Franchises a great option for business-minded

BMO expert gives brief look at 2020

If you’re looking to get into the world of business, franchises could be a very attractive option, heard members of the Leduc/Wetaskiwin Chamber of Commerce Feb. 13.

Held at the Montgomery Glen Golf Club, the luncheon featured a brief presentation by BMO investment counselor Rick MacDonald, who looked at the upcoming year of 2020 and what it could hold in store.

MacDonald said the trade war between the United States and China will continue, which had an impact on trade and growth in the world in 2019.

MacDonald said Alberta’s economy has recovered somewhat, but still remains in doldrums. “We’re all concerned about the Alberta economy,” said MacDonald, who added that the energy industry continues to struggle. However, he said he feels Alberta’s economy will improve in 2020, albeit slowly. Alberta has the lowest net debt in the country.

He noted emerging markets could lead growth in 2020.

MacDonald said coronovirus is having an effect on the global economy and on China’s economy in particular. He stated that anything that affects China affects everyone because China is responsible for 16 per cent of global growth.

The U.K.’s exit from the European Union, or “Brexit” as it’s called, will also have an effect, especially in the long term he stated. MacDonald said it looks like Brexit will go ahead, will take some time, will require the U.K. to develop new economic ties with Europe and will continue to hang over European economies.

A lackluster global economy also suggests demand for energy products such as oil and gas will lag.

MacDonald said he feels Canadian energy companies deserve a pat on the back for their sustainable and responsible practices, things that don’t get reported often enough. He said Canadian companies are ranked #2 in the world in responsibility.

MacDonald closed by noting that Canadian households continue to carry a lot of debt.

Franchise facts

BMO franchise finance market leader Daren Chalupiak presented to the members on the world of franchises. He noted such businesses usually have a time component, including a commitment to the business of up to 20 years.

He said prospective franchise owners pay a fee and in return can enjoy the benefits of a well-known brand. He pointed out not all franchises are fast food restaurants. Re/Max, Canadian tire and H&R Block are all franchises.

He said franchising is very popular in Alberta. ‘There’s lots going on in Alberta,” said Chalupiak.

“What’s interesting about franchises is it’s very stable.” He noted new franchises tend to survive longer than mom and pop” operations.

He noted small business activity tends to do very well in rural areas, and that’s what franchises are.

Chalupiak stated banks and markets are interested in franchises because risk is substantially lower.

There are lots of choices when it comes to franchises. Chalupiak stated there are 1,700 available in Canada. Franchises have passed the $100 billion mark in Canada and employ 1.5 million people across the country.

Home cleaning services is the fastest growing franchises category, at 129 per cent, followed closely by real estate at 111 per cent.

Interestingly, Chalupiak added that it seems younger people are getting more interested in owning their own businesses in the franchise world. The average age of owners has dropped from roughly 50 plus years, to early to mid 30’s.Stu.salkeld@pipestoneflyer.ca

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