Check Out the Podcast with Patrick, Frank, Ned, and Gigi!

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Franchise industry veterans Gigi Harding, Ned Levitt, and Frank Zaid sat down with Franchise Canada Chats Podcast and examined the changing landscape of franchising within the last few decades in Canada.

Bringing the Franchise Model to Canada

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Before Levitt became a pivotal figure in the passing of legislation for franchising in Canada, he began his career as a lawyer for Dickinson Wright. It was during this time that Levitt would work with countless franchising clients, such as KFC (where he actually met the colonel) and contribute his expertise to several difficult assignments.

After graduating as a Chemical Engineer from U of T, Zaid attended Osgoode Hall Law School of York University to pursue a career in law. After his studies, Zaid joined Osler, Hoskin & Harcourt as an associate lawyer in the corporate/commercial sector; and would regularly assist clients with IP matters. It was during his time at the firm that Zaid was introduced to the concept of franchising by two automotive franchises from the US that were looking to expand into the Canadian market.

When Ned Levitt and Frank Zaid were introduced to the world of franchising – long before the internet – there was not much information available about the industry, especially in the Canadian market. Any information that could further their understanding of franchising was pulled from the United States. 

In 1973, on separate occasions, both Levitt and Zaid were assigned the challenging task of expanding U.S. franchises into the Canadian market.

Both men quickly realized there was not much information they could pull from Canadian markets, so they would have to dig a little deeper in their research.

Zaid claimed he referenced a lot of his information from the Canadian Franchise Association (CFA) and International Franchise Association (IFA), as well as a few Canadian lawyers that were privy to the idea of franchising at the time. During this research period, Levitt and Zaid became highly knowledgeable about the industry, developing a keen interest in the franchise business model, leading them to take on more franchising work moving forward.

Spurring Business Growth with Franchising

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Gigi Harding’s introduction to franchising was through her family’s printing business, Kwik Kopy Printing. During her studies at Western University, one of KKP’s franchisees asked her if she wanted to work with them to open a location. Harding jumped at the opportunity and immersed herself in every aspect of working in the location. After this experience, she went on to work in every department in QuickBooks to get a well-rounded perspective on the franchising industry.

By 2009, Harding and her brother were well-versed in the industry and were discussing growth opportunities. This is when they added Hand & Stone into their franchising portfolio to develop and expand the brand. Harding believes that franchising is a “great way for people to become entrepreneurs, with less risk.”

Enter the Canadian Franchise Association and Franchise Disclosure

The CFA has played a major role in legitimizing franchising in Canada. As the longest-standing CFA member, Frank Zaid praises the CFA for its growth in membership, its work in promoting ethical franchising, and its efforts in government lobbying. The CFA represents the industry as a whole, by supporting its franchisors and the franchisees.

The evolution of Canadian franchising started in Alberta when the first legislation was passed in the province because of “disreputable” franchisors from the U.S. All franchising agreements would require approval from the Alberta Security Commission, and they had the right to disapprove of any agreements they deemed necessary or unreasonable.

As franchising legislation continued to evolve, disclosure agreements were established. All three of the panelists agreed that disclosure agreements set great franchisors apart from the rest of the competition. Without a disclosure agreement, franchisees are unable to access viable information about the brand which could potentially lead to serious repercussions for the franchisor.

Without the disclosure agreement, franchisees are unable to measure their store performance and establish their goals.

Examining the Franchisor/Franchisee Relationship

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Ned Levitt explains that the growth of a business is not only dependent on the franchisee, but also the franchisor. It is vital to remain aware of upcoming trends or diversions from the franchise system that may severely impact the franchise. A great example would be the pandemic. While no one could predict the outcome of the pandemic, Levitt’s points out that it is crucial to have a course of action established for when disaster strikes. This plan must centre itself around the needs of the franchisees, since they are the most vulnerable party in this scenario.

Maintaining open and honest communication between the franchisee and franchisor is what can elevate a store, and in turn, the brand. While speaking about the positive outcomes of franchising legislation, Zaid highlights the importance of having a franchisee advisory council. This council exists to speak directly to franchisors, and make them aware of any unforeseen issues with the franchise system. Zaid points out that the only way advisory councils can be successful is if the franchisors genuinely take the franchisee’s points into account and address them. Zaid mentions there are circumstances in which franchisors play the part of listening, but do not take real action on the issues raised.

What’s Next for Franchising in Canada?

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In their closing remakes, each panelist addressed the biggest challenges currently facing the Canadian franchising industry. Harding expressed concerns with staffing shortages in the future, along with keeping up with technology and the effects it has on our communication. A lot of context, body language, and verbal cues are missing when you are simply sending an email. In person communication is necessary.

Zaid states that one of the biggest obstacles in the industry is staying ahead of the franchising curve; keep yourself educated and stay up to date on the latest legislations and trends. He also expressed concern for the lack of space for new and emerging franchisors – with most of it being occupied by big name franchisors.

The biggest challenge Levitt believes the industry faces, is the rapidly changing environments. He advises franchisors to be prepared to pivot their operational model – if necessary. He suggests having advisors on your staff that can keep an eye out for emerging trends or difficulties that may impact the decisions of your business.