Becoming a Business Immigrant (Pt. 2)

After you apply at a Business Immigration Centre for business immigrant status, it will take a good six months to a year for your application to be reviewed, depending on how complete your application your circumstances. The three steps involved in this whole process are:

 

• Submitting the application
• Attending a personal interview at a Canadian embassy
• Medical and Security checks

 

You also are required to submit a business plan or business proposal with your completed application. Consult a lawyer or accountant for a bit of assistance. They will be very familiar with the application process. Check the government of Canada website for even more information.

 

Business immigrants can apply for entry into Canada in one of three ways:

 

• As a entrepreneur
• As an investor
• As a self-employed person

Becoming a Business Immigrant

It’s not hard to become a business immigrant in Canada. The first thing you need to do to apply at one of the nine “Business Immigration Centres”. They are located in the following cities:

 

• Beijing
• Berlin
• Buffalo
• Demascus
• Hong Kong
• London
• Paris
• Seoul
• Singapore

If you have the ability, desire and resources to invest in a franchise or start your own business, it is very likely you will be accepted. In 1998 alone, $437 million dollars on the Canadian economy came from business immigrants. Be sure to check with the Business Immigration Program as they are the ones who allow immigrants to enter Canada. You must meet their criteria and be willingly to follow ministry and government regulations at all times. These regulations do change from time to time, so be sure to do your research and get the most current information.

Franchisee’s Right of Rescission

The franchisee’s right of rescission allows him or her to act in case of misrepresentation on the part of the franchisor and information in a disclosure document. Should your franchisor fail to provide you with the disclosure document, you may rescind the agreement up to 60 days after receiving the document, or no later than 2 years after granting the franchise itself. Once the franchisor receives your notice of cancellation, he has 30 days to compensate you, the franchisee, for all net losses you have sustained in acquiring, setting up or operating the franchise.

Earnings Claims

By law, your franchisor must provide you with all the information about earnings claimed. This includes all material assumptions involved in the preparation and presentation of their franchise. These assumptions must be based on actual results of existing outlets and a percentage of the outlets which exceed or simply meet the portrayed results must be provided. Earning claims information must be prepared for you well in advance of your being presented any contract or agreement on behalf of the franchise. These documents should also provide you with a location where you can find additional substantiating evidence and information. All franchisees may and are encouraged to use this information for their own inspection. If any information on the claims is only relevant to a franchisor-operated outlet, this must be clearly stated in the documents. The results may vary with a franchisee-operated outlet. Earnings claims allow the franchisee to ascertain which specific level or range of sales, costs, income and profit can be expected for a franchise.

Disclosure Document

A disclosure document must be provided by the franchisor 14 days before you sign any agreement related to his franchise. If you plan to give him any sort of payment, he must also provide this document 14 prior to receiving it, whichever is first. This is enforced by law in the provinces of Alberta, Ontario and PEI. If you researching a franchise outside of these provinces, but are operating in one of these provinces, you can request a copy of the franchisor’s disclosure document that is required in these provinces. The document needs to contain all franchise contracts to be signed, financial information of the franchisor, and all other documents in accordance with regulation. The document needs to be signed by a minimum of two officers or directors, stating that the document is completely true and omits nothing of importance. As a franchisee, use the disclosure document to evaluate the merits of a given franchise. However, all documents need to be reviewed by your lawyer, accountant and other franchisees if possible. Franchise consultant are also very helpful in this regard.

Franchise Legislation

Canada has generally been free of strict franchising legislation. Until 1997, Alberta was the only province to have any legislation directed specifically at franchising at all. Unfortunately, there has been more and more legal action taken between franchisors and franchisees and this has begun to change. Other provinces have begun to reassess the importance of having this legislation. May 17, 2000 brought the Arthur Wishart Act (Franchise Disclosure). It was passed by the province of Ontario and is very similar to the Alberta Act. Prince Edward Island passed its own legislation (the “PEI Franchise Act”) in June 2005. This legislation is also very similar to that of the other two provinces.

 

These laws concern the sale of franchises that are to be opened partly or whole in the province in question. They concern whether the purchasers are permanent residents of the province they wish to run their business in. Alberta is by far the strictest of the three in this regard. You must be a resident of the province to run a franchise there.

Rent Payment

You’ve probably already considered the amount of rent you are going to have to pay as a crucial factor in whether a location will work for you. Obviously, the more traffic in a certain location, the more expensive the rent will be. If you choose a location that is on the more expensive side, you need to make sure you can justify it financially. Many young, up and coming businesses go bankrupt because of inability to pay rent. The only way to justify it is if the proposed rent measures as a percentage of your anticipated sales. Do some research within your own industry on sales volume and how rent factors into the equation. What is the average amount of rent paid by similar companies as yours? What percentage of overall sales is it? High rent costs that go above industry averages are dangerous, but they can be justified if your location allows for mark-ups in price or other an increase in the volume of customers (and therefore sales) that can offset the expense.

The Factors of Location

Competition

It is imperative that you know your competition, no matter what location you choose. There may not be many competitor businesses in the area, and this is equally important to know. Are there many small independent businesses, or huge nation-wide corporations? Do these companies have a lot of advertising in the area? What about on TV or in the newspaper? The most important question of all is whether you will be able to have a competitive edge against whatever competition is in your area.

 

Hours of Operation

Some locations require that you operate at specific hours. If hours of operation are important to the success of your business, you should check with the landlord first to avoid a disagreement and legal problems down the road. If you choose to do business in a shopping mall, you could be bound to the malls hours of operation. If you wish to run your business on Sundays, do some research to find out if your city’s bylaws allow this.

Location Trends

History of the Location

If you find a location you are happy with, that seems to be a recipe for success based on what we have talked about so far, take another look. With more research, it may become clear to you that many businesses in the past have tried this location and shut down due to certain factors. Are there many vacancy signs in the building? For lease signs or going-out-of-business sales? Investigate the buildings adjacent to yours. Could they be drawing traffic from your location? Are the leasing rates more attractive? Better promotions? Nicer facilities? You want your location to be one of prosperity, where many different businesses are being successful together by complimenting each other. An otherwise empty building is not a good place for your franchise. Difficult or incompetent landlords can also have an effect on people leaving.

                                                                                                             

Changing Patterns of Neighbourhood

Try to predict the current patterns or trends in your neighbourhood. Use the surrounding area as a rule. Has there been an increase in the number of businesses other the past few years, or is the opposite true? A trend of growth means your business will grow with the area, but you won’t have much luck if there is a declining pattern. It will definitely have an adverse effect on your business. Contact your municipal office to get all this information straight from the source.

Shopping Centres

If you want to have your franchise located in a shopping call, be sure to do plenty of research to be sure it is the right choice for you. Get familiar with them all yourself well before you make any decisions. Know who the other tenants are what types of businesses are in the mall. Once you know this information, you need to decide for yourself whether it is a favourable location by thinking about whether your chances of getting customers are increased or decreased by these other companies. Some businesses will be competitors, others will be complementary. Also for whether there are any really well known companies in the mall, as these tend to generate lots of traffic.

 

Besides being familiar with the mall you are interested in operating in, you should also know any malls in the vicinity equally well. What types of businesses are in the other malls that might be competitors or complimentary? Are there any big companies in these malls? Also, you should know if there are any malls in the area that are being planned or built in the near future.

 

If you’ve done all this and you think that you’ve found a good location in a mall, consider that shopping centre leases are often very specific with many stringent clauses. Landlords also often ask for a percentage of gross sales in addition to your base rent. You need to weigh this against the potential increase of customers you would have being located in the establishment. Is the outcome favourable or are you better off going it alone?