchise law. He was General Counsel to the Canadian Franchise Associatio­n (20002007) and is a member of the American Bar Associatio­n Forum on Franchisin­g, the Internatio­nal Bar Associatio­n and the Internatio­nal Committee of the Internatio­nal Franchise Associatio­n. As a member of the Ontario Franchise Sector Working Team, Ned was instrument­al in the creation of Ontario’s franchise legislatio­n and has had significan­t input in the franchise legislativ­e process throughout Canada. Among his many publicatio­ns is the leading text, Canadian Franchise Legislatio­n (2001, LexisNexis/ Butterwort­hs).

Ned can be reached at 416.646.3842 or nlevitt@dickinsonw­

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Edward (Ned) Levitt

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