Here’s a couple of questions for you: As an investor, do you have an E-Trade account and research all of your own companies before laying down your money? Or, do you have an investment adviser who does the research for you, and puts your money in the relative safety of a mutual fund?
If you’re the former, you’re a risk-taker with a great deal of confidence in your abilities; if you’re the latter, you’re more risk-averse and inclined to rely on the advice of the experts. The two ways of thinking also represent the two sides of the franchising coin: those who create a franchise, and those who buy and operate them.
Creating a franchise is a holy grail of sorts for entrepreneurs. It is taking your successful business and making it even more successful – validated by others who wish to buy into your concept. It can be a very quick way to expand and grow your business. This route requires a tremendous amount of talent, organization, investment and hard work. It also requires some degree of courage, as 75 percent of franchise concepts fail by year 10.
In Canada, there are more than 900 franchises operating under unique brand names. And Vancouver seems to be a hotbed for the franchise dream. It is the home to successful brands such as 1-800-GOT-JUNK?, Nurse Next Door, Cupcakes by Heather and Lori, and Blenz Coffee. And within this ecosystem is a camaraderie that is supporting and inclusive. JUNK’s Brian Scudamore is completely transparent about his operations and success, and will gladly sit down with any entrepreneur on the same path.
On the flip side of this coin are the franchisees – those entrepreneurs who are more risk-averse and want the comfort of buying into a proven concept. According to the Canadian Franchise Association, there are more than 78,000 franchise units in Canada, accounting for $90 billion in sales, or 10 percent of Canada’s gross domestic product.
Globally, the titans are 7-Eleven with 35,100 stores, Subway with 31,400 stores, and McDonald’s with 25,800 stores. By comparison, Tim Horton’s has 4,083 stores across Canada and the US.
If you have the cash on hand (7-Eleven startup, $40,000-$775,000; Subway startup, $84,000-$258,000; McDonald’s startup, $995,000-$1.8 million), the reasons for buying into a franchise are compelling. According to a survey conducted by the US Department of Commerce, the number of franchises still operating after one year is 97 percent, as compared to 63 percent for independent businesses; after five years, 92 percent versus 22 percent; and after 10 years, 90 percent versus 18 percent.
So whether you’re a new entrepreneur, a corporate refugee looking for the next move, a pioneer with a great idea, a retiree looking to get back in the game – I encourage you to check out the franchising options presented in this issue of the magazine.