The franchising industry in Canada continues to grow year over year, contributing over $120B to the country’s GDP. While expected to continue growing, the industry faces some challenges; real estate constraints, economic uncertainty, and tighter lending standards are just a few. Most concerning is the scarcity of qualified franchisees.
Historically, second- and third-generation franchisees helped bridge the gap—they grew up in the business and understood its demands. Today, fewer successors are willing to take on that legacy. To address the shortage of franchisees, networks are discussing expansion with more multi-unit, multi-brand owners. This model is gaining traction out of necessity--and opportunity-- solving two problems at once: franchisors gain experienced, financially strong operators with proven track records. For franchisees it diversifies their portfolios for stability and growth.
From a franchisor’s perspective, as long as the brands are not in direct competition, growing with multi-unit, multi-brand franchisees foster knowledge-sharing and stability. To maintain their growth and talent, these franchisees bring on minority equity partners as local operators. The local operators manage the day-to-day functions—often positioning themselves for future ownership as they lay roots and engage the community for long-term success.
From a lender’s perspective, multi-unit, multi-brand franchisees typically represent lower risk. Here’s why:
Diversification reduces volatility: Operators who diversify across industries (i.e., quick-service restaurants and auto care brands) can be seen as less exposed to single-market downturns.
Proven operators often represent a stronger credit profile: Experienced franchisees with a history of success managing processes and systems, make financing decisions easier.
Structured ownership matters: Lenders prefer when the primary franchisee retains majority control, ensuring accountability and financial security if a location falters.
Succession planning is a plus: Having local operating, equity partners in place signals continuity, which Banks value for long-term stability.
Internally, franchisees need a strong management team with legal and accounting support, and to be flexible to manage multiple brands and geographies. When these pieces are correctly in place, the result can mean stronger banking relationships, and easier access to growth capital – a win-win-win for lenders, franchisors, and franchisees alike.
The future of franchising belongs to those who adapt. Multi-unit, multi-brand operators are leading the way, and the opportunity has never been greater. Ready to scale smarter? Let’s connect and explore how you can diversify and thrive.