Knowledge Centre

While franchising is popular with both new entrepreneurs and seasoned investors who like the ‘turnkey’ model to run a successful brand, the ‘franchisee’ faces many financial twists and turns that demand careful planning or a quick response.

With COVID-19 creating both sudden headaches and opportunities for Canadian franchises - from busy fast food outlets to frenzied pharmacy counters - Scotiabank’s Franchising Specialists are ensuring that franchise operators are “dressed up and ready” for today, tomorrow and years down the road. 

Rising interest in franchise model:

“We’ve seen tremendous growth in recent years, with clients calling almost daily about buying a franchise,” says Vancouver’s Jeffrey Lo, Director & Group Lead, BC. He notes the rise of franchises in nearly every sector, from quick-serve food to pharmacy chains whose rapid growth is driven by consumers’ growing interest in their health. “Many people dream of being their own boss, and the franchise model provides great help to get started - and the support never ends.”

In Montreal, Hichem Guellouz, Director and Group Lead, Quebec, notes that franchises can be an attractive option for new entrepreneurs, newcomers to Canada who want to start a family business, or hands-off investors who hire others to run the operations: “Many franchisees start from scratch, since the initial investment is often quite affordable. However, we see many grow into multi-store companies, since franchisor brands grant expansion opportunities to those operators who prove they can successfully run the business.” 

As a result, Guellouz has observed widespread franchise growth in Quebec, from retail, to professional services, to fast food chains that thrived during the pandemic era of take-out and delivery dining. 


Although there was worry at first about the impact of COVID-19 restrictions, key franchises leveraged the crisis to adapt their service model by adding delivery, pick-up or e-commerce, or introducing new products. In fact, some fading brands have enjoyed a revival, by pivoting and aggressive promotion, and newer, ‘trending’ brands are popping up in more neighbourhoods. During COVID-19, we saw less focus on expansion and more on re-modeling and maintaining.”

Hichem Guellouz Director and Group Lead, Quebec

Starting on the right foot:

Lo and Guellouz point out that being ready for shifting business conditions starts with careful upfront preparation, including practical advice that a franchisee won’t find in their operator’s manual.


We work with everyone from first-time business owners, who seek a lot of hand-holding, to immigrant entrepreneurs, who have run a franchise in their home country but seek guidance through the ‘Canadian way’ of doing things,” explains Lo. “Our Franchising Specialists share their experience working with different brands and past franchisees to help clients perform sales projections and consider financial structures.  We want them to be realistic, so they have a true picture of what to expect in the early days, the first year, and so on.”

Jeffrey Lo Director & Group Lead, B.C.

While Franchising Specialists help prospective franchisees ‘do the math’ before choosing a specific brand, Scotiabank has also built relationships with many major franchise brands, so the Bank can deliver a ready-to-roll, financial package.  Scotiabank’s National Financing group develops customized financial services for each industry and brand, geared to the franchisee’s needs, from banking and savings products, to term loans and credit lines for business.  These pre-constructed packages enable Scotiabank to deliver rapid approvals when financial needs arise and form a foundation for individualized support, as the client relationship develops. 

Notes Guellouz, “We form strong relationships, both with the brand and with each individual franchisee, to make their lives as easy as possible. And it shows, when a brand’s business development manager tells a new franchisee, ‘There are many bank financing programs available to you, but our franchisees have had the most success with Scotia.”

Lo even recalls an established pharmacy franchisee who moved his business from another bank when he was drawn to Scotiabank’s superior service, and later his spouse, who operated a different pharmacy brand, followed suit.

He emphasizes that Scotiabank’s support for franchisees continues throughout the business lifecycle, including periodic renovations mandated by the brand head office: “Our Franchising Specialists will know that a franchisee needs to renovate on ‘year five’, for example. That can be a costly pain-point for them, so we’ll help them plan for it now, to build their war chest of cash or get a credit pre-approval so it’s smooth sailing when they get there.”

Surprises, despite best-laid plans:

Despite the up-front planning, franchisees still face unexpected events, as shown by COVID-19. While some franchises have seen a spike in business, others struggled during community lock-downs or supply chain disruptions. This prompted Scotiabank to work with its brand partners to offer franchisees customized, flexible loan payment deferrals or government relief programs.

In other cases, franchisees called upon Scotiabank to help them seize new opportunities. Among them, a Quebec-based operator of several pharmacies wanted to increase his inventory in response to rising orders for health products. Unfortunately, his existing operating credit was based on lower sales volumes from pre-pandemic times.  “Because of our relationship with this pharmacist, we were able to go a bit ‘outside of the box’ where it made sense,” recounts Guellouz. “We increased his credit, based on his new inventory projections, rather than based on his past credit line history.  He was able to fill his shelves and now he’s looking to expand further.”

At the same time, the pandemic has also pushed many long-time franchisees to sell out and retire, whether due to the new government directives, strict public health protocols, or severe workforce shortages that make it hard for franchisees to adequately staff their stores. 

“For those owners looking to sell, our Franchising Specialists have resources to help and a network of industry contacts. We might even be able to help facilitate the discussion with a possible buyer,” says Lo. “Most importantly, since the sale of the business can usually be anticipated, we always introduce clients to our wealth management partners early on, so they have a team in place when the time comes, to plan for retirement, manage tax issues, or help maximize the business value when they sell.”

Guellouz agrees, noting that: “Much of this work starts at the beginning of the relationship, not the end, when the client is selling. We’ve already done the groundwork and connected them with lawyers, accountants and advisors who specialize in franchising, so when the transition comes along, our client is ‘dressed up and ready’ for the next step.”

He adds that Scotiabank serves both ends of the franchising spectrum: 


“For the franchisor, we have among the largest number of programs by industry, and for the franchisees we have on-the-ground Franchising Specialists who understand the ‘ins and outs’ of the franchising world.”

Hichem Guellouz Director and Group Lead, Quebec

“It comes down to our people,” concludes Lo, “Our Franchising Specialists really care about their clients and act in their best interests. We have Franchising Specialists in the field who live and breathe franchising and only work for the franchise operator. They can provide relevant advice to their clients, work through the process together, and help them be successful.”

Jeffrey Lo Director & Group Lead, B.C.