The expansion of commercial activities in the province of Quebec is often delayed or avoided by international and European franchisors due to a lack of knowledge of the rules to be applied or for fear of making mistakes.
While there are marked differences from other Canadian provinces, Quebec can be a very lucrative market to export your franchise.
It is for this reason that we want to present to international franchisors all the essential conditions and rules of franchising in Quebec, in order to allow them to evaluate the necessary investment and also to maximize their success in the Quebec market.
What are the rules to know about investing in Quebec?
A franchisor looking to establish itself in Quebec may be tempted to use its standard French or even European franchise agreement with its future partners
While this solution may seem natural at first, there is a significant risk that it will have negative long-term consequences if the contract is not adapted to Quebec’s legal landscape.
The most important factor that differentiates Quebec’s legal system from that of the rest of Europe and France is that it is governed by the courts and not by jurisprudential decisions as in our system. Not to mention that Quebec law stems directly from the province’s Civil Code (also known as the CCQ).
But be careful, even though the CCQ sets the specific rules for private law contracts, it does not specifically deal with franchise contracts. Franchise agreements in Quebec are therefore interpreted in accordance with general law.
You understand that the absence of specific rules (such as the Arthur Wishart Act for franchises in Ontario) and limited case law on franchising may lead to greater legal uncertainty.
In other words, if you plan to export your franchise to Quebec, you should be aware that the province does not have specific legislation on this subject, even though the Civil Code of Quebec governs many aspects of the franchise relationship, including pre-contractual disclosure, duty of good faith, contracts, security interests and leases.
Finally, depending on the industry in which the franchise concept operates, several federal, provincial, and municipal rules may apply, such as dairy import restrictions, food labelling and calorie disclosure requirements, as well as waste disposal and professional certification requirements. It should also be noted that provincial franchise laws apply equally to domestic and foreign franchisors.
How to create a franchise in Quebec: the steps to follow
Here is an overview of the process of franchising a business in Quebec. Read each point carefully so you know what to expect.
Evaluate your goals
Are you ready to export your franchise? Unlike running a store or restaurant, running a franchise involves marketing your business, selecting franchisees, helping to start new locations, and overseeing all activities.
It is therefore advisable to examine all the advantages and disadvantages of opening your franchise in Quebec to determine if it is suitable for your business objectives.
Talk to a Franchise Consultant
If you’re ready to start the process, you should first meet with a Canadian franchising consultant. These professionals understand the industry better than anyone. With their expertise, you will be able to determine 1) whether your business is franchisable and 2) What are the legal conditions to follow to launch your franchise in one or more cities in Quebec.
Your franchise consultant will be your main resource throughout the process. From the development of the business plan and evaluation to the selection of franchisees and the beginning of training, he will prevent you from making amateur mistakes.
Although these professionals are paid, the investment is definitely worth it.
How do I find franchisees/partners on site?
There are two main franchise models to find your future partners: the master franchise and the direct franchise.
In a master franchise model, the franchisee is granted the rights to develop and operate multiple units in a given territory, such as in the province of Quebec. The master franchisee then has the option of granting subfranchises to individual franchisees in that territory. This model allows for a rapid expansion of the franchise system and local expertise in different markets. The master franchisee is typically responsible for training, recruiting, and supporting franchisees, in addition to operating their own units.
Direct franchising, on the other hand, consists of a franchisor granting individual franchisees the right to operate a single unit in a given territory. The franchisor retains direct control over the franchise system and maintains a closer relationship with each franchised unit. This model is simpler and less complex than the main franchise.
In both cases, it is therefore the franchisees who bear the cost of creating new points of sale. Not the franchisor.
Choosing the best franchise model is important for international expansion. Factors to consider include the company’s resources, know-how, and market knowledge, as well as the level of control required by franchisees.
The master franchise may be more suitable for businesses that want to expand quickly into a new market, while the direct franchise offers more direct control over operations and brand consistency.
Determine the amount of fees to be charged to new franchisees
You’ll need to meet with an accountant to review all of your financial data and assign value to every aspect of your business. This amount will constitute your franchise fee.
Document your business model
Once you’ve determined that you can export your franchise to Quebec, you need to write down all the little details that make you successful. To get started, you can review all of your existing documents and compile them into a unified plan.
Here are some of the main topics to discuss
– Hiring and training
– Customer service
– Dress code and hygiene
– Food handling (if applicable)
– Operation of the POS system
– Marketing policies
After gathering all of this information, you’ll compile it and create your franchise operations manual.
Hire a Franchise Lawyer
In addition to the operations manual, you will need to prepare many other documents before you can export your franchise. In any case, you’ll need to work with a franchise attorney to prepare these documents and ensure that your business is protected by legal agreements.
Franchise lawyers help in the following areas
– Franchise agreements
– International agreements
– Litigation/Class Actions
-Intellectual property
– Quebec law
– Information Technology and Privacy
– Marketing and distribution
– Expertise in business law
Marketing your franchise
Once you are legally ready to market your franchise in Quebec, you should start making contacts with entrepreneurs to find potential franchisees.
During this step, make sure you become a member of the Canadian Franchising Association. They can provide you with access to leads, learning events, government officials and other important resources.
What are Quebec’s specificities?
In this last part, we will take a quick look at some of the specificities of those who choose to export their franchise to Quebec in the near future.
First of all, it should be remembered that the economic impact of the franchise industry in Quebec shows the presence of 457 different brands in the province, operating in various sectors of activity (many of which are renowned brands). The franchise industry also generates approximately $59.4 billion in revenue annually, which represents 5.6% of Quebec’s gross domestic product (GDP) and 9.8% of direct and indirect jobs. As a result, the franchising industry is an important driver of economic growth in Quebec and an excellent reason to export its franchise here.
Also, all employment issues specific to Quebec must be well understood by all franchisors who establish head offices, subsidiaries or stores. In fact, the CCQ’s laws and specialized laws, mainly the Act respecting labour standards (ALS) in a country that is not a member of the European Union, are all applicable. This must be taken into account under penalty of serious fines. In this regard, the ALS contains nearly 200 provisions and establishes all the general rules and labour standards.
In short, all questions relating to employers but also to the tax issues of franchisors are essential and it is strongly recommended that companies doing business in Quebec call on a legal advisor (very often a lawyer) who deals specifically with employment and labour law. This is a very common practice when you decide to export your franchise to Quebec and more broadly to Canada.