Table of contents:

• What is a franchise?
• How franchising works
• Types of franchises
• Benefits and drawbacks of owning a franchise
• Is a franchise right for you?
• Making the right business decision
• FAQ

What is a franchise?

A franchise is like a business short cut that helps you skip the hardest parts of starting from scratch.

Instead of building a business from the ground up, you get to use an already successful brand’s name, products, and system to open your own location. In return, you pay fees upfront and share part of your earnings (called royalties) with the company that owns the brand. It’s a win-win — the company gets to grow its brand, and you get support and guidance every step of the way​.

Think of franchising like a team sport. You’re still running your own business, but you’re not doing it alone. Many franchisors provide training, marketing, and even help with finding a location.

Whether you dream of running a coffee shop or opening a fitness centre, franchising gives you a proven playbook to follow while keeping you connected to a bigger brand​.

Popular Canadian franchises

Franchising is a popular path for Canadian solopreneurs. You probably recognize Tim Hortons on every corner, but this franchise started as a small donut shop in Ontario. And over the years, many Canadians have started their first business journey by opening a new Tim Hortons location.

Other successful Canadian franchises like Boston Pizza and Second Cup also offer new business owners a chance to ride on the success of an already beloved brand​.

Beyond food, there are opportunities in other industries — like opening a Molly Maid cleaning service or a GoodLife Fitness gym. These examples show that franchising in Canada goes far beyond burgers and coffee. It’s about finding the right fit for your goals, whether in food, retail, or services.

Canada’s laws ensure transparency and fairness between franchisors and franchisees, meaning you’ll know what to expect before signing on. If you’ve got the drive but want the backing of a tried-and-tested business, franchising might be the perfect option for you.

How franchising works

When you buy into a franchise, you’re not just purchasing the rights to use a company’s name — you’re getting a whole business-in-a-box. The franchisor (the company) gives you access to their products, training, marketing strategies, and even operational systems. This way, you don’t have to figure out everything from scratch, and you can hit the ground running with a tested and successful business model. In return, you’ll need to sign a legal agreement, pay initial fees, and pay ongoing royalties — which are often a percentage of your revenue​.

For example, opening a Tim Hortons franchise means following specific guidelines, from store layout to product offerings. In return, you benefit from national advertising campaigns and the trust consumers already have in the brand.

Similarly, a GoodLife Fitness franchise comes with support in site selection, training, and equipment sourcing, ensuring that every location offers the same high-quality experience​.

Think of it as a partnership where you handle the day-to-day operations, but the franchisor helps you stay on track. Many franchisors also offer ongoing support through advertising, supplier networks, and management tools. This set-up can be especially helpful for first-time business owners who want the freedom of running their own business, plus some guardrails to guide them along the way​.

What’s included in a franchise agreement

A franchise agreement lays out the terms of your relationship with the franchisor.

Here’s what you can typically expect:

• Initial fees: A one-time payment for the right to operate under the franchisor’s brand.
• Royalties: A percentage of your sales or a flat fee paid regularly to the franchisor.
• Training and support: Many franchises offer help with employee training, marketing campaigns, and even selecting the perfect location.
• Operational guidelines: You’ll need to follow the franchisor’s rules to maintain brand consistency across all franchise locations.

While these guidelines might seem strict, they’re there to protect the brand and ensure customers have a consistent experience no matter which location they visit​.

This structure helps franchisees focus on operations and customer service without having to reinvent the wheel, making it an attractive model for many entrepreneurs.

Types of franchises

Franchising offers several models, each with unique structures to fit various industries and goals.

Here are the main types:

• Business format franchise: The most common model, where franchisees adopt the franchisor’s full business system, including training, operations, and marketing. Examples include fast food giants like Tim Hortons and McDonald's​.
• Product distribution franchise: Focuses on selling a franchisor’s products under its brand name. Think of car dealerships or beverage distributors as typical examples​.
• Conversion franchise: Existing independent businesses join a franchise to benefit from the brand’s recognition and resources. This model is popular in real estate and home services, such as Molly Maid franchises​.
• Master franchise: Grants the franchisee rights to recruit and manage new franchises in a region. Often used for international growth, it creates a regional franchisor with expanded responsibilities​.
• Area developer franchise: Provides exclusive rights to open multiple units in a specific territory within a set timeline, ensuring brand growth across regions. GoodLife Fitness often uses this approach to secure consistent market presence.

The right franchise model depends on your goals — whether you want to operate one location or manage multiple units — and your industry expertise. Each type offers different levels of control, investment, and support, so aligning the model with your business plan is key.

Benefits and drawbacks of owning a franchise

Franchising offers a structured way to start a business with the backing of an established brand.

• One of the most compelling advantages is its higher success rate compared to independent startups — about 80% of franchises remain in operation beyond five years. This model reduces the risks of failure by providing franchisees with proven systems, training, and ongoing support.
• Built-in brand recognition also helps attract customers quickly, saving time and resources that would otherwise go into building a new brand from scratch.

However, franchising has its challenges:

• The upfront fees, royalties, and strict operational guidelines can limit profitability and flexibility. Franchisees must carefully evaluate these trade-offs to ensure the model aligns with their long-term goals.
• Success also relies heavily on the franchisor’s reputation and management. If the franchisor faces difficulties, franchisees may feel the impact across their locations.

Is a franchise right for you?

Deciding whether to invest in a franchise comes down to your personal goals, financial situation, and appetite for structure. Franchising offers a lower-risk path to business ownership with built-in brand support and operational systems, making it a great fit for those looking to start a business with guidance.

This model can also appeal to individuals who value being part of a recognized brand and prefer not to build a business from scratch.

However, it’s important to assess how comfortable you are with the trade-offs.

If you want complete creative freedom or prefer to run a business on your own terms, a franchise may feel too restrictive. Additionally, the financial commitment is a key consideration — upfront fees, ongoing royalties, and other obligations mean franchisees must carefully manage cash flow to ensure profitability.

Before committing, take time to research potential franchises thoroughly. Look into their track record, the support they offer, and any restrictions outlined in the franchise agreement. It’s also wise to speak with current franchisees to understand what the day-to-day experience is like.

If the structure and brand support align with your business goals, franchising can be a great option.

But if flexibility and autonomy are your priorities, it may be worth exploring other business models.

Making the right business decision

Franchising offers a compelling way to start a business with the support of a recognized brand and established systems. It provides structure, reduces risks, and makes entrepreneurship more accessible.

However, it’s important to assess whether the financial commitments and operational guidelines align with your personal and business goals. Franchise ownership requires dedication and a willingness to operate within the franchisor’s framework, which may not suit everyone.

Carefully researching franchises, understanding your obligations, and speaking with current franchisees will help you make an informed decision. If franchising feels like the right path, it can offer both personal fulfillment and business growth.

As you embark on this journey, tools like QuickBooks Canada can provide essential support, helping you manage finances effectively and keep your business on track.