Business expansion in the province of Quebec is often delayed or avoided by international and European franchisors due to a lack of knowledge of the rules or fear of making mistakes.
Although there are marked differences from other Canadian provinces, Quebec can be a very lucrative market for exporting your franchise.
That’s why we want to present international franchisors with all the essential conditions and rules of franchising in Quebec, to enable them to assess the investment required, and also to maximize their success in the Quebec market.
What are the rules for investing in Quebec?
A franchisor looking to set up in Quebec may be tempted to use its standard French, or even European, franchise contract with its future partners.
While this solution may seem natural at first, there is a significant risk that it could 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, not by case law as in our system. Not to mention that Quebec law derives directly from the province’s Civil Code (also known as the CCQ).
But even though the CCQ sets out specific rules for private law contracts, it does not deal specifically with franchise agreements. 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 can lead to greater legal uncertainty.
In other words, if you’re planning to export your franchise to Quebec, you need to be aware that the province has no specific legislation on the subject, even though the Quebec Civil Code governs many aspects of the franchise relationship, including pre-contractual disclosure, the obligation of good faith, contracts, security interests and leases.
Finally, depending on the industry sector in which the franchise concept operates, a number of federal, provincial and municipal regulations may apply, such as dairy import restrictions, food labeling and calorie disclosure requirements, as well as waste disposal and professional accreditation requirements. Note also that provincial franchise laws apply equally to domestic and foreign franchisors.
How to create a franchise in Quebec: the steps to follow
Here’s an overview of the business franchising process 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, managing a franchise involves marketing your business, selecting franchisees, helping new establishments start up and overseeing all activities.
It’s a good idea to examine all the pros and cons of opening a franchise in Quebec to determine whether it’s right for your business objectives.
Talk to a franchise consultant
If you’re ready to start the process, you should first meet with a Canadian franchise consultant. These professionals understand the industry better than anyone. Thanks to their expertise, you can determine 1) if your company is franchiseable and 2) What are the legal requirements for launching your franchise in one or more Quebec cities?
Your franchise consultant will be your key resource throughout the process. From business plan development and evaluation to franchisee selection and the start of training, he’ll help you avoid amateur mistakes.
Although these professionals charge a fee, the investment is well worth it.
How can I find local franchisees/partners?
There are two main franchise models for finding your future partners: master franchising and direct franchising.
In a master franchise model, the franchisee is granted the rights to develop and operate several units in a given territory, for example in the province of Quebec. The master franchisee then has the option of granting sub-franchises to individual franchisees in this territory. This model enables rapid expansion of the franchise system and local expertise in different markets. The master franchisee is generally responsible for training, recruiting and supporting franchisees, in addition to operating his or her own units.
In direct franchising, a franchisor grants 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 master franchise.
In both cases, it is the franchisees who bear the cost of creating new outlets. Not the franchisor.
Choosing the best franchise model is important for international expansion. Factors to consider are the company’s resources, know-how and market knowledge, as well as the level of control needed by franchisees.
Master franchising may be more suitable for companies looking to expand rapidly into a new market, while direct franchising offers more direct control over operations and brand consistency.
Determine the amount of fees to charge new franchisees
You’ll need to meet with an accountant to review all your financial data and assign a value to each aspect of your business. This is 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 your existing documents and compile them into a unified plan.
Here are some of the main topics to be discussed
– Hiring and training
– Customer service
– Dress code and hygiene
– Food handling (if applicable)
– How the point-of-sale system works
– Marketing policies
Once you’ve gathered all this information, you’ll compile it and create your franchise operations manual.
Hire a franchise lawyer
In addition to the operating manual, you’ll need to prepare a number of other documents before you can export your franchise. In all cases, you’ll need to work with a franchise lawyer to prepare these documents and ensure that your business is protected by legal agreements.
Franchise lawyers provide assistance in the following areas
– Franchise agreements
– International agreements
– Litigation/Class actions
– Intellectual property
– Quebec law
– Information technology and privacy protection
– Marketing and distribution
– Expertise in business law
Marketing your franchise
Once you’re legally ready to market your franchise in Quebec, you need to start networking with entrepreneurs to find potential franchisees.
At this stage, be sure to become a member of the Canadian Franchise Association. This organization can give you access to leads, learning activities, government representatives and other important resources.
What’s special about Quebec?
In this final section, we’ll take a quick look at some of the specifics for those choosing to export their franchise to Quebec in the near future.
First of all, 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 them well-known brands). The franchise industry also generates revenues of around $59.4 billion annually, representing 5.6% of Quebec’s gross domestic product (GDP) and 9.8% of direct and indirect employment. As a result, the franchising industry is a major driver of economic growth in Quebec, and an excellent reason to export your franchise here.
Also, all employment issues specific to Quebec need to be well understood by all franchisors setting up head offices, subsidiaries or stores. Indeed, CCQ laws and specialized laws, mainly the Labour Standards Act (LSA) in a non-EU country, are all applicable. If you don’t take this into account, you could face serious fines. In this respect, the NTA contains almost 200 provisions and establishes all the general rules and work standards.
Ultimately, all questions relating to employers and franchisors’ tax issues are essential, and companies doing business in Quebec are strongly advised to call on legal counsel (very often a lawyer) who deals specifically with employment and labor law. This is a very common practice when you decide to export your franchise to Quebec and, more broadly, to Canada.
