Home > Article > Michel Gagnon

Franchising in Quebec

Written by : Michel Gagnon
2008-07-15
Many franchisors consider Quebec as the last province to expand into, and typically will develop Ontario first, since a majority of Canadian Franchise Systems originate from Ontario or start in Ontario when the Head-Office is from outside Canada, and then will expand in the West and then in the East, often jumping over Quebec. Of course, there is a sound strategy in developing the largest and most profitable market first, and avoid what seems to be the most difficult area of expansion for last. However, the perceived difficulties or barriers to entering Quebec are often perceptions rather than realities.

As most Canadians already know, our Country is made up of four entities: Western Canada, Ontario, Quebec and Atlantic Canada, each having its own particularities and perceptions towards each other. At the end of the day, we are all Canadians; the consumers habits and tastes are not that different, business practices and laws are very similar and, lets face it, if a company wants to be strong and big, it must expand over all of Canada. Contrary to our southern neighbour, our regional markets are not large. California’s population alone is 30% bigger than all of Canada!

Quebec represents 24% of the Canadian population with well over 7.4 million customers, making it the second largest market after Ontario. Greater Montreal with its suburbs has over 2.5 million people, 35% of the Quebec population and is the equivalent of Atlantic Canada as a whole. The third largest market is B.C. with 13% of the national population.

In general, the negative perceptions towards Quebec, from a franchisor’s point of view are: the language barrier, different tastes and consumer habits, different laws, poor economy and difficult franchisees. Let’s try to address these issues:

For the issue of language, we must break the discussion in two distinct parts: the legal requirement and the demographic consideration. Quebec passed a language law in 1997, the famous Bill 101 and its derivatives. This law affects signage, business name, advertising material, usage of language in business context, labelling and similar visual aids. The details of the law are available to any citizen and any business lawyer or corporate manager. The summarized version is relatively common sense.

Companies with English brand names can use their name or brand without any problem, assuming that they do not have a French name or brand name as well, in which case, the French would need to be used. There are ample examples of well established systems with so-called English names: McDonald’s, Tim Horton, Pizza Hut, Second Cup, East Side Mario, Home Depot, Boston Pizza and many others.

Bill 101 does not prohibit the use of English, but rather prioritizes French as the first language of 80% of the population. Of course, there are rules and regulations and everyone should consult an expert before doing anything. However, besides translation and printing costs, the required modifications are not prohibitive and do not prevent businesses from operating profitably.

The second part of the language issue deals with the obvious. Overall, French is the first language of 80% of the population of Quebec, with 40% of the overall Quebec region speaking both French and English. However, Montreal, which represents 25% of the general population, is 70% bilingual. Other regions such as Laval and the Outaouais (Gatineau) are very bilingual as well. This means that a majority of Quebec consumers want or need to be addressed in French, by store personnel, the marketing and advertising material, the menus or direct marketing pieces, etc. This reality is beyond the confines of any language law and is common sense, just as a company would deal in the language spoken by the majority of its intended clients in a market outside of Canada.

To address the third point, the Quebec consumer, and in particular the French-Canadian, is influenced by his (her) European and Latin background and is sensitive to certain tastes, packaging and/or marketing differences. However, this is also true for Canadians living in the other regions. A prudent franchisor will undergo some market analysis on the receptivity of the product/concept before entering a new market, even if it means minor modifications to either the product or its packaging/offer to the consumer.

Quebec has a legal system somewhat similar to the other provinces. The differences, though, are related to the use of the Civil Code as opposed to the Common Law in certain business or civil issues. As an example, the impacts on guaranties and franchise agreements are noticeable and franchisors entering Quebec will need to have their legal contracts reviewed by Quebec based lawyers, most of them having affiliations with Ontario firms. Again these modifications are not prohibitive and will not drastically change the way business is done by the franchisor.

On an economical and demographic level, Quebec is very similar to the rest of the Country. Except for language, the demographic details of Quebec (families, age, revenues, employment) are comparative to the average Canadian figures. Ontario and B.C. are currently enjoying higher revenue-per-family than the Canadian average, but Quebec compares favourably with the majority of the other provinces. Quebec’s economy is diversified and is home to many entrepreneurs.

Established franchise systems in Quebec enjoy the same success in Quebec as in other parts of the Country. There have been great success stories and there have been great failures. Reasons for these are complex and rarely due to the System/products not working in Quebec due to consumer resistance. Many elements enter into why something does not work: poor planning, bad real estate decisions, poor knowledge of the market, weak relationship with franchisees (support not adequate), failure to adapt to the differences of Quebec, poor choice of people etc.

Again, just like entering Western Canada or Eastern Canada from Ontario (or any other permutation) consideration of particularities must be exercised. Franchisees everywhere need to feel the support of the head-office. Co-op marketing strategies need to reflect the needs of the regions and particularly in Quebec, most franchisees need to be serviced in their language.

There are a number of ways for a franchisor to develop his System: opening corporate units, joint ventures, finding a master franchisee, finding area franchisees who will open multi-units, and signing single franchisees. These are the usual methods, but they could be more. The key is people. There are professionals who can assist you, including franchise lawyers, real estate experts, consultants, marketing firms and the Canadian Franchise Association, which can recommend people or other franchisors who have experience with this.

It is worth noting that the Province does not have its share of franchise systems, relative to its population size. The majority of franchise systems is indigenous to Quebec. The Quebec consumer has access to less than 20% of the franchise brands available elsewhere in Canada. The potential is there !

Entering the last frontier is like anything else. You need planning, the right experts to guide you, a willingness to make the required changes, a commitment to do the right things, a marketing strategy and a support strategy to ensure that the first units and franchisees will be successful!

Other articles on Columnist franchise
If franchisors are reluctant to negotiate the terms of their franchise agreements, what is the point of having it reviewed by a franchise lawyer before signing? Consider The Following Issues BUYING A READY-MADE BUSINESS IS APPEALING TO MANY MID-LIFE ENTREPRENEURS BY JAMES PASTERNAK