Franchising has had a profound impact on
Canadian business, and many franchisors, franchisees and consumers have
benefited greatly from it.
For many franchisors, franchising has provided
a relatively inexpensive way of growing the business quickly, and of achieving
market penetration, without the corresponding capital cost, time and risk
of having to establish and finance each business location single-handedly.
For many franchisees, franchising has provided
a formalized business structure, within which the franchisee hopes to benefit
from the franchisors' experience, know-how, business structure, procedures,
trade-marks, goodwill, trade secrets, advertising, and promotion.
Consumers have also benefited greatly from franchising. Consumers expect,
and generally speaking, receive, consistent products and services at a
particular franchise, whether that franchise is located in one city, or
Consumers also benefit from the market penetration which has been achieved
by some franchises, which allows those franchises to honor discounts, or
warranties, or promotions, nationwide.
Despite the possible benefits, franchising is not for everyone,
and it is certainly not without serious risks. Prospective franchisees,
who will want to rely heavily on a wide range of "hoped-for" benefits from
the franchisor, should conduct thorough research in relation to any potential
franchise, and the franchisor, before taking any steps with respect to
that franchise. Franchisors, on the other hand, put the goodwill and viability
of their franchising business at risk each time they enter into a franchise
agreement, and should conduct thorough research in relation to a prospective
franchisee before any steps are taken with respect to that prospective
franchisee. It is essential that all parties involved in franchising conduct
thorough investigations and consult with a lawyer before any steps
are taken in relation to a prospective franchise.