Underneath the Golden Boy - Robson Hall Faculty of Law

236 Underneath the Golden Boy
million jobs, or nearly 14% of all private sector jobs, and accounted for 11% of
the private sector payroll and 9.5% of the private sector economic output, or
more than $1.53 trillion. According to the study, when both direct and indirect
forms of employment were combined, franchising generated one out of every
seven jobs in the private sector. 19
In Canada, it was reported in 2004 that there were 1 327 franchisors, 63 642
franchisees and annual franchising industry sales equivalent to approximately
$90 billion U.S., 20 or approximately 10% of Canada’s gross domestic product.
Franchising has been reported to account for one out of every five consumer
dollars spent in Canada on goods and services and to employ over one million
Canadians. 21
D. Types of Franchise Arrangements
There are two primary types of franchise arrangements: business format and
product distribution franchises. Some commentators also include business
opportunity franchises.
1. Business Format Franchise
The business format franchise is the modern type of franchising that emerged in
the 1960s and is most commonly recognized as a franchise today. The franchisee
exclusively identifies with the franchisor, and adopts its entire business system,
including its product, brand name, operating manual and marketing strategy.
There is “an almost complete merging of the business identity of franchisee and
franchisor, so that the public perceives each franchised outlet as part of a larger
chain of identical outlets, all offering the same high quality goods and services”. 22
Examples include hotels and fast food outlets such as Tim Hortons and
McDonalds.
The unit franchise is the simplest and most popular business format
franchise. In this model, the franchisor licenses the franchisee to operate a single
19
PriceWaterhouseCoopers, The Economic Impact of Franchised Businesses: A Study for the
International Franchise Association Education Foundation, Part II (March 2004), online:
(date accessed May 3, 2007); “Franchises
provide big boost to nation’s economy: study measures jobs, payroll, overall output” 38:5
Franchising World (May 2006), online: (date accessed May 3, 2007).
20
So, supra note 7 at 5.
21
D. Caldarone and D.J. Gray, “Advising the Start-up Franchisor” (Paper presented to The
Domino Effect: 6 th Annual Franchising Conference, Ontario Bar Association, November 16,
2006) at 2.
22
Trebilcock, supra note 3 at 2.