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Introduction
The process of franchising is essentially the arrangement where any brand provides the rights of operating business to any individual under their brand name. The gainer of the franchise license must make the arrangements of the infrastructure workforce and the additional resources. A legal contract is carried out in this process that serves as the agreement between the investors and the franchise provider. This process has various advantages and disadvantages in it for both parties. In this report, the prospects of gaining a franchise in Canada and its application in a potential franchise will be assessed. The brand that has been selected for the process is Tim Hortons. Lastly, the availability of business loans for the process and its related requirements will also be analysed.
Expanding Business Activities through Franchising
The process of franchising can be an excellent initiative for the growth of the business. There are various advantages in the process that makes it a feasible option for all global brands.
Faster Expansion
The franchise process is a win-win situation for both the brand and the franchisee. While the band does not have any worries about finding new locations and workforce to expand their business, the franchisee will not need any buses plan or model in running their business (Becker & Hornung, 2019). For these reasons, the process got its popularity in the global corporate sector.
Better Management
Many large brands face problems in terms of hiring efficient managers for their regional business units. But the franchising system can be the ultimate solution for this issue. The business owners or the franchisee are involved in the business themselves, and hence they have more responsibilities for the betterment of the business.
Lower Cost
The acquisition of new locations and the setting up of the new units can need a significant amount of resources for any brand. However, the franchising process does not need any additional cost, and I also include the fees and royalty amounts for the brand roving the franchise.
Advantages and Disadvantages Of being A Franchisee
The process of being a franchisee has its own advantage and disadvantages. The applicant must assess all the necessary issues before making the final call. The relative advantage and disadvantages of getting a franchise in Canada have been explained in the following section.
Advantages
- The business model of a successful brand is already proven. Thus the risk factor for a franchise is lower than any new brand.
- The banks and the other lending institutions are more interested in giving loans to the reputed franchises.
- The customers are quickly attracted as the brand name of the franchise is attached.
Disadvantages
- There is a high initial fee, and that makes the profit for the owner lower in the initial period.
- The business policies are sometimes restricted by the franchise terms and conditions.
- The relationship of the franchise brand and the franchisee is like the owner and the subordinate. For that reason, the growth of the franchisee can never be higher than the brand itself or even near it (Brookes & Altinay, 2017). The limited possibility of growth is a significant issue in this process,
Obtaining Franchise in Canada
Opening a new business and making it feasible in the industry can be an incredibly complex task for any individual. However, if they have the necessary financial resources, the franchising process can be a great help in this regard (Capurso, 2016). It is not very tough to open a franchise in Canada as the government policies are very favourable towards this section. Any foreign national can also open a potential business in Canada by obtaining a franchise in the country. Brands like McDonald’s, Tim Hortons are offering various flexible offers to expand their business through franchising in the country. If the franchise is based in Toronto, the need for net worth is around $800,000 for the franchisee. However, it is much lower if the location of the franchisee is outside of Toronto like Ontario or neighbouring areas. The only thing that is necessary to have apart from the financial aspects of the business owner is the expertise of the team to manage the brand. However, all the prospective brands can have their personal requirements that they want to implement in the process. It Is also necessary as no brand would want to provide a franchise to anyone who will not be able to run the business efficiently.
Process of Purchasing Tim Hortons Franchise in Canada
There are specific criteria and requirements that any individual must fulfil in order to purchase a Tim Hortons franchise. The size and the location of the restaurant determine the overall cost of the franchise (Foster, 2018). Along with that, there are some other factors that are associated with this process. The restaurant owner must have a net worth of $1.5 million and liquid assets worth $500,000 for winning the franchise deal. It is required to inform that the transaction type that the restaurant is carrying out in their business also matters in this regard. If the restaurant is doing mainly in online and POS transactions, the financial requirements can be higher. There is also a separate agreement charge for a period of the 20-year franchise of Tim Hortons. It is around $350,000 in the preset period. It must be paid to Tim Hortons before the restaurant starts its operations. Apart from that financial requirement, the restaurant owner must also possess the necessary experience regarding the management of a restaurant and should be able to provide their full effort into the business (Hockett & Omarova, 2016). They must also agree to avoid all kinds of relations with the rival brands of Tim Hortons.
Qualifications Necessary for Obtaining Loan from Canadian Banks
The banks of Canada is too willing to provide business loans to eligible individuals or partnerships. However, the maintenance of the government guidelines are necessary, and the banks are needed to check for specific criteria when they approve the business loan application. The Royal Bank of Canada, Toronto-Dominion Bank and the Bank Of Nova Scotia are the most feasible options for business persons for getting their loans. An operational time of a minimum of 100 days is required by most of the financial institutions along with a minimum of $10k/mo deposits on average. The credit score of the applicant and the business profile is also checked in the process (Melo, Borini, & Ogasavara, 2019). A higher credit score of the owner is more likely to get a handsome amount of loan from the banks. The terms of the loan may range from 3-60 months if the borrower repays the initial loan in a proper manner. They may be eligible for a better amount from the next time. The Canadian government has implemented various policies to he;p the small businesses in the country in the pandemic situation. Bank loans are also included in this policy.
Process of Getting Tim Hortons Franchise
There is a particular framework for obtaining a Tim Hortons franchise that is prescribed by the organisation itself. It is explained in the following section to explain the matter in a more effective manner.
- Applying Online
The applicant must initiate the process by applying for the franchise through the online application portal (Mires, Cumberland, & Berry, 2020). They must make sure that they have fulfilled all the requirements for the process.
- Discovery Call
The discovery call is the first step for the organisation towards the applicant. It is a process for getting all the necessary knowledge from both ends. The company may ask for the goals and the requirements of the owner that they expect from the franchise.
- Credit & Background Investigation
A background check of the applicant and their credit check will be done by the company (Nyadzayo, Matanda, & Rajaguru, 2018). It is done as the organisation wants to make sure that the franchise is provided to eligible individuals.
- Interview Process
The interview process is the in-person meeting of the applicant and the official of Tim Hortons. It will be the last phase before the final approval.
- Final Approval
After the necessary checking and the interviewing, the franchise will be given to the applicants.
Skills Developed in the Internship Project
There are specific skills that I developed through the internship project. These will be essential in terms of my future career development process.
- Understanding of the Organizational Processes
It is necessary to understand all the aspects of the organizational process for being an integral part of it. If any individual does not have any efficient knowledge of the process, they will not be able to manage the business properly.
- Development of Communication Skills
The development of the oral and written skills of communication we greatly enhanced in this course (Soner, Aslan, & KIYICI, 2017). It is relatively essential to have the proper communication abilities in terms of making a business in an efficient manner.
- Problem Solving
The problem-solving skills were improved to certain extents as a result of being exposed to real-world issues of the corporate sector.
- Decision Making
The decision-making process is the ultimate tool for the management to run their businesses efficiently (Watson, Dada, Wright, & Perrigot, 2019). These skills were developed dramatically as a result of this internship.
Job or Position After Graduation
There will be various career options available to me after the completion of the graduation course. There will be certain offers from some large companies in the managerial positions also. However, I have always preferred to be creative in my professional life, and for that reason, I want to start my own business after finishing my education. However, I am not very confident about starting my own brand as all the industries of Canada are well-saturated, and it is not very easy to gain market share for the newcomers. For that reason, I would go for the franchise option. I would take up the franchise of any reputed brand and run the business under its brand name. It will be beneficial for me as there would be no need for separate marketing or brand expansion processes. The customers would be more attracted to the business as it will have a big name associated with it (Weatherby, 2016). However, some issues must also be managed in this regard. Other businesses can also imitate my strategy and start their franchise with rival brands. In that situation, it will be necessary to apply the competitive strategy to get the upper hand of the competitors for my business.
Skills Required in this Position
There are certain skill sets that I would need to operate the business in an extraordinary fashion. As the franchise option is not the same as the conventional business, it needs some separate ideas and strategies to be successful in the process.
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People Skills
Interacting and communicating with people is an essential task in terms o operating a franchise. These people can be the executives of the brand, the customers or the employees. If people cannot be managed, the franchise will not be successful (Wibowo & Tielung, 2016). It is necessary to build a reputation for the outlet manager to the customers and the brand owners.
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Motivational Skills
Motivational skills are necessary to improve the quality of work, and it is unavoidable if the businesses are going through a bad patch.
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Market Assessment Skills
The market assessment skills of the owner come in handy for the need for product selection. All the products of any particular brand may not be as popular as some specific item in a particular region. It is necessary to decide which products will be focused down by the franchisee.
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Ability to Follow System
It is required to follow system poetry as there is a definitive marketing structure of the franchise brand. The franchisee must adhere to all the regulatory guidelines of the band.
Development of the Skills
As the internship course was based on business administration and commerce, I have learnt some particular skills that will be necessary for operating my franchise. The people management skills were moderately developed as I had interacted with a limited number of individuals through the learning sessions. In the actual business, I would need to meet and manage a vast number of individuals with various characteristic traits. However, I think that my motivational skills were extensively developed in the process. I have read about various data leaders and their thoughts about motivation. I know about the ways that they used to motivate their employees. It will be incredibly beneficial for my franchise process. The same cannot be applied in terms of market assessment skills (Yusoff & Harun, 2018). I believe that market assessment skills cannot be adequately obtained through any course or study. It is a skill that goes through raw experience. I would need to spend some time in the business to gain this skill properly. However, I would try to apply all of my skills and knowledge to manage the situation initially. The last aspect of the skill development process will be concerned with the system following abilities. It is a section that was appropriately taught in the course. I have a product idea of following the system and all its modules. I would have no such problems in this regard, and that will be incredibly beneficial for my business.
Selection of the Program
If I can go back in the past, I would not want to change the selection of this program as I think that this program is the best career option that could have selected me. As I have told earlier that I have a particular habit of structuring innovations in my professional career, Would have faced specific issues in any conventional job (Wibowo & Tielung, 2016). There was no chance of moving aside from the pre-described structure. In this course, I have got a scope of ring my own business, and that has ample scopes of innovative processes. For that reason, the course and its future applications are perfect for me.
Conclusion
The development of the franchise process requires some essential elements. It includes time, resources, investments and some specific strategies. If the utilisation of the franchise system can be done correctly, it becomes beneficial for both parties. There are some responsibilities of the franchise provider towards the franchisee also. It is necessary that the brand helps the franchisee in terms of strategic advice and business modules. The main benefit for the investors is the availability of a tested business model and an established brand name for their business. However, they should also consider the future of the brand in the long term. As most of the franchise options are provided for a period of years or more, the feasibility of the brand after that period must be assessed by the investor.
References
Becker, S. O., & Hornung, E. (2019). The Political Economy of the Prussian Three-class Franchise. https://www.econstor.eu/bitstream/10419/207192/1/cesifo1_wp7801_0.pdf
Brookes, M., & Altinay, L. (2017). Knowledge transfer and isomorphism in franchise networks. International Journal of Hospitality Management, 62, 33-42. http://www.academia.edu/download/50884152/Altinay56.pdf
Capurso, C. (2016). Burgers, doughnuts, and expatriations: An analysis of the tax inversion epidemic and a solution presented through the lens of the Burger King-Tim Hortons merger. Wm. & Mary Bus. L. Rev., 7, 579. https://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1112&context=wmblr
Foster, J. (2018). Unfree Labour? Struggles of Migrant and Immigrant Workers in Canada. https://research.library.mun.ca/14060/1/LLT%20review%20Unfree%20Labour%20Foster.pdf
Hockett, R. C., & Omarova, S. T. (2016). The finance franchise. Cornell L. Rev., 102, 1143. http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=4731&context=clr
Melo, P. L. D. R., Borini, F. M., & Ogasavara, M. H. (2019). Latin American franchise internationalisation: The impact of institutional environment. Thunderbird International Business Review, 61(2), 217-228. http://files.resendemelo.webnode.com/200000140-3ce213ddfe/2019%20-%20Latin%20American%20Franchise%20Intern%20-%20TIBR%20-%20Pedro,%20Felipe,%20Mario.pdf
Mires, E., Cumberland, D. M., & Berry, A. (2020). Veterans Serving the Franchise Sector: Exploring the Appeal. Small Business Institute Journal, 16(1), 24-43. https://www.sbij.org/index.php/SBIJ/article/viewFile/317/255
Nyadzayo, M. W., Matanda, M. J., & Rajaguru, R. (2018). The determinants of franchise brand loyalty in B2B markets: An emerging market perspective. Journal of Business Research, 86, 435-445. http://modir3-3.ir/article-english/article539.pdf
Soner, B. A., Aslan, Ö., & KIYICI, H. (2017). PKK’s regional franchise of terror. International Center for Terrorism and Security Studies. http://www.pa.edu.tr/Upload/editor/files/PKK%E2%80%99S%20REGIONAL%20FRANCHISE%20OF%20TERROR_01_05_17.pdf
Watson, A., Dada, O., Wright, O., & Perrigot, R. (2019). Entrepreneurial orientation rhetoric in franchise organisations: The impact of national culture. Entrepreneurship Theory and Practice, 43(4), 751-772. https://economicsjournal.info/index.php/edu/article/download/10/13
Weatherby, G. J. V. (2016). Tim Hortons (Doctoral dissertation, University of Prince Edward Island). https://www.islandscholar.ca/islandora/object/ir:20217/datastream/PDF/view
Wibowo, S. W., & Tielung, M. (2016). Analytical Hierarchy Process (AHP) approach on consumer preference in franchise fast food restaurant selection in Manado City (Study At: Mcdonald’s, Kfc, and A&W). Jurnal EMBA: Jurnal Riset Ekonomi, Manajemen, Bisnis dan Akuntansi, 4(2). https://ejournal.unsrat.ac.id/index.php/emba/article/download/12490/12062
Yusoff, Z. M., & Harun, Q. N. (2018). SETTLING FRANCHISE DISPUTES THROUGH MEDIATION IN MALAYSIA. International Journal, 3(13), 322-330. http://www.ijlgc.com/PDF/IJLGC-2018-13-12-29.pdf
