Today's most promising franchising options have nothing to do with heat lamps or deep fryers. Instead, B2B and home-service operations are the best bets for those looking to own a business without the risk entailed in getting an independent venture off the ground.
Franchising consultant Michel Gagnon, president of Davier Consultants Inc. in Montreal, says most firms are staying lean post-recession, opening the door for proven B2B franchises to help companies cut costs by outsourcing distribution, fulfillment and even sales.
Gary Prenevost, president of Mississauga, Ont.-based Fran-Net of Southern Ontario, sees lots of room for B2B franchises that solve tech challenges, such as SEO agencies, mobile IT teams and a U.S. franchise coming to Canada that provides quick, on-the-spot cellphone repair for companies.
On the consumer side, franchises targeting seniors should soon see their best years yet. From 2010 to 2014, Canada's ranks of the 65-plus will grow by 15%, versus 5% for the total population. While health care is an obvious go-to for seniors, Gagnon cautions that the market for home-care services is becoming saturated.
Prenevost says that aspiring franchisees should instead look to home-service concepts that tap into boomers' fast-growing spending on decor and handyman services. "Most older boomers are in the place they want to be for the rest of their lives, and most younger boomers are starting to nest," he says. "Both groups are upgrading their homes or downsizing to the homes they want, and putting money into comfort and safety."
Home-service concepts are appealing franchises because they cost $100,000 or less to license and can be run from an office rather than a storefront. The lower fixed costs of service businesses can allow for a higher ROI than bricks-and-mortar franchises. Restaurants aren't off the radar, and still represent about 40% of all franchises in Canada, estimates the Canadian Franchise Association. But consultants warn that traditional concepts are becoming stale. Consumers will keep gravitating toward healthier options, and those with higher income will move down a notch from full-service to quick service restaurants to save money in a dicey economy. But this group is less keen on basic fast food than on ethnic fare, local ingredients and artisan-esque foods at reasonable prices.
Would-be franchisees also should keep an eye on Yankees set to expand northward. "We have an influx of strong U.S. brands interested in coming to Canada in the next few years," says consultant Wayne Maillet, president of Coquitlam, B.C.- based Franchise Specialists. "They have the experience to support new franchisees, but haven't yet tapped into the market here." Among them are Steak 'n Shake (1950s-style diners), Games2U (mobile arcades and event entertainment) and Flip Flop Shops (retail footwear).