In this segment, we’re going to cover some of the most common myths and misconceptions of franchising—what it is and what it’s not. Many of the views that a lot of people have about franchising are, frankly, incorrect. What’s really unfortunate about that is those misperceptions cause people to:

1. Not look at franchise ownership at all
   
   
2. Not seriously look at and research businesses they should be considering
   
   
3. Worst case, buy a business they shouldn’t have bought because they weren’t well-suited to it—but bought it based on incorrect perceptions they didn’t research further

So let’s now look at some of the most common myths and misperceptions that exist about franchising.

The first myth we’ll explore is that franchising is only food and retail. When I ask people what brands come to mind when they hear the word “franchising,” the most common responses are pizza, McDonald’s, Subway, Canadian Tire, maybe a dollar store or a pet store. In other words: food, food, food, retail, more food.

Why? I believe it’s because food and retail are the visible face of franchising in Canada. A critical part of these businesses’ marketing strategy is “location, location, location”—so we see them everywhere.

Now, franchise fact number one: the reality is that there are over 1,300 different franchise concepts in Canada across more than 50 different industries. There are over 78,000 independently operating franchise units that generate about 10% of the total gross domestic product in Canada. So franchising is way more than food and retail.

As you can see by the data, food and retail occupy roughly 46% of the total market—but there’s a lot more out there. The fastest-growing segments we see are in the business-to-business and business-to-consumer service sectors.

Before we go into the various categories of franchise investment, I think it’s really important to answer the question: how much do I really need, and what are the components of that initial investment?

When we talk about the total investment breakdown, that’s the amount you’ll need to get the doors open—from the day you buy the franchise to the day you open. There are three main parts to that:

1. The franchise fees—what the franchisor charges you to become a member of their system. This is often the smallest portion of the total investment.
   
   
2. The construction and buildout costs—all the equipment and everything else needed to open and operate your business.
   
   
3. The working capital to break even—this covers training fees and other startup costs.
   
   

Franchisors are very good at describing all aspects of total investment in great detail. As mentioned in the last segment, this is a critical part of the franchise disclosure document.

Once you’ve got the business open, the next financial component you need to consider is your working capital. This is the amount of money you’ll need to keep injecting into the business to cover rent, salaries, and other expenses until the business consistently breaks even and the revenue can cover all operating costs.

We call this the “funded burn.” I like to compare it to giving a child an allowance until they get a part-time job. Until they can support themselves, they need that allowance. Once they’re working, the allowance stops. A new business needs an allowance too—the funded burn, provided by you as the owner, until it becomes self-sustaining.

When we think about the financial resources required for each of these components, typically the franchise fee and the working capital are covered by your personal savings and lines of credit. When it comes to the buildout and equipment costs, those are most frequently funded by small business loans or the Canada Small Business Financing Program.

We usually see roughly two-thirds of the funding coming from bank financing for equipment and hard costs, and one-third from your own funds to cover the franchise fee and working capital.

There’s one additional component of initial investment that far too many people completely overlook when planning how to fund their business purchase: personal working capital. If you’re the primary breadwinner in the family—or if the family needs a portion of your income on a monthly basis to sustain their lifestyle—then you need to plan how much personal income you’ll need to draw until the business becomes profitable.

For example, if your family’s monthly expenses are $4,000 and it takes nine months for the business to reach breakeven, that’s $36,000 you’ll need to fund. Realistically, you’ll also need to plan for additional months before paying yourself a full salary, so you might want to budget $40,000 to $60,000 or more, depending on your situation.

We maintain that this personal working capital—enough to cover your income needs until the business can replace that income—must be included as part of your total initial investment. When you’re considering what kind of business you can afford to buy, this figure matters.

While the franchisor outlines in their disclosure document what the initial investment is from their perspective, it’s essential that you go beyond that. We recommend talking to at least 8 to 10 existing franchisees and asking what their initial investment and working capital were, and how closely those figures matched what the franchisor presented. That way, you get a much more realistic picture of what you’ll actually need in your market.

Now that you understand more about what the components of the initial investment are, let’s move on to Franchise Fact Number Two.

Over the years, most of the people we’ve worked with initially thought franchising was far more expensive—often assuming it would cost more than $500,000. In reality, the vast majority of franchises are much more affordable than people expect.

Why the misconception? Because most people associate franchising with food and retail—the most visible parts of the franchise landscape. And yes, those tend to be more expensive due to real estate, construction, and equipment needs.

But you might be surprised to learn that roughly 27% of franchise systems in Canada cost less than $100,000. Another 28% fall between $100,000 and $250,000. About 24% are in the $250,000 to $500,000 range. So overall, franchising is often much more accessible than people assume.

Depending on the category you’re looking at, we see most of our clients buying franchises in the $100,000 to $500,000 range. And as we mentioned earlier, two-thirds of that amount is often financed through banks, depending on the business model.

The third misconception we often hear is that franchisors need to operate in new industries with little competition in order to be successful. In fact, most franchise systems emerge from well-established industries by creating market consolidation.

Let me repeat that: successful franchisors emerge from proven industries by creating systems and strategies that allow them to outperform smaller, independent operators. Franchise brands don’t typically invent brand-new markets—they leverage existing demand and introduce consistency, branding, and scalability through systems.

The fourth misconception is that industry experience is required to own a franchise. Let’s look at Franchise Fact Number Four.

The reality is that most franchisors are not looking for industry experience. In fact, many prefer you don’t have it. Why? Because industry experience often comes with bad habits, preconceived notions, or resistance to following the franchisor’s systems and processes.

Instead, franchisors are looking for people with transferable, leverable skills—things like leadership, communication, business management, and problem-solving. They want people they can train and coach, who will follow the playbook and focus on running the business, not reinventing it.

In most cases, less than 20% of franchisors want industry experience. Franchising is based on the ability to run proven systems well. The right franchisee is someone who sees themselves as the owner of the business—not just the operator.

That means using your accumulated business and life experience to lead teams, manage operations, and grow the business, while letting the franchisor fine-tune your skills through training and support.

The fifth misconception is that franchise success is all about the product.

Think about this: can you make a better hamburger than some of the biggest fast-food brands? Most people would say yes. But those brands are among the most successful franchises in history—not because they have the best product, but because they have the best systems.

Franchise Fact Number Five is this: it’s not about the product—it’s about the systems. We don’t go to major brands just for the food or service. We go because we know what to expect. The experience is consistent, reliable, and convenient—and that comes from the systems behind the scenes.

Franchisors invest heavily in systems: point-of-sale tools, accounting, performance tracking, HR strategies, and marketing—all designed to create consistent, scalable outcomes across locations.

These systems allow franchisees to be part of a much bigger network that consistently outperforms independent operators, especially those without formal processes or support.

Now, the final misconception we’ll address is that franchises are too risky.

Too risky compared to what? The uncertainty of a corporate career? The unknowns of starting a business from scratch?

The truth is, life is full of risk. What matters is how you manage it. And you’ve already developed risk management skills—whether it was buying your first home, making investment decisions, or choosing a career path.

Franchising allows you to apply those same skills to business ownership. The key is managing risk by choosing the right opportunity, doing your research, and understanding what you’re getting into.

Many people are concerned about investing in a business during uncertain economic times. Yes, the economy has cycles—but some businesses perform well no matter what’s happening in the market.

There are several types of franchises that thrive even in downturns. One example is businesses that cater to growing demographic trends, such as:

• Senior care services—medical or non-medical, helping people stay in their homes longer.
• Home renovation—kitchen and bath upgrades, painting, or cleaning services for aging homeowners who no longer want to move or do the work themselves.

Another strong segment is essential services—things people need regardless of the economy, like:

• Hair care
• Automotive repair and maintenance
• Damage restoration (e.g., fire or flood cleanup)

These services are always in demand and often backed by insurance or repeat customers.

A final category is business-to-business services—things like coaching, marketing, peer groups, and consulting. Just like professional athletes have coaches, smart business owners invest in support services to help them grow. Many franchises offer those services.

Franchising is not just about food. It’s not just for experts. It’s not too expensive. And it’s not too risky—if you approach it with the right mindset, research, and guidance.

That concludes the segment on franchise myths and misconceptions. In the next segment, we’ll look at the different types of franchise ownership models.