Ontario minimum wage hike won't stop franchise growth, association says
The Canadian Franchise Association says it expects franchises to grow this year despite the introduction of a significantly higher minimum wage in Ontario.
"While minimum wage will indeed impact and inhibit growth of the franchise model as a whole, it really is an opportunity for people to become an entrepreneur," said Ryan Eickmeier, vice president of government relations and public policy at the organization.
Earlier this year, minimum wage was raised to $14 in Ontario with some franchisees making cuts to benefits and paid breaks, saying it was necessary to keep their doors open. Labour advocates and some employees, however, said the moves were punitive and posited that multinational corporations could likely find other ways to help franchisees cover the increased costs.
"What they've been forced to do is find ways to really offset that gap that they've had to manage," Eickmeier says of some of the changes enacted by franchisees.
"That can include things like changing operating hours, increasing prices. They've gone through all of their options to keep their doors open and keep their employees coming in every day."
'I had to cut back,' franchisee says
Jose Miguel Aguila, a Booster Juice franchisee, faced the minimum wage hike head on and says he had to make some changes in response.
"I had to cut back on staff a little bit to tide us over to get us through that higher labour period," Aguila said. "[I also had to] changing my expectation to understand the fact that I am going to have to dish out a little more."
It's also taking a toll on his personal bottom line.
"I'm not expecting in the current period to earn as much as I did last year, for example, because legislation has required that I pay more."
Franchising still has perks, CFA says
Despite the hit franchising has taken from the minimum wage hike, Eickmeier says there are a number of advantages to running a franchise as opposed to an independent business.
"You're part of an established system, you have a brand that has proven itself in the Canadian marketplace, you have a network of other franchisees that are going through the same challenges that you are."
He adds that not all franchise locations have been impacted by the higher minimum wage.
"Many of them have been paying above and beyond minimum wage for years and it's really dependant on the sector that they operate in," he said. "There's an ability for them to work with their employees, to work with their franchise brand to make it work."
For Aguila, he says that if younger people and minimum wage workers getting more money in their pockets, he hopes there will more money going into the economy as well.
"I do have high hopes that in the near future more of that money will come back into our stores. That's a good silver lining there."