Nov/Dec 2016 – Franchise Canada https://cfa.ca/franchisecanada Produced by the Canadian Franchise Association Fri, 14 Oct 2016 19:21:32 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.3 https://cfa.ca/franchisecanada/wp-content/uploads/sites/16/2020/03/cropped-cropped-favicon-32x32.png Nov/Dec 2016 – Franchise Canada https://cfa.ca/franchisecanada 32 32 Franchise Legal Matters https://cfa.ca/franchisecanada/franchise-legal-matters/ Fri, 14 Oct 2016 19:21:32 +0000 https://cfa-ca.flywheelsites.com/franchisecanada-2/?p=93 A potential franchisee’s guide to retaining a franchise lawyer and franchise disclosure documents Franchising is often referred to as a mutually rewarding relationship between franchisors and their franchisees. While this is true, the franchise business model is built upon contracts and other documentation, which makes the relationship that much more...

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A potential franchisee’s guide to retaining a franchise lawyer and franchise disclosure documents

Franchising is often referred to as a mutually rewarding relationship between franchisors and their franchisees. While this is true, the franchise business model is built upon contracts and other documentation, which makes the relationship that much more complex. Luckily, franchise lawyers are there to help prospective franchisees wade through the paperwork, including the franchise agreement and disclosure document, and fully understand the rights and obligations of the franchise relationship that are outlined within.

Franchise Legal Counsel Matters:

Franchise lawyers are well versed in the ins and outs of the franchise business model. It’s vital for prospective franchisees to fully understand all documentation involved in their franchise investment, particularly the disclosure document (a comprehensive summary of pertinent information about the franchise system, its officers, finances, etc.) and the franchise agreement. As a potential franchisee about to invest your time, effort, and money, you’ll want to have a complete understanding of the relationship you’re about to enter into. This is where an experienced franchise lawyer comes in.

Though there are some common features found in franchise agreements, these agreements can vary from franchise system to franchise system, and from franchisee to franchisee. Today, some provinces have franchise legislation that outlines the information that franchisees must receive before signing on the dotted line. CFA members are required by the CFA Code of Ethics to provide this disclosure regardless of whether provincial legislation is in place. This is just one of the reasons why retaining a lawyer who has experience with the franchise business model is a wise choice.

So where can you find a franchise lawyer? You can find a lot of the information that you need online, through sites like the CFA’s online directory of franchise support services members (www.cfa.ca/SupportCategories). Although the internet is a great source for some initial inquiries, you should speak and meet with lawyers before you retain one.

When selecting a lawyer, there are a few things you should consider. First, look at the lawyer’s experience – have they dealt with the franchise you’re interested in before? How often have they acted for franchisors and franchisees?

Fees are another area that should be examined. You should be comfortable with the costs and timelines, but should also look for quality services and a lawyer who understands your goals and financial situation.

A large part of examining the franchise system is reviewing its disclosure documents and agreements. When meeting with your franchise lawyer, you’re advised to bring in everything you’re being asked to sign, from the franchise agreement itself to any leases or other contracts. Usually these are standard documents, but each should still be examined. It’s also important to look at some documents, such as the franchise agreement and real estate lease, together.

The lawyer will be looking for two main things: franchisee obligations and potential risk. If, upon review, everything is in order, you’ll sign on the dotted line and move forward with establishing your franchise location. But it doesn’t necessarily signal the end for the relationship with your franchise lawyer, as, once a positive working relationship is established, many clients will return with more legal work down the road.
Having an experienced franchise lawyer on your team is an asset both during and after your franchise investigations.

Franchise Document Disclosure Matters:

As part of a proper due diligence process, you should be collecting pertinent information about franchising and franchise systems. You should also be evaluating this information against your goals, attributes, capabilities, and assets. During due diligence, some of this information (financial capacity, skills, passions) will come from your end, while other details will come from the franchise system. An important piece of this investigation puzzle is the franchise disclosure document. Here’s how you can put these valuable resources to best use and learn as much as possible.

What is a franchise disclosure document?

A franchise disclosure document is a written resource designed to provide you with the vital information that you need in order to make an informed decision about investing in a franchise opportunity.

A typical franchise disclosure document may include information such as:

  • Background on the franchisor and the key players within the system, including its directors and officers;
  • Any history of litigation, civil actions, convictions, bankruptcies, etc. of the franchisor and/or its directors and officers;
  • A summary of the trademarks and other intellectual property;
  • A summary of the costs and fees required to start and run the franchise business;
  • An outline of the training and ongoing assistance provided by the franchisor;
  • A list of the current and former franchisees and their contact details; and
  • Financial statements and other fiscal information.

The disclosure document must meet requirements set out in any provincial franchise legislation. Currently, Alberta, Manitoba, Ontario, New Brunswick, and Prince Edward Island have specific franchise legislation, and franchise legislation is soon to become law in British Columbia. CFA members pledge to provide disclosure documents to serious franchisee candidates in all provinces and territories, regardless of whether they’re required by law to do so.

As a prospective franchisee, you’ll be given a minimum of 14 days to review the document prior to signing on with the franchise.

Will a disclosure document specify how much money I can make as a franchisee?

Franchisors can, but aren’t required to, provide information on projected earnings. As a variety of factors can play into the success of a franchise location, it can sometimes be difficult – and risky – for franchisors to provide earnings claims that apply widely.

The financial information that franchisors will include in the disclosure documents is likely to include the franchisor’s overall fiscal performance during the most recent year (which will show the assets, liabilities, and earnings of the franchisor itself) and/or possibly historical actual gross sales of anonymous individual locations. You’re advised to review all financial statements with an accountant, who can explain the numbers and use them to extrapolate the financial viability of the franchise system, and to help you put together a solid business plan.

No matter how the financial information is presented, though, the franchisor must be able to substantiate and justify the information.

Another way to find out more about earnings potential is to speak with existing franchisees.

When will I receive a franchise disclosure document?
The timing of providing a disclosure document to a prospective franchisee can vary from system to system.
Just as you’ll be evaluating the franchise opportunity, the franchisor will also be assessing whether you would be a good fit for the system. The franchise disclosure document usually comes into play once you’re considered a serious candidate.

What should I do with a franchise disclosure document?
When a disclosure document is provided, you have a minimum of two weeks in which to review the materials. You should not sign any contracts or agreements until this period has passed. The two weeks should go by quickly, though, as there is much to be done.

The first step is to gain a full understanding of the information it contains, with help from an experienced franchise lawyer.

A franchise lawyer will be able to “translate” all of the essential rights, responsibilities, and obligations that the documents outline pertaining to both sides of the franchise relationship.

The lawyer will also point out anything different or unusual about the information or what the franchisor requires, and can often identify items that may be negotiated with the franchisor (and lead these negotiations when the time comes).

In addition to speaking with a franchise lawyer, there are others you should consult during this time, including an accountant and banker, who may also want to review the disclosure document.

You will also want to put the list of franchisees that the franchisor provides to good use by contacting current and former franchisees for their firsthand knowledge.

Franchise disclosure documents play an important role in your due diligence process. By consulting with franchise professionals, a disclosure document can help you make your investment decision with a better understanding of the franchise opportunity, as well as the rights, responsibilities, and obligations you’ll be undertaking as a franchisee.

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Franchisee Profile: Peter Dyakowski, Oxford Learning Centres https://cfa.ca/franchisecanada/franchisee-profile-peter-dyakowski-oxford-learning-centres/ Thu, 13 Oct 2016 17:27:37 +0000 https://cfa-ca.flywheelsites.com/franchisecanada-2/?p=34 As a past winner of CBC’s “Canada’s Smartest Person” competition and a former contestant on Jeopardy!, Peter Dyakowski seems like the perfect candidate to open a tutoring franchise. But being a multi-unit franchisee with Oxford Learning Centres is actually a second career for Dyakowski, who plays guard for the CFL’s...

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As a past winner of CBC’s “Canada’s Smartest Person” competition and a former contestant on Jeopardy!, Peter Dyakowski seems like the perfect candidate to open a tutoring franchise. But being a multi-unit franchisee with Oxford Learning Centres is actually a second career for Dyakowski, who plays guard for the CFL’s Hamilton Tiger-Cats.

“Football doesn’t last forever and I was interested in finding a business that I could invest in and build for the long term,” says Dyakowski of his decision to open a business. As he researched business opportunities, he decided franchising was the best route to entrepreneurship. “I’m a smart guy and know enough to do my homework; my research found that starting or buying a franchise business is a more secure path to small business success.”

As an active volunteer in Hamilton, where he opened his first centre, Dyakowski was keen on starting a franchise that would allow him to give back to the community. “I wanted to find a business with a social conscience,” he says. “That’s what drew me to education and tutoring.”

Dyakowski began researching education franchises online but wanted to meet face-to-face with franchisors before making any big decisions. So, in 2013, he attended The Franchise Show in Vancouver, where he met Matt Baxter, Vice President of Business Development for supplemental education franchise Oxford Learning.

“He did an awesome job of getting me really acquainted with the company,” says Dyakowski, adding that he was impressed with the company’s proven track record for improving students’ grades. “The fact that Oxford Learning has been around since 1984, and having the chance to meet some multi-decade franchisees helped seal the deal for me.”

As a first-time business owner, and without any experience in education, Dyakowski says he felt “100 per cent prepared” to open his first Oxford Learning Centre thanks to the training he received prior to opening. “Matt made sure I had all of the corporate information and pre-training materials I needed, we visited existing centres together, and I attended a training program at the Oxford Learning headquarters in London, Ontario.” He also received ample start-up support, including site selection and grand opening assistance.

He says operating his Oxford Learning Centre has been just as rewarding as he hoped, especially when he sees his students make progress. “Hearing from parents about how much we’ve helped makes me feel really good about the business I’m running. That’s exactly what I wanted in the first place.”

For prospective franchisees looking at education franchises, Dyakowski says not to be discouraged if you don’t have a teaching or business background. “I had neither,” he points out, “but what I did have were strong organization skills, strong communication skills, and a love of education.”

No matter the industry, he says, all franchisees should take full advantage of being part of a franchise network. “You’re paying for an organizational system that, if implemented properly and consistently in your business, will all but guarantee success. Dedicate yourself to your training and commit to making sure you pass that dedication and passion on to your staff.”

As a successful franchisee, Dyakowski’s secret to success is simple: “Believe in yourself and your franchise,” he says. “Your franchise has proven itself time and time again at other locations. Know that it is designed to make you successful.”

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Cover Story: Small but Mighty https://cfa.ca/franchisecanada/cover-story-small-but-mighty/ Thu, 13 Oct 2016 17:24:43 +0000 https://cfa-ca.flywheelsites.com/franchisecanada-2/?p=30 [pro_ad_display_adzone id=”889″] It was a feat that no other franchise had accomplished before. On April 18, 2016, children’s soccer franchise Little Kickers took home the Canadian Franchise Association’s (CFA) prestigious Awards of Excellence in Franchising Grand Prize for the third year in a row. Little Kickers’ Chief Operating Officer Frank...

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It was a feat that no other franchise had accomplished before. On April 18, 2016, children’s soccer franchise Little Kickers took home the Canadian Franchise Association’s (CFA) prestigious Awards of Excellence in Franchising Grand Prize for the third year in a row.

Little Kickers’ Chief Operating Officer Frank Stanschus credits his franchisees for the company’s historic win. “There’s a real feeling that we won this award together,” he says. “It’s not just head office doing a good job; it’s the franchisees making it easy for us to do a good job.”

A fitting statement given that strong partnerships are at the heart of the Awards of Excellence. Launched in 1992, the annual awards program recognizes franchise systems with the strongest franchisor-franchisee relationships, as demonstrated by the results of an independent survey of participants’ franchisees.

As one of the smaller companies to participate in the Awards of Excellence, Stanschus views Little Kickers’ multiple wins as a victory for small franchise systems in Canada. “It shows it’s possible – a small company can win this and win it repeatedly and they’re taken seriously by the CFA,” he says. “It’s a fantastic testament to our country and how we recognize the importance of small businesses.”

Growth goals

Little Kickers might be relatively small in Canada, but worldwide, the franchise has more than 240 locations. The concept originated in the U.K. in 2002, when Stanschus’ wife Christine couldn’t find an age-appropriate soccer program for their two-year-old son.

She founded Little Kickers to fill that void, offering soccer programs specifically for pre-school aged children. In addition to soccer skills, classes cover everything from understanding colours and numbers, to social skills like taking turns and waiting for instructions.

Since expanding to Canada in 2009, Little Kickers has grown to more than 30 units in Ontario and British Columbia. Ultimately, Stanschus hopes to expand to all of the provinces but, he says, supporting existing franchisees will always take priority over selling new franchises. “What matters to me most is that everyone who has put their faith into our company actually succeeds.”

To that end, the support provided to franchisees has grown just as rapidly as Little Kickers’ physical footprint. For example, the franchise recently hired a Director of Coaching to help franchisees perfect their classes, and a newly-launched online training platform enables coaches to train on the go. These new resources, plus personalized support from head office, are designed to help franchisees succeed.

Clearly, Little Kickers is on the right track. All of the system’s franchisees participated in the 2016 awards survey and gave their franchisor top marks for communication, operations, training, and support. Given that Little Kickers has nearly doubled in size over the past three years, Stanschus is encouraged by these results. “That we’ve been able to keep everyone on board and satisfied means we’re doing a good job through this constant massive growth we’re experiencing.”

A winning team

Participation in the Awards of Excellence is just one way Stanschus facilitates franchisee feedback. Everyone in the Little Kickers network communicates regularly via an online forum, and when important issues arise, Stanschus reaches out to each franchisee personally. “Almost everything we do, we do through communications with the franchisees,” he says.

Stanschus describes this leadership style as “consensus management,” where everyone is invited to provide input before a final decision is made. “It gives us a lot more and better ideas,” he says, noting that franchisees come from diverse career backgrounds and bring their own unique skills and experience to the table. Franchisees are even involved in the franchise sales process so they can offer Stanschus feedback about a potential franchisee. “It’s a good qualifier for me to judge whether the potential franchisee will work or not.”

So what makes the ideal Little Kickers franchisee? First, franchisees must be passionate about getting children involved in sports. “Every now and then, a prospect will ask ‘how much money can I make?’ We usually discount those people right away because that’s not what it’s about,” he says. “You will make money, but it’s more about giving back to the community. We’re successful because all of our franchisees think like that.”

Many franchisees even partner with charitable organizations to offer free classes to children from low-income families. “Our mission is to give every child a positive introduction to sport, not just kids who can afford it,” says Stanschus, adding that he would eventually like to develop a system-wide charitable initiative.

In addition to being passionate about the concept and devoted to their communities, Little Kickers franchisees should be prepared to work hard. “Everyone needs to recognize it’s their own business and it’s not a guaranteed success,” says Stanschus.

Franchisees can expect to do a lot of grassroots marketing to build their classes, which includes tasks like posting flyers around town and networking with other local business owners. “If you’ve been at a corporate job, it might seem like demeaning work, but it’s critical to what we do,” he says.

His advice to new franchisees is to take advantage of the support offered. “Some franchisees try to reinvent the wheel and don’t ask for help or listen in training. It’s a simple business if you do it the way it’s set out.”

All-star franchisees

The franchisees have spoken and they clearly agree. After all, it’s their enthusiasm for the franchise that earned Little Kickers the Awards of Excellence in Franchising Grand Prize three years in a row. We spoke to five franchisees to find out what they love about owning a Little Kickers franchise:

Courtney and Kevin Lyman, Toronto West and East York
Courtney Lyman was on maternity leave from her job as a Regional Manager at Lululemon when she decided to look for a business she could run with her husband, Kevin.

As a new mom, she immediately recognized a great concept when she discovered Little Kickers, and thought it would be a perfect fit. “We both value athletics and knew having the chance to instil the love and habit of sport at a young age would be incredibly rewarding,” she says.

Since opening in 2013, the Lymans’ Little Kickers franchise has grown to become the biggest in Canada, and one of the largest in the world. Lyman credits their coaches for this success. “Without incredible coaches, it doesn’t matter what we do,” she says.

The Lymans pay it forward by partnering with community organizations to ensure that any available space in their programs is given to children who can’t afford to enroll.

Courtney Lyman says her favourite part of owning a Little Kickers franchise is watching her students improve. “It’s been so fun to watch these kids progress both in their physicality, but also in their social skills over the years.”

With their commitment to their students and their community, the Lymans are only just getting started. Says Courtney: “We’ve been given the freedom to really innovate and push the boundaries of what were previously thought to be the limits of the business – and we still feel there is room to grow!”

Melanie Webb, Scarborough

Melanie Webb discovered Little Kickers at a critical time in her life. “I’d just been through a bad divorce and was having financial difficulties,” says the mom of two, who left a career in investment banking to raise her children full time.

With two young children to support, Webb needed a source of income that would allow her enough flexibility and time to look after her children. The solution to Webb’s dilemma turned out to be Little Kickers, as it offered a home-based business with relatively low start-up costs.

Today, Webb is co-owner of Little Kickers Scarborough and appreciates the training and support she received. “We were provided with a wealth of information on how to run our company, ways to develop our business, insurance information, and more.”

Webb says she “couldn’t be happier” with her decision to become a Little Kickers franchisee. “I’m able to work from home and spend my time in the best fashion possible for my children.”

Clark Webster, London

While living abroad in Seoul, South Korea, Clark Webster operated several bars and restaurants. When he returned to Canada, he wanted to buy a business, and found a posting for an existing Little Kickers franchise in Brampton, Ontario. “I’ve always been active in sports and I love being an entrepreneur,” he says of Little Kickers’ appeal. “Becoming a Little Kickers franchisee offered me the best of both worlds.”

He was outbid for the Brampton location, but inquired about other opportunities in Southern Ontario, and eventually opened in London in 2016 with fully-booked classes.

His favourite part of the business is seeing his students improve. “There’s nothing more rewarding than having a child listen to their coach and complete a drill properly for the first time.”

Going forward, Webster hopes to get involved in the local community, something he was passionate about when he lived in Seoul, where he organized charitable events, sports tournaments, and fundraisers for various causes. “I look forward to getting involved in London’s local community in a similar capacity.”

Larissa Gibson, North York

As an office manager for a soccer supply company, Larissa Gibson met many Little Kickers franchisees over the years, and noticed they all seemed to love what they did. Whenever she asked them about their experiences with the franchise, they only had positive things to say.

In 2014, she decided to take the plunge and become a Little Kickers franchisee herself. “I wanted to be happier at work and have the opportunity to make more money.”

As a franchisee, she loves the satisfaction that comes with working hard to build her business. “What I put into the business is what I get out of it,” she says. “I really feel there is no limit on how much I can grow the business.”

To build her business in the local community, she hosts numerous events throughout the year, including an annual Open House featuring games, face painting, and draws to win free classes. She also offers discounts to low-income families where possible.

She says the most rewarding part of her role is providing a supportive work environment for her coaches and receiving positive feedback from parents. “A parent recently shared with us that their children practice our games in their backyard and take turns pretending to be their favourite coaches leading a class. Hearing feedback like that is rewarding because we hope to make a difference in the lives of the children who attend our classes.”

Vivijana and Vlado Cajic, Milton

Vivijana and Vlado Cajic were no strangers to business ownership before they became Little Kickers franchisees. The husband-and-wife team owned a computer store for 15 years before deciding to seek out another business opportunity.

Sold on the benefits of franchising, they discovered Little Kickers on LookforaFranchise.ca (CFA’s online member directory). “It was a perfect fit for our combined skills and strength,” says Vivijana Cajic, referring to their backgrounds in administration, customer service, and soccer. They also shared the company’s commitment to getting kids active.

The couple opened in Milton in 2013 and give back to the local community by supporting the Children’s Aid Foundation and the United Way. Cajic says their favourite part of owning a Little Kickers is hearing positive comments from parents. “We love hearing how much fun their children are having, how they’re looking forward to their class every week, and how much they love their coaches.” But the best feedback, she says, is seeing the same happy faces in their classes week after week. “That’s why we truly love what we do.”
With a proven concept, a passionate group of franchisees, and a committed head office team, Little Kickers shows that when it comes to success in franchising, it’s not the size of the system that matters, but the strength of the franchisor-franchisee relationship.

LITTLE KICKERS STATS

Franchise units in Canada: 33, International: 210

Corporate units in Canada: 1

Franchise fee: $16K

Start-up capital required: $5K

Available territories: All of Canada

Training: Initial and ongoing training provided

In business since: 2002

Franchising since: 2003

CFA member since: 2009

Learn more about Little Kickers!

 

 

 
By Christine Rosal

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