Читать книгу Buying a Franchise in Canada - Tony Wilson - Страница 21

For US franchisors (who may not have converted their US agreement and marketing material to a Canadian format), initial fees and other costs set out in the franchisor’s US FDD or in US-based pro forma financial statements will be in US, not Canadian dollars, and will be based on the franchisor’s US experience, not a Canadian one. Needless to say, those costs will be different in the US and won’t factor in the GST, PST, HST, Canadian tax rates, lease costs, labour costs, or other differing costs.

A pro forma financial statement is a projection of what the franchisor thinks or expects the location to reflect in the first year (or the time period in the projection). It is little more than a projection, and like the weather, can be quite accurate or highly inaccurate. Actual financials are more reliable as they reflect actual performance over a period of time, rather than estimating performance. Accordingly, buying an existing operation from a franchisee or an outlet run by the franchisor itself as a corporate location (with actual financials to read) has its benefits. Also, you should inquire how the franchisor calculated its pro forma statements, especially if it has no operating locations of its own.

If the franchisor has simply extrapolated US assumptions regarding anticipated Canadian sales (and costs of sales), this may also be unrealistic in Canada. The franchisor’s numbers may simply reflect the US experience. Taking the US population and dividing it by ten to deal with a Canadian population that is one-tenth the size of its southern neighbour is not always an accurate way to measure anticipated performance in Canada. Canada is a country in which our disposable income is less, our labour costs are higher, and our taxes are more than what they would be in the US. As a nation, we don’t seem to shop or eat out as often as Americans do, so pro forma financial statements that assume that a sample group of 200,000 Canadians will shop and eat out as often as a sample of 200,000 Americans may well be flawed. Mind you, this doesn’t mean you have to treat financial or pro forma financial statements based solely on US performance as if they were claims for weapons of mass destruction, but you should treat them with a healthy degree of skepticism and an ever so small grain of salt. Your accountant may be able to assist you with this. So might other franchisees, particularly in Canada.