Qualifying as an Investor

The fastest and easiest way to become a landed immigrant in Canada is to become an investor. This is a very favourable method if you do not wish to be actively involved in running a business in Canada. There are three criteria you must meet to qualify as an investor. They are:

 

• You have prior experience operating, controlling or directing a successful business.
• You have a net worth of at least $800,000
• You are willing to make an investment of at least $400,000 in a fund run by the government.

To apply you must make your investment to the Receiver General for Canada in Ottawa. National Headquarters approves the funds by collecting your investment and distributing it according to their own IIP allocation formula. This investment you make is designed to be distributed throughout the provinces to strengthen the economy and create employment. The investment is report to NHQ annually and after five years in returned to you the investor without interest.

 

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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.

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?

Your Location and Traffic

Here are some things to consider about the location of your franchise:

 

Walk-By Traffic

Does the business require a high level of walk-by traffic to be successful?  If so, is it in a location that provides sufficient pedestrian traffic in order to provide sufficient growth, or will you have to consider relocating the business at some point in the future?

 

Drive-By Traffic

Does the business require a high level of drive-by traffic?  Is there adequate parking readily accessible to your business operation?  Is the parking free, as in a shopping mall, or will your customers have to pay to park in an underground lot or in a coin-metered space?  If you have a business that serves trade customers and delivers products like automobile parts to them, then parking for your customers may not be an important factor. When do the big traffic jams happen in your area? Throughout the day or just at various peak times during the day, evening, or weekend?  Do any of these traffic problems seriously affect a customer’s access to the business?

The Importance of Location

This is an introductory post in an ongoing series about the role location plays in a franchise. The ideal location for your franchise may depend on what type of business you are running and what your target market is.

 

Never underestimate the importance of the location of your business. It is as important as your product or advertising offers. It literally makes or breaks your business, especially in retail. Not only is a good location important, but you must ensure that your targeted demographic matches the people that live or work in the area.

 

If your franchise is in manufacturing or distribution, you may be less dependent on your location and instead need larger premises at a lower rental cost to maximize profit. If your business is a motel, donut shops, gas station or small family restaurant, your best location may be off a major highway.

 

Stay tuned for more specific information on locations and how to get the best location for maximum profit!

External Clauses and the Franchise Agreement in Quebec

The topic for the second post on franchising in Quebec concerns a series of rules set forth by the province’s Civil Code of Quebec which protect franchisees from external clauses. External clauses are clauses in a contract which incorporate documents that are not part of the actual contract signed between the franchisee and franchisor. This includes referencing outside documents, contracts made in an incomprehensible manner or agreements that contain abusive clauses.

 

One of the most common examples of an external clause is when the provisions of a franchise agreement allude to an operations manual that is not part of the contract. The legislature in Quebec is designed to protect franchisees from being responsible for conditions which they have not read or understood prior to signing the contract. It is common practice for the franchisor to provide an operations manual at the time the contract is being signed. There can be legal complications with this approach though if the manual is particularly lengthy, as it would be hard to prove in a court that the franchisee has actually read and understood it. Some franchisors go to such extremes as giving the manual prior to the agreement being presented, along with a Confidentiality/Non-Disclosure agreement.

 

The operations manual can be the source of other difficulties as well, since it is not supposed to be a fixed document but rather is designed to evolve over the period of the franchisee’s term. In the Quebec courts, it could be argued that any change to the operations manual is a change to the original franchise agreement. The matter is further complicated by the fact that the courts can not rewrite external, they can either uphold them or declare them null.

 

Franchising in Quebec

If you plan to do franchising in Quebec, there are some things you should know first all about their charter, rules and regulations. According to the Charter of the French Language, contracts predetermined by a single party which contain standard printed clauses must be written in the French language. Franchising agreements fall into this category.

 

Each person involved in said contract whose name is not French must use the French version of their name in carrying out all business activities. Basically, you have to have a French name in order to be carrying business in Quebec. These laws are very strict and you will suffer a serious blow to your career in business if you do not follow them.

 

There are also specific rules related to advertising in the Charter of the French Language. All commercial advertising, including public signs, posters and TV ads, must be in French. You can, however, include English with the French if the French is clearly dominant.