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The Quebec Market - Success or Failure?

Written by : Michel Gagnon
2008-05-15
The general perception for many Franchisors based outside of Quebec and not operating in that Province at this time is that the Quebec Market is so very different than anywhere else in Canada and should be avoided if possible. On the other hand, Quebec represents 24% of the population. What should we do ?

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 are rarely due to the system/product 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 relationships with franchisees (support not adequate), failure to adapt to the differences of Quebec, and a poor choice of people, etc. Again, just like entering Western or Eastern Canada from Ontario (or any other area) consideration of particularities must be exercised.

Let’s look at two different cases of nationally established Systems who decided to enter the Quebec market. We will call them Franchisor A and Franchisor B.

Franchisor A was well established all over Canada and had ample resources to maintain a fast pace growth all over the Country, had no locations in Quebec yet and was firmly committed to get its share of this interesting market of 7 Million people!

For any business of any type to grow successfully, there is a minimum of ingredients: Commitment, Organization, adequate financing, a Strategy, Market intelligence and research. Then the Company needs to hire the right people for the initial development steps. The execution needs to be monitored and modified if needed, based on actual findings, recommendations from the people in the field and consumer response. Thereafter it is crucial that the remaining resources of the Company be marshalled to ensure superior follow-up and support for all aspects of the business.

Franchisor A did many things right: Proper Research on the Market, detailed determination and definition of the available territories, adaptation and translation of all legal documents, sale materials, store signage, forms, etc used to communicate with the French clients and between franchisor and franchisee. Substantial budgets were available to promote the search for franchisees in Quebec. Bilingual and experienced people were hired and assigned to the Project. As a consequence, in a short time, Franchisor A recruited a good number of franchisees, found them locations, built the stores, stocked the stores with adequate inventory, trained all these people and the doors of the first wave of Franchises A were open.

However, a few things were not done right. Some of the locations were not suitable. Why ?. Not enough attention was spent in ensuring that the chosen location was suitable for Franchise A. The decisions were made from the Head Office based in another part of the Country without consulting the local experts and advisors and without doing the usual due diligence normally done in other markets. Some of the products were not adequate for the Province, which by itself is not a serious problem, however, it took many months for the Company to react to the franchisees and local staff’s many reports on the issue, therefore losing sales and not reacting to ultimately the consumer taste.

Thousands of dollars were available for recruitment but no funds or plans of any kind were available to launch the Brand in an unknown market ! Stores were open with the expectation that they should be recognized in the same manner as the dozens in operation for years in other markets. Finally, there was no follow up by Senior Management and no support staff to visit the new franchisees for months. The consequences ? Store sales were nowhere close to expectations and franchise recruitment stopped after prospects were calling up on the initial franchisees for reference. From the point of view of Franchisor A, Quebec was a different and not profitable Market and if asked, would advise anyone against going there, correct ? Planning was good, but the execution was flawed.

There is a positive conclusion to this story, Franchisor A has corrected all the problems and has resumed its growth, but at a very expensive cost that could have been avoided with adequate planning and commitment from all departments and not just the Franchise Sales department. Also the expectations on quick results lead to real estate and execution errors.

Franchisor B on the other hand, did everything right. It did everything that Franchisor A did, but the entire Organization was involved in the patient expansion plan.

Additional advertising support was in place to help the first new franchisees in the Market. Franchisees were monitored weekly for consumer reaction to the Brand and products. Minor changes were done rapidly. Store visits started immediately. A respectable and competent bilingual Quebec based representative was in constant touch between the franchisees and the Head- Office. Location choice were given top level priority with a sign-off process involving many individuals. They were problems to be fixed and minor alterations to be made. But Senior Management had involved all Company resources for this Expansion and not only the Development department.

Quebec franchisees are an happy part of the Team and contribute to the success of Franchisor B. If one would ask Franchisor B, what he thinks of Quebec, how do you think he would respond ?

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