2020 Franchise Outlook

Five categories to watch out for in 2020

Are you considering franchising as a path to business ownership? If you’re interested in becoming a small business owner with the backing of a franchise system, it’s the perfect time to start making this business dream a reality! With thousands of franchise businesses in communities from one side of the country to the other, the Canadian franchise industry is growing, and is now the 12th largest contributor to our nation’s economy (and fast on its way to becoming the 11th largest!).

According to the Canadian Franchise Association’s (CFA) 2019 Economic Impact Study, there were projected to be more than 76,000 franchise locations in Canada by the end of 2019. You can find franchises in more than 50 different categories, from food service and fitness to cleaning and children’s services, retail, accommodation, and so much more.

While Canadian franchises contributed approximately $96 billion in 2018, this number is continuing to grow, with the sector expected to have topped the $100 billion mark for the first time by the end of 2019. Canadian franchising also employs almost two million people and was projected to contribute almost $28 billion in tax revenue in 2019. Further, franchising’s contribution now makes up five per cent of Canada’s GDP.

Franchising is making a major impact on Canadian society, with five noteworthy franchise sectors in particular attracting interest from both Canadian franchisees and consumers. According to listings data collected for the Franchise Canada Directory, the following categories are projected to play a major role in franchising in 2020: food (including grocery/specialty shops), children’s products and services, senior services/home care/transition, home improvement/renovation/restoration, and health/fitness/nutrition.

These categories reflect the changes that are taking place in a time-conscious Canadian society with an aging population. Canadians are also invested in their future, from ensuring the longevity of their homes to ensuring the youngest generation will have the tools they need to succeed.

Gary Prenevost, president of FranNet of Southern Ontario, says Canadian consumers are also highly educated and know what they want, particularly when it comes to their own health. “I believe we’re dealing with the most educated consumers in human history regardless of what business, but especially around health, because it is such a personal interest for the vast majority of people,” he says.

In this 2020 Franchise Outlook, Franchise Canada explores five franchise sectors to watch based on both an increase in Directory listings, as well as trends the CFA is noticing within its membership. We also spoke with some of our CFA members about the trends and their respective franchises. Read on to learn more about these sectors that are attracting Canadian franchisees.

Canadians Demand Healthy Food and Convenience

When it comes to the food category, it’s all about customer convenience, from apps and ordering through electronic kiosks, to increased demand for food delivery services. According to a recent study published by Restaurants Canada, technology continues to play a role in providing this convenience. The Q3 2019 Restaurant Outlook Survey found that 76 per cent of quick service restaurants offer online ordering or an app for takeout and delivery, while 40 per cent of table service restaurants offer electronic reservations.

Wayne Maillet, president of Franchise Specialists, notes that the increasing demand for food delivery can have a positive impact on food franchises.

“This past year has seen the growth of food delivery services, such as SkipTheDishes, UberEats, or Foodora. Third party delivery is generating new revenues for those franchises in the food sector. At least one franchisor has gone to the extent of adjusting their royalty structure to accommodate this new revenue source.”

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Restaurants aren’t the only ones in the food category looking to delivery to accommodate customers’ need for convenience, says Maillet. He notes that the grocery category has also been getting into the delivery game. “This past year, several grocery store retailers have introduced or have been testing grocery delivery. Delivery will become required in order to remain competitive and maintain market share,” he explains. One such franchise brand that is answering customers’ call for convenience is M&M Food Market.

M&M Food Market
M&M Food Market is a food retail franchise that has been providing Canadians with frozen food products for 40 years, becoming a mainstay in Canadian communities.

What sets the M&M Food Market concept apart is their dedication to helping Canadians put delicious meals on the table by offering customers easy-to-prepare, top-quality foods, and personalized customer service, all within a uniquely convenient shopping environment. M&M Food Market has been focused on innovation since it opened in 1980, and now offers a “Real Food Promise,” reformulating its entire food portfolio of more than 400 products to include absolutely no artificial colours, flavours, or sweeteners. The offering has also adapted to include more gluten-free items, an expanded single serve lineup, and brand-new meal kits.

M&M Food Market is providing new and innovative products for Canadians to serve to their family when they don’t have a lot of time to prepare and cook meals from scratch. The M&M Food Market concept takes convenience a step further with its shopping experience. M&M Food Market knows that their customers are looking for quick and easy meal solutions. That’s why they make the shopping experience just as fast. Customers can visit their website and place a Click & Collect order for pickup in store. There are no additional fees to place a pickup order and M&M Food Market offers a one-hour guarantee. And they’ve taken this one step further. Two thirds of the M&M Food Market stores across the country offer delivery of their food to the doorsteps of Canadians.

For those who do shop in store, M&M Food Market ensures that its franchise partners and their teams of meal advisors have the training they need to offer a personalized shopping experience and expert meal planning and preparation advice.

This training, which includes an innovative new tool that provides personalized training and timely information to the entire team, is a major draw for M&M Food Market franchise partners. This new platform supports every part of the business by delivering daily relevant product and service knowledge that helps their in-store team offer incredible, best-in-class customer service. This ability to share meaningful product information with customers helps M&M Food Market stand apart in the sector.

Parents Looking to Take Their Children’s Education Further

There’s no shortage of classes, programs, and services that parents can turn to for help in fostering growth in their little ones.

Within the children’s products & services category, Prenevost says the big demand is for early childhood education (ECE) and daycare, and that this is going to continue going forward. Prenevost also notes a shift toward more supplemental education franchises on the market.

“We’re seeing a market shift; where parents used to go to traditional tutoring companies only, now the tutoring companies are competing with the supplemental education programs for parents’ mind share. We’re quite excited about this growth in supplemental education,” says Prenevost.

Prenevost also notes a resurgence of interest in young children’s activities, and more opportunities in that category. Andrew Walters, director of international development at Stagecoach Performing Arts, says this is the result of parents wanting to invest in their youngsters.

“What we’re seeing more and more is that parents are more than happy to invest their earnings in activities for their children which offer personal development, as well as being fun,” explains Walters. “Parents are looking to invest in their children, looking for outlets where they can get out and play, socialize, and develop important life skills.”

For franchisees looking to invest in this category, Prenevost notes the importance of catering to parents. “They have to understand what the time availability is for the parent to bring the child to and from the program. It’s hyper-competitive – it’s competing with all other aspects of the person’s life, and it’s competing with all of the other programs on the marketplace. People need to understand how the franchisor is helping them attract and retain the customer,” he explains.

Let’s take a closer look at Stagecoach Performing Arts.

Stagecoach Performing Arts
Stagecoach Performing Arts, a U.K.-based franchise system that’s currently rapidly expanding in Canada, teaches children from the ages of 4 to 18 how to sing, dance, and act. Director of international development Andrew Walters says Stagecoach schools provide a thriving, nurturing, and supportive environment for creative learning, which attracts 49,000 children a week to classes around the world.

“With over 30 years’ experience in teaching the performing arts, Stagecoach is so much more than teaching our students how to sing, dance or act – it’s about developing a sense of confidence and life skills, like teamwork, perseverance, resilience, and feelings of self worth to support them through whatever paths they choose,” he explains.

Stagecoach teaches its young performers through small classes and three-hour sessions that focus equal attention on each of the ‘triple threat’ components – drama, singing, and acting. “We encourage students to take ‘safe risks’ through rehearsals and performance, which brings out a willingness to take on new challenges, helping them blossom into well-rounded individuals, ready to embrace life and all its opportunities,” notes Walters.

Walters says that opportunities in mainstream education fall below parents’ expectations so more parents are turning to programs like the one offered by Stagecoach.

“Children need a safe space to be able to express themselves, to explore their imagination and creativity, while all the time learning and building important life skills to help them succeed in life. At Stagecoach, we believe that the performing arts should be available to all children so they learn, grow, and thrive in a creative environment.”

All new Stagecoach Performing Arts franchisees receive ongoing training along with industry-leading support in marketing, customer service, IT, and business development. Walters says their tried-and-tested structure enables franchisees to play to their strengths and provides the best possible environment in which to succeed.

“The children’s education and services franchise category is a very rewarding area to work in, with the ability to inspire our next generation, while at the same time having flexible working hours to build a successful and rewarding business, built around family life,” he says.

Keeping Up With the Baby Boomers

Canada’s population is aging, and the baby boomer generation now makes up more than half of the senior demographic. According to Statistics Canada, on July 1, 2019, there were 6,592,611 Canadians aged 65 and over, with baby boomers making up the majority (51 per cent) of seniors.

Maillet notes that this rise in the senior population is leading to an increase in demand for the services that are helping this demographic to “age in place.”

“There is a growing need as the baby boomers enter senior years. And it will continue to grow. The senior population is expected to double in the next 25 years. Senior care facilities have not been able to keep up with the demand, resulting in senior in-home care services expanding to fill the gap. Senior in-home care services allow seniors to remain safely and independently within their personal homes, rather than moving into a facility,” explains Maillet.

Prenevost notes that the increased demand for senior services has led to significant interest from prospective franchisees. “We get more people asking about senior care than any other category. This is the number one category we get requests for and interest in, because of the sheer strength of the demographic of our aging population in the next 10-plus years.”

There are a wide range of franchise opportunities available when it comes to senior services, from transportation services and meal delivery to mobility systems and downsizing services. But the majority of senior services franchises can be found in home care. One such franchise system is Just Like Family, which offers a complete range of home care services.

Just Like Family
Just Like Family is a senior home care franchise that offers customized care services to help clients meet the needs of their loved ones. Razvan Isacescu, president of Just Like Family, says they offer so much more than home care.

“We are providing a more personalized service. We are trying to find the perfect match between the caregiver and the client, by doing comprehensive free assessments in clients’ homes with the purpose of finding out more about our clients. Not only about their medical needs, but also about their personality, background, likes and dislikes, etc. Just like our name says, our clients and caregivers are treated like a family member, not as a client or employee,” he says.

Services provided by Just Like Family include personal care, companionship, home support, overnight care, live-in care, and consistent care updates, all provided by carefully screened caregivers.

Isacescu says that the desire from seniors to continue to live in their own homes is what’s driving an increase in senior care services.

“Statistics say 93 per cent of seniors would like to stay in their own homes when they get older, and we are helping them to do that, by providing any type of help, from a few hours a day to 24/7, just so they can grow older in their own homes, instead of having to move to an unfamiliar environment, like a care facility,” he explains.

There are many draws for franchisees to the senior care category, and to the Just Like Family concept in particular, notes Isacescu.

“We’re a Canadian company, our franchise fee is the lowest in the senior care field, and we’re the only home care company offering free royalties and marketing fees for the first six months of operation. We also provide 24/7 support and professional business coaching, and we are helping our franchise partners grow to the level and at the pace they would like to grow,” he says.

Renovations and Improvement a Priority for Canadian Homeowners

Just take a look at the number of home improvement and renovation TV shows on throughout the course of the day, and it’s no surprise that this is a major area of interest for Canadian consumers.

“I think the home improvement market is one of the strongest, most recession-resistant categories in franchising,” says Prenevost. “It’s driven by a few different key factors, and one of those factors is the aging population.”

He explains that as children move out when they reach their 20s or 30s, their parents are left with a choice – either downsize and move, or change their space, which is what most people do, as it’s less expensive and more convenient. The aging demographic also means that more houses are being renovated to accommodate mobility issues.

He also points to the real estate market as a major factor, as more people are using services to stage their homes, and are also enlisting renovation franchises to help turn their recently-purchased homes into spaces designed to their own taste. Add to that the convenience factor of enlisting handyman services when you’re too busy to carry out your own home improvements, and you have a category that’s finding many ways to capture Canadians’ interest.

On the home restoration side, Prenevost refers to disaster recovery as an “actuarial table business.” In other words, there are a certain number of households, and there’s always going to be a certain amount of fire, water, and flooding.

Prenevost says that while franchisees do well in the home restoration business, they need to excel at managing projects, and be prepared for the lifestyle that comes with this type of franchise. “It can be an incredibly lucrative business, but people have to understand the lifestyle and the crews that they have to manage.”

This is where PuroClean comes in.

PuroClean
Gordon Gamble, president of PuroClean, says that when the franchise entered the home restoration market in 2009, the market was already well established. But PuroClean was able to differentiate itself by bringing “fresh blood” to the industry. Gamble says they didn’t draw from the existing industry for franchise owners, but instead sought individuals who had strong, proven leadership skills, and this continues today.

“We look for what we call the 3 Cs – people with character, competence, and good chemistry. By chemistry, I mean how are they going to play with the rest of the network, because that’s a big part of how efficiently your network can function nationally,” he explains.

Gamble notes that everyone in the industry has branding and equipment, and pricing is pretty standard across the sector, so what sets PuroClean apart from others is the level of service it provides. “When you distill the whole mix, what comes out of it is if you have good leadership, good management skill, and good character, and a well-oiled, fine-tuned organization, you’re going to wind up delivering a higher level of service experience than organizations that have taken a more common approach.”

Once PuroClean attracts these ideal franchisee candidates, as long as they meet these expectations, they should find success, especially with the stability of the category.

“It’s an interesting category because no one ever grows up saying ‘I want to vacuum sewage out of a basement.’ You could categorize it as a niche market, because the business and the industry itself has a level of stability to it,” says Gamble. “People own property and they have to buy insurance and insure that property. If something happens to that property, they have to fix it. The insurance company supplies a fixer, and that’s us. It’s a very simple business model that’s predicated not on price, but on the customer experience that gets delivered.”

Gamble notes that while the restoration industry has actually seen more consolidation in recent years, it’s a service that performs at its peak as a franchised business, which allows a system like PuroClean to continue to find success.

“I think a franchise-based business model has the ability to extract the maximum amount of passion, talent, skill, and collaborative effectiveness, more than a corporate or any other model in this industry.”

Canadians Becoming More and More Health-Conscious

Consumers are more educated about health and wellness than ever before and are using this knowledge to try to establish and maintain healthier lifestyles.

“One of the things that’s driving the health/wellness industry is the significantly higher awareness on the importance of what goes into the body and health maintenance from consumers in general,” notes Prenevost. “They’re becoming more aware and they’re making choices to progressively improve their long-term health – that’s driving the industry massively.”

This leads to more interest in all aspects of the category, including wellness, notes Prenevost.

“The wellness category is about feeling good about yourself from a physical perspective, and that gets into supplements and massage, and all those different things. That has been a multi-billion-dollar industry for years, so there are lots of franchisees and franchisors trying to maximize that opportunity,” explains Prenevost.

Mike Mutsaerts, vice president of franchise development with Massage Addict, says these franchisees and franchisors are drawn to the massage category in particular because it resonates strongly with Canadians.

“People understand the importance of living a healthy, active lifestyle and look for alternative health care options like massage therapy to be part of their overall health care regime. Massage therapy is the most common type of therapy Canadians have used over their lifetime, with 44 per cent having tried it.”

Keep reading to learn more about Massage Addict and how it’s meeting the needs of health-focused Canadians.

Massage Addict
Massage Addict is Canada’s first and largest membership-based massage therapy provider, with over 95 locations across Canada. It has a proven business model that fulfills a market gap: the need for high-quality, affordable therapeutic treatments. On a monthly basis, at Massage Addict, Registered Massage Therapists, Registered Acupuncturists, and Certified Reflexologists provide more than 65,000 treatments to help clients relieve pain, reduce stress and anxiety, and sometimes just to relax for an hour.

Caroline Kolompar, president of Massage Addict, says, “The Massage Addict brand is fuelled by the passion and commitment of the franchise partners, the quality of our therapeutic treatments, and the overall experience a client receives. The combination is the reason why Canadians continue to choose Massage Addict to fulfill their therapeutic needs.”

And, franchisees looking to invest in a health care business can expect a number of benefits with Massage Addict, notes Mutsaerts, including a strong business model and a significant training and support system.

“Massage Addict offers a low cost of investment, a straightforward business model, and extremely attractive long-term client relationships due to the fact that 75 per cent of revenue is from annual contracts and 80 per cent of revenue is paid through insurance/employee benefits,” he says.

Massage Addict also offers franchisees comprehensive training and support to help maximize clinic sales and profit, including its ‘Playbook for Success,’ which provides everything franchisees need to know about the brand’s operations. Franchisees also receive ongoing support in the form of additional training, regular communication, marketing support, and new products and services to help them meet customer needs.

“Besides being the largest and fastest-growing provider of therapeutic services in Canada, Massage Addict is a brand that strategically evolves in the marketplace to ensure continual relevance,” says Mutsaerts.