Unleashing growth

Working in lockstep with London’s population boom, the franchising industry is seeing the city as fertile ground for expansion

Photo: Lee Smithson, president, FranNet Soutwestern Ontario

WHETHER WE REALIZE it or not, Canadians live in Franchise Nation. We are 38th in the world by ­population, but, at more than $120 ­billion in value, boast the second largest franchise industry in the world after our neighbours to the south.

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One in every five loonies spent on goods or services in Canada is spent at a franchise business. They are the oft-overlooked workhorses of the small business economy — and it’s not just fast food anymore.

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“If you look at the breadth of franchising business models and the sectors that franchising is in, we’ve got something in just about everything,” says Lee Smithson, president of FranNet Southwestern Ontario, a network of franchise brokers that match potential franchisees with brands.

As London’s population has grown, so has its franchise sector, says Smithson. “It’s pretty busy,” he observes. FranNet tends to diverge from the wider franchise market, in that its inventory of franchises looking for operators has a smaller percentage of QSR (quick service restaurants) businesses — around five per cent — which make up the bulk of franchises in Canada.

“Fast food — they are popping up all the time across the city,” he says. “But there are also the home services franchises that are opening, and retail franchises.”

“Franchisors are looking for available space, but also where the demographics are telling them their clients are” —Lee Smithson

Outside of QSRs, two areas where Smithson and FranNet are seeing a lot of growth these days are within beauty and fitness franchises — a development he puts down to a restored sense of stability post-Covid.

“There’s more people looking at ­fitness, more at beauty than there were in, say, 2022,” Smithson says. “Today, people are more confident with moving ahead and looking at the business models, seeing the existing income statements, being able to learn and project their models. There’s great opportunity in that sector.”

The who of the franchise sector is another area where there’s been some shifts in recent years, Smithson says. Rather than the traditional demographic of franchise buyer — someone in their 40s — Smithson is seeing is an explosion of interest among millennials in their late 20s and early 30s.

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“The younger generation is coming in and their parents are helping them with that investment,” Smithson says. “When I talk to them, I’m often surprised at the maturity they have in their outlook. They’ll say to me, ‘I saw my dad get laid off twice and struggle to get a job,’ or ‘I know I’m just a number at the company I’m working for right now and I want more than that.’ They’re making an entrepreneurial decision earlier in their career than people used to.”

Immigration, too, is driving a lot of the franchise boom right now, Smithson says. Franchises can often make for convenient, turnkey ways to invest in a Canadian business, he explains, which has advantages in securing entrepreneurial visas.

And then there’s the where. Growth in franchising is following growth in the rest of London, which is to say a lot of it is concentrated in the city’s periphery areas.

“Franchisors are looking for available space, but also where the demographics are telling them their clients are,” Smithson says. “In London, we’ve seen rapid growth in the west end, the north, the south, we’ve seen it in the northeast. If you drive through east London, down Dundas Street out past Clarke Road — that whole area is full of different franchises and small businesses.”

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For all the changes in demographics and geography, though, Smithson says the motivators for franchisees are essentially the same as they always have been. “We work with people who have decided they want to own their own business, for all kinds of reasons,” he says. “They don’t want to work for someone else anymore, they want that control, or they’re making a lifestyle decision.”

The result, from Smithson’s perspective, is a dynamic and colourful franchise sector with a bright future.
“There are a lot of really interesting franchises that I get to work with,” he says. “And interesting franchisees that have taken a risk on achieving a dream — and winning. It’s great to see.” Unleashing growth franchising Franchising Kieran Delamont

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