Cover StoryJanuary/February 2023Previous Issues

Canadian Franchising: A 2023 Industry Overview

Canada strong 

Franchising is the 12th largest industry in Canada and the second largest franchise industry in the world. In 2019, the income from franchising represented $100 billion of Canada’s GDP. Since then, the franchise industry income has grown to $120 billion. Even through a once-in-a-generation public health crisis, Canadian franchising proved to be a stronghold of wealth generation and a shining example that Canadian franchising is resilient and poised to expand even further with the potential for long-term, sustainable growth. 

Franchising is also present in the life of the everyday Canadian, with one in 10 Canadians being employed, directly or indirectly, in a franchise system. Every day, the average Canadian interacts with three to five franchise locations. They stop in at their local franchise location for a morning coffee, and drop their kids off for daycare, after-school extracurriculars, or even swimming lessons. After work, they pick up groceries or drive-thru for a quick bite throughout the day. That’s why franchising in Canada is an essential industry, with a presence in every facet of life and part of the reason the Canadian franchise industry is so well-represented on a global stage. It’s even primed to grow through 2023. Here are some facts and statistics showcasing the Canadian franchise industry’s positive outlook for 2023.

A growing business option

Since the introduction of the International Franchise Attractiveness Index in 2020, Canada has consistently ranked among the top five countries with attractive franchise markets for balanced growth. This means international prospective franchisees, from the U.S. and otherwise, have a strong chance of maintaining growth in Canadian sectors. 

Furthermore, an investment in Canadian franchising is a low-cost, low-risk option: we’re the first among G7 countries for political stability. The marginal effective tax rate has also been trending downward since 2000, and is now the lowest of all G7 countries. 

In addition, Canadian young adults are the most highly skilled talent market in the world. More than 55 per cent of Canadians aged 25-54 graduated from post-secondary institutions. This figure becomes even higher (73 per cent) when limited to young adults (25-34) looking to take their first steps into the workforce. Since 2018, Canadian millennials have developed an increased interest in franchising, seeing the possibilty of ownership and work-life balance, while providing more control over their future, and utilizing skills and values earned through the first decade of their careers. (Study: Youth and education in Canada; FranNet

Regional breakdown 

Although Ontario dominates the franchise economy with the sheer number of locations, representing about 65 per cent of all operating franchise units, that simply means there’s room to grow in the Prairies, the Atlantic, and in West Coast markets. On a percentage basis, the largest growth is estimated to occur in British Columbia, where the number of franchise locations is expected to grow by 1.16 per cent. Slower growth in Atlantic Canada, (estimated to increase by 0.46 per cent) means there’s more space for international franchises to initiate expansion and develop an audience across the pond. 

Categories to watch in Canada 

The following categories have experienced growth over the past year, making them strong options for those looking to purchase a franchise in Canada. 

(Based on the comparison of Franchise Canada Directory listings between 2021 and 2022.) 

Retail: +179% growth between 2021 and 2022 

This sector has gained increased interest through the innovations in the grocery industry as well as the growth of the pet care and health and wellness industries, with the always-popular meal assembly group bolstering the sector overall. 

Business to business: +141% growth between 2021 and 2022 

While most businesses in this category were able to stay open through the pandemic, others pivoted around restrictions and came back stronger. This industry is gaining more and more attention for being a pandemic- and recession-proof sector. 

Consumer services: +123% growth between 2021 and 2022 

With a wide range of services, the consumer services market offers a strong opportunity for new franchisees to parlay skills from other industries into their own ownership system, whether it be automotive services, fitness and nutrition, or winemaking. There’s something to offer everyone in the consumer services sector. 

Childrens Products & Services: +16% growth between 2021 and 2022 

Looking out from a public health crisis that kept children away from school and limited socialization, children’s products, including tutoring services, STEM education, and swimming lessons, have grown in popularity. 

Quick service restaurants (QSR): +11% 

Despite being one of the more popular sectors in the Canadian franchise landscape, interest in quick service restaurants is still increasing, with QSR restaurants continuing to find new ways to bring convenience to Canadian customers.

So, what’s not to love about Canadian franchising? With seemingly limitless growth opportunities, an audience hungry for new options, and strategic partnerships with the CFA and other franchise supplier members, we highly encourage you to reach out for membership details or more information. Being a member also allows us to work together to protect the industry, and in essence, to protect your investment and your business. We’re ready to continue our mission of helping everyday Canadians realize the dream of building their own business through the power of franchising.