OTTAWA — Bank of Canada governor Tiff Macklem doesn't think the economy is in a recession, but he does acknowledge some recent weakness — something other economists argue should give the central bank more leeway to keep its key interest rate steady for the rest of the year.

The central bank’s policy rate remains at 2.25 per cent Wednesday after the central bank's fifth consecutive hold, a move that was widely expected by economists.

The Bank of Canada's rate decision arrived after days of debate over whether the country is in a recession, triggered by a second straight economic contraction in the first quarter of the year.

Macklem said Wednesday that the economy was weaker than expected in the first quarter as U.S. trade policy and the war in Iran spur geopolitical uncertainty.

Asked whether he thought the economy was in a recession, Macklem said that label isn't yet warranted — echoing the chorus of economists who argue the current downturn fails to meet that bar.

"Based on the data we've seen to date, the economy is weak, but it is not clearly in recession," Macklem said.

In its April forecast, the Bank of Canada called for growth of 1.5 per cent in the first quarter of the year. Macklem chalked much of that miss up to an unexpected pullback in government spending, which he said can be choppy from one quarter to the next.

While there's been some volatility in the economy and labour market over the past year, Macklem said the wider trend is of flat growth, not a pronounced decline. More than half of Canadian industries were also growing in the first quarter of the year despite the marginal headline decline, he noted.

Recent economic data, including a strong May jobs report, signals the economy could rebound in the second quarter of the year, Macklem said.

"So far, we have not seen a significant, broad-based decline in economic activity," he said.

"Recession is not the word I would use."

Macklem highlighted that the upcoming review of the Canada-U.S.-Mexico agreement, or CUSMA, comes with significant risks for the economy. An outcome that sees current tariff levels ratchet up, or that sees uncertainty persist into the second half of the year, would hamper Canada's economic recovery.

Michael Davenport, senior economist at Oxford Economics, said he believes Macklem has the right interpretation of recent data, including sharp risks around the upcoming CUSMA renewal.

"The Canadian economy is definitely a little bit weaker than we had thought, say, a couple of months ago, but we don't think that the Canadian economy's currently in a recession," Davenport said.

Global oil prices — driven higher by the Middle East conflict — are meanwhile staying higher than first thought in the Bank of Canada's April forecast. Opposing pressures on prices and economic growth put the central bank in a dilemma, Macklem said.

“Raising rates to dampen inflation could further slow the economy. Easing rates to support growth increases the risk that higher inflation becomes persistent,” he said.

“For now, holding the policy rate unchanged balances those risks.”

Annual inflation rose to 2.8 per cent in April, in part because of the global energy shock. The Bank of Canada now expects inflation to hold around three per cent in the coming months before easing back toward the central bank’s two per cent target.

Macklem said there has so far been “limited evidence” that higher energy prices are passing through into broader inflationary pressures.

He said the Bank of Canada will keep looking through the short-term rise in inflation tied to the oil price shock. He also reiterated the central bank will act to prevent price pressures from becoming entrenched.

Core inflation — a group of metrics the Bank of Canada uses to track underlying price trends — has cooled in recent months despite the rising headline rate. Macklem said the central bank "might have to take some action" if that trend were to reverse course.

Financial market odds call for the Bank of Canada to hold rates steady again at its next meeting on July 15, according to LSEG Data & Analytics. But markets are pricing in a quarter-point hike before the end of the year.

"We think that misses the mark. We think the Bank of Canada is more likely going to remain on hold for the remainder of this year," Davenport said.

In order for the central bank to raise its policy rate this year, he argued core inflation would have to pick up steam and price pressures would have to broaden across the consumer basket. Long-term inflation expectations from businesses and consumers would also have to rise, but those have so far been grounded in the wake of the Middle East oil price shock.

"None of that, we think, is likely given the current weak macroeconomic backdrop," Davenport said.

KPMG chief economist Ali Jaffery said in a media statement that the focus on recent economic weakness gave Macklem's remarks a "dovish" tone — suggestive of looser monetary policy rather than any tightening.

Risks of persistent inflation seem low in the face of a soft economy, Jaffery argued.

"Even if the economy perks up in Q2 — which it likely will — there is a lot of room for non-inflationary growth when an economy is coming out of a hole like this," he said.

CIBC senior economist Andrew Grantham said in a note to clients that Wednesday's rate decision reflects a "very patient central bank" content to wait and see how the risks play out.

He said CIBC continues to expect no change to the policy rate in 2026 as the current rate level supports a modest recovery in the economy starting later this year.

This report by The Canadian Press was first published June 10, 2026.

Craig Lord, The Canadian Press

The B.C. government on Friday, May 29, made a policy change that private beer, wine and spirits retailers have been urging for years, if not decades. 

Restaurants, bars and pubs are now able to buy alcohol directly from those private retailers, as well as from government stores. This is only a temporary measure, however, as the change is set to expire at the start of June 2029, according to the ministry of agriculture and food, which oversees the BC Liquor Distribution Branch (BCLDB).

The news comes days after Business in Vancouver reported that the BCLDB's longtime CEO and general manager Blain Lawson had retired without the BCLDB announcing the retirement publicly. Erin McEwan is now in those roles on an interim basis, the BCLDB confirmed earlier this week. 

"This has been 40 years in the making," Marquis Wine Cellars owner John Clerides told BIV.

"The change will help small businesses and I'm looking forward to it."

BC Restaurant and Foodservices Association CEO Ian Tostenson said his organization first spoke with government officials about making this change more than eight years ago. 

"Good things take time and we are pleased to see this collaborative work move forward," he said. 

"This is a substantial benefit to our industry and an important step forward in providing greater operational flexibility for restaurants, bars and pubs across B.C."

Calls for the B.C. government to make this change ramped up last fall, when British Columbia General Employees Union (BCGEU) workers went on strike and picketed BCLDB warehouses and liquor stores.

Private stores remained open but restaurants, bars and pubs were legally not able to buy their products to resell to customers—a situation retailers said was ridiculous.

A restaurant patron was able to leave the premises, go to a private liquor store, buy a bottle of wine and return to the restaurant for the server to open and charge a corkage fee, but it was illegal for restaurant staff to make that shuttle run for the customer.

Restaurant representatives told BIV some reasons why they want to be able to buy from private stores include:

• They may run out of a popular product and want to restock quickly by buying from a private retailer down the street;

• They may want to only buy a few bottles of a product, and the government often requires them to buy a full case, unlike private stores;

• Private stores may also sell products unavailable at government stores; and

• There could be a situation like last fall, when BCGEU workers conducted job action to block access to alcohol.

B.C. Premier David Eby told BIV in 2020, when he was attorney general, that his ministry had been readying to allow restaurants to buy wine directly from private stores.

He had established the Business Technical Advisory Panel (Liquor Policy)—or BTAP—in 2017 to get recommendations to modernize liquor laws in the province.

That panel issued 23 recommendations the next year, including that the government should allow restaurants to buy directly from private stores.

The BCLDB sent BIV an email last year saying that the policy has not changed because in 2022 the government reviewed the recommendation. They determined not to make any change “given policy, labour, financial and trade implications, and lack of consensus among stakeholders.”

BIV asked the BCLDB to elaborate on those objections and identify which "stakeholders" did not agree with the policy but a response from the BCLDB did not expand on what complications to "labour, financial and trade" matters might arise or which stakeholders opposed the change.

The BCLDB did add that "any changes to the current model would require cross-government coordination, the development of new oversight mechanisms and reporting systems, and careful consideration of impacts to other sectors in B.C.’s liquor industry."

If the policy change would mean a potential reduction in BCGEU jobs, then it may make sense for that union to not want to see the policy change go ahead.

BIV on Friday emailed BCGEU president Paul Finch for a comment on the government's policy change to allow restaurants, bars and pubs to buy alcohol from private retailers but did not get a response by press time. BIV also left a voicemail and text with BCGEU's communications team.

AI is expected to be a major growth driver for Vancouver’s tech industry and office space demand over the next decade, according to a new report.

The commercial real estate market could be reshaped as AI adoption scales across industries and transforms business, said the 2026 Tech Gateway Office Markets report by CBRE Ltd.

The report, released Monday, examined how a tech growth cycle is accelerating leasing activity in 17 markets in the U.S., Canada and Europe.

Vancouver saw greater tech industry office leasing activity in 2025 compared to 2023, said the May 11 report.

It was among 12 of the 17 markets that saw increased tech leasing activity, with the largest percentage gains in Manhattan, Toronto and Boston, said the report.

Vancouver saw a rising vacancy rate over the past two years—it increased by about 16 per cent during that period—but the city recorded positive net absorption growth and positive annual rent growth in 2025, said the report.

In Canada more broadly, the tech industry accounted for 14.7 per cent of total leasing in 2025 or 2.8 million square feet. This volume was 55 per cent higher than 2023 but well below peak levels in 2019, similar to the U.S., the report said.

The tech industry share of total Canadian office leasing increased to 32.2 per cent or 1.4 million square feet in the first quarter of 2026, up from 15 per cent in 2025, said the report.

CBRE said AI will create entirely new business opportunities much like mobile devices enabled the app economy more than a decade ago.

It said venture capital (VC) funding reached a record high in 2025 in the U.S., Canada and Europe, and that AI is accounting for a rising share of VC funding.

“The technology industry is in the early stages of what could be a large growth cycle driven by AI development and deployment,” said the report.

“AI innovation will likely create more jobs than it replaces and increase office space leasing demand in tech gateway office markets,” it said.

Still, the report noted that AI-related job cuts are increasing as many tech companies reposition their workforces and capital expenditures.

DEAL | Dogwood Mobile Home Park at 1700 Cumberland Rd., Courtenay, sold March 31 for $1.35 million. The sale price averaged $54,000 a pad. The Klein Group at Royal LePage Commercial was exclusively retained by the Public Guardian of BC to handle the listing, which attracted 30 qualified offers following more than 200 inquiries. The 4.1-acre park represents a rare, stabilized multifamily investment in Courtenay, with zero vacancy and full municipal services. Strategically positioned near ongoing community growth and redevelopment corridors, the park offers both steady income and redevelopment potential.

PRICE | $1,350,000

Online shopping has been the bogeyman of brick-and-mortar retailers since well before the COVID-19 pandemic forced everybody online.

But the reports of the death of in-person retail were greatly exaggerated.

“We’re always talking about the demise of retail because of e-commerce, but it’s persevered over the years,” said Raymond Wong, vice-president of data solutions with Altus Group.

A survey of investment intentions Altus Group conducted last fall indicated that retail was the top choice, thanks to the promise of steady cash flow and appreciation due to few purchase opportunities.

“Number one on the list is still retail – especially food-anchored retail strips – followed by apartments, industrial and office,” Wong said.

Jon Buckley, senior managing director of Marcus & Millichap’s Western Canada NNN Group, which specializes in single-tenant triple-net (NNN) assets, believes transaction volumes and investor interest are now past pre-pandemic levels across all retail asset classes.

“What we’ve noticed post-pandemic is that because there was a negative view towards retail assets for so long, there wasn’t a lot of new supply coming online,” he said. “If anything, you’d see older retail centres being redeveloped into mixed-use residential with retail in the podium, but there wasn’t a lot of new product coming online. And as retailers have continued to perform well, we’ve seen excess tenant demand and limited new supply, so that’s created upward pressure on lease rates. Strong fundamentals and strong metrics have driven a lot of investor demand back towards retail now.”

While grocery-anchored centres and open-air retail strips have shown particular strength, the NNN properties his team specializes in have also performed exceptionally well. Quick service restaurants with drive-thrus are a case in point, thanks to the scarcity of locations.

“There’s just not a lot of corners remaining where you can go and put a drive-thru,” he said. “So, in those existing facilities, they’ve seen upward pressure in rents.”

Drive-thru restaurants have replaced financial institutions as tenant of choice for buyers of single-tenant assets thanks to their reliable income, exceptional covenants and long-term leases.

Most of the big banks have sold their real estate in recent years, Buckley said, so most bank locations are owned by private investors – also the most active type of retail investor in 2025.

This is the case not just for single-tenant assets but also some of B.C.’s largest retail deals last year, including the $140 million acquisition of 798 Granville St., Vancouver, by GJ Group Robson Inc. and Shato Holdings’ $137 million acquisition of Willowbrook Park in Langley.

On the Prairies, one of the most active buyers in recent months has been Montreal-based real estate investment firm Leyad, which acquired St. Vital Centre in Winnipeg for $160.5 million earlier this year as it focuses on properties delivering consistent returns in growth markets.

“This acquisition embodies everything we look for in a community shopping centre,” said Leyad president and CEO Henry Zavriyev in announcing the purchase. “St. Vital Centre is dominant in its market, anchored by essential retail, deeply embedded in the daily lives of the community, and positioned for many decades of continued success. We are proud to become its long-term steward.”

Originally built in 1979, St. Vital Centre underwent a comprehensive renovation and expansion in 1998. It is now one of the top-performing shopping centres in Manitoba, with 926,310 square feet of gross leasable area and 160 retailers, including Indigo, SilverCity, Dollarama, London Drugs and Walmart.

The ambitious goal to build up to 20 new hotels and add 2,000 new rooms to the region over the next decade is gaining momentum with municipalities, First Nations and developers, says the chief executive of Destination Greater Victoria.

Paul Nursey said that as new residential builds wane and the price of land stabilizes, the hotel space is emerging as a “generational opportunity” to address a 25% decline in rooms since 2016 and refresh the hotel landscape to remain competitive in the global tourism industry.

The tourism marketing group assembled a working group of five municipalities, industry partners, builders and the Songhees First Nation last year to work together to bring more hotels to the planning phases.

In 2025, hotel occupancy was at nearly 80% over the entire year and at one point during the summer, reached 94%.

This season is shaping up to be the same or even better, said Nursey.

The region has about 4,500 hotel rooms, but needs more after losing properties for social housing during the pandemic and redevelopment.

The working group issued its first report this week with recommendations for local governments to kick-start new hotel plans by identifying potential sites and zoning, addressing complex permit processes, pursuing First Nations partnerships and supporting the renewal and expansion of existing hotels.

The report notes that existing hotels are aging, with more than half built before 1975 and requiring significant renovations or replacement.

Managers and chief administrative officers from Victoria, Colwood, Saanich, View Royal and Sooke are part of the working group and are taking the lead, said Nursey.

“The municipal partners are really rolling up their sleeves. They are taking this seriously,” Nursey said.

“They see a sense of opportunity and a diversification of their tax base.”

View Royal, for example, doesn’t have a hotel and wants one to attract a slice of the annual visitor pie.

Colwood has recently approved two sites for hotels in the Royal Beach development along its waterfront. Sooke wants more hotels that highlight its waterfront and serve as a gateway to the trail system west of the town.

Jocelyn Jenkins, manager for the City of Victoria, said the city is “happy to collaborate” with the working group on future hotel projects, adding the tourism economy is essential for businesses, the city and the conference centre it owns.

Aryze Developments director Chris Quigley said interest in the hotel sector is gaining strength among developers. The company recently partnered with Victoria software developer Redbrick, which purchased the old Plaza Hotel property in downtown Victoria, to build a new hotel on the property.

He said the working group sets out a road map for companies to “navigate the permitting system and unlock projects” that will strengthen the local economy.

“With several hotel projects in our pipeline, we’re committed to working with local government and our business partners to make a new hotel development in Victoria a reality,” said Quigley.

Recent statistics show hotel demand is on the rise. Greater Victoria showed a jump in average daily room rates — a metric considered a key indicator of the health of the industry — from $200 a night in 2024 to $224 last year. Conferences increased by 20%, and arrivals at Victoria International Airport saw a 5% lift.

In a recent hotel investment report, Colliers said the hotel asset class has seen a surge of activity nationally, with more than $2.2 billion in hotel transactions in 2025, an 11% increase over the previous year. The report cited the strength of domestic tourism and improved international inbound travel, both expected to increase in 2026.

Municipal leaders identified several types of possible new hotels for the region.

Outside of the need for full-service hotels in the downtown core, the group said there could be more affordable mid-scale hotels for sports tournaments and cultural events, boutique hotels connecting visitors to bike and hiking trails and transportation hubs, extended-stay hotels for major employment hubs like the naval base in Esquimalt and Victoria General Hospital in View Royal, and mixed-use developments that pair hotel and residential uses.

The report said 2,000 new hotel rooms would generate more than $100 million in annual visitor spending, 1,180 direct jobs in hotel operations and 1,580 indirect jobs supporting operations.

The 130-room TownPlace Suites by Marriott recently opened at Victoria International Airport, and the same brand is opening a 103-unit, six-storey hotel in Langford next spring.

The first new hotel in Victoria in nearly two decades is under construction on Broad Street. The 167-room Hyatt-branded hotel is expected to open in 2028 at Broad and Johnson streets on the historic Duck’s Building property, preserving the 1890s-era facade and back wall.

Reliance Properties recently submitted new plans to the city for its project at 780 Blanshard St., the former B.C. Power Commission building.

The new plans call for the rehabilitation of the existing building as a 124-room hotel with a public café.

Recent hotel sales have also brought optimism for potential improvements.

This month, Toronto-based InnVest, the country’s largest hotel owner and operator, purchased the Hotel Grand Pacific on Belleville Street. The 304-room hotel, owned since 1996 by Pacific Sun, had been on the market for months. The property’s value is close to $48 million.

The Royal Scot Hotel on Quebec Street was sold this year to Vancouver-based Synvest Capital for about $41 million. Synvest’s hotel management division, Roadside Hospitality, will run the hotel. It will also run the Bedford Regency Hotel, which Synvest purchased last year for $8.9 million.

dkloster@timescolonist.com

Cottage prices are set to rise across Western Canada this year ac­cording to Royal LePage’s spring recreational property report, released March 26.

The strongest growth is forecast for Manitoba and Saskatchewan, which will lead the country with 5.5 per cent growth in the median sales value of cottages. This follows 5.7 per cent growth in waterfront cottage prices last year, the strongest growth in Western Canada and the sec­ond-strongest growth rate nationally. Manitoba's Interlake region saw the strongest growth in waterfront cottage prices last year at 6.6 per cent to $395,000 -- an attractive figure versus the regional median of $477,400.

Domestic buyers are driving demand, consistent with other regions, but supply has not kept up, as many properties are generational holds for their families.

Alberta ranks second, with 2.5 per cent growth in median cottage values fore­cast for this year, followed by British Columbia at 1.5 per cent. However, the median value of waterfront retreats in B.C. dropped significantly last year, falling 14.8 per cent. The drop was driven by a 22.6 per cent decline in the Okanagan region.

Royal LePage reports that recreational home inventories through 2025 were largely similar to 2024 volumes, with 69 per cent of recreational real estate agents surveyed indicating that average days on market has increased versus a year ago.

Trends in Western Canada mirror those in Eastern Canada, where more affordable regions are seeing stronger appreciation in values even as the record double-digit growth seen during the pandemic has waned and single-digit growth has become the norm.

Canada's commercial real estate sector could be at a turning point after the national vacancy rates for both office and industrial properties simultaneously declined for the first time since 2020, a new analysis has found.

The report from Colliers International said the national office vacancy rate was 13.6 per cent in the first quarter of 2026, down one percentage point year-over-year and marking one of the most significant improvements since the COVID-19 pandemic.

Canada's industrial market, meanwhile, recorded its first national vacancy decline since 2022, down to 3.5 per cent.

The report said these trends suggest the commercial real estate market as a whole is moving toward a more balanced environment.

"It was quite unprecedented how long, especially office vacancy, went up," said Adam Jacobs, head of research for Colliers Canada, in an interview.

"It was a good five or six years of rising rates ... but the return-to-office momentum we've seen, especially in Toronto, has been very rapid in the last six months and it's really turned the market around quite quickly."

He said leasing demand is still concentrated primarily in the "best of the best" buildings, and it could take some time for that momentum to trickle down to other less coveted properties.

Toronto and other major urban centres in Canada are still working through an oversupply of existing office space after a post-pandemic surge of completions, said Ben Haythornthwaite, CoStar Group’s director of market analytics.

"The office market is like if you had a patient in the intensive care ward, they've now moved into the general ward," said Haythornthwaite.

"It's still sick, but it's not getting any worse and that's why we're seeing vacancy tighten up."

While many companies have moved their employees back to the office for at least part of the week, inventory growth is grinding to "a near-total halt," the Colliers report said.

Less than two million square feet of new office space is currently under construction, marking a major downswing from the period of 2021 to 2023. Each quarter during that stretch, an average of 1.8 million square feet of new supply was delivered nationally.

The slowdown in new office builds means Canada is unlikely to see any meaningful supply gains before the end of the decade, given that construction can take roughly three to seven years per project, said Veritas Investment Research analyst Shalabh Garg.

He predicted vacancy rates will continue falling, especially as more office space is also converted for residential use, but won't reach pre-pandemic levels.

"Five to 10 per cent vacancy rate is what's optimal, but it's hard to see us getting there," he said, noting the last time construction activity was this slow was the early 2000s.

"We would need to see lots more conversion of older office space into some different use."

On the industrial side, Jacobs said the market is coming back strong from a brief shock caused by tariffs and trade uncertainty last year.

Market absorption outpaced new supply in the quarter, with more than 3.6 million square feet newly taken up, compared with three million square feet delivered, according to the report.

Jacobs said the trend shows the market is stabilizing after inventory had been piling up.

"Anywhere you live, you can notice a lot of new warehouse space was built in the last five years and there is just kind of a natural cycle to every market," he said.

"It takes a while to absorb it. But I think we're kind of through the other side of that in both the office market and the industrial, where a lot was built, it was difficult to build it all and now the building is really slowing down and we're starting to see those spaces fill up."

Colliers said industrial construction starts were resilient in the first quarter, with 5.6 million square feet of new projects breaking ground. Toronto, Vancouver, and Calgary drove 76 per cent of all new starts.

"For the most part, I think we're going to continue seeing demand increase for industrial space and we will see that space absorbed," said Haythornthwaite.

He said industrial markets should continue tightening in the coming years, however the looming renegotiation of the Canada-United States-Mexico Agreement continues to cast a shadow of uncertainty in the short-term.

"I think we're probably going to see a slowdown in leasing over the next couple of months, just while people wait and see what happens with that because we're getting so close to it now," said Haythornthwaite.

This report by The Canadian Press was first published April 20, 2026.

Sammy Hudes, The Canadian Press

Those seeking a detached house with a couple of bedrooms in Vancouver are likely looking at spending more than $2 million.

But if you want way more bedrooms for a lower price, there's a place up north.

Williston Lake Resort has been on the market since 2024, but recently the cost dropped, as $300,000 was cut from the original price.

That puts the property at $1.7 million, about the same as a Kitsilano duplex. 

But there's a bit more space up north. The 103-acre property is a little smaller than Jericho Beach Park.

On that piece of land, there's a fully functional resort. The 11,000-square-foot main log building has 14 rooms, a commercial kitchen and a lounge with a wet bar and floor-to-ceiling fireplace. It was built by Pioneer Log Homes, the company that was the subject of the show Timber Kings.

There's also a variety of other rooms currently used for recreation, meetings and miscellaneous things.

Outside the lodge, there's also an RV park, animal shelters and more equipment to care for large animals. And nearby, there's plenty of wildlife as it's a remote area.

The resort is on Williston Lake, the biggest lake in B.C. It's also the home to the W.A.C. Bennett Dam, which created the lake. The dam is about 20 minutes away.

Beyond the dam and wildlife, there's Hudson's Hope, the closest community in the area. The town of 1,000 is about 20 minutes away.

Vancouver may be a bit far for a commute. It's about 13 hours away (if the roads are good).

When Vancouver franchisor Pokerrito opened its 11th location on Renfrew Street in mid-October, it demonstrated that innovative and popular restaurant chains can add locations even as other entrepreneurs in the restaurant industry struggle.

All current stores are in Metro Vancouver but Pokerrito has sold master franchise rights to Mexico City and is awaiting that franchisee to open a first location in the Mexican capital soon.

A corporately owned location is readying to open in a newly leased property in Toronto.

Executing well in the franchising game can be trickier than simply expanding a corporately owned chain.

Pokerrito owner Jung Moon told BIV he had experience running a Japanese sushi restaurant before the 2016 launch of his first Pokerrito location—a poke restaurant on Dunsmuir Street in downtown Vancouver.

That demonstrated his passion for restaurants and Asian cuisine.

“I chose downtown deliberately,” Moon said of his first location. “With the high rent, intense competition, and demanding customers, if we could make it there, we could make it anywhere. It was trial by fire, but it validated our concept.”

By 2019, when he started franchising the concept, he operated two Pokerrito eateries. Today, four of Moon’s 11 locations are corporately owned, with seven separate franchisees owning one location each.

Moon uses corporately owned locations to test new products, he said.

Moon’s aim is to grow his chain, but not as fast as possible or to reach some per-determined numerical target.

“I'm cautious about putting specific numbers out there,” he said. “I've seen too many [franchisors] chase growth targets and lose what made them special.”

If success in Mexico City and Toronto materializes, he said he would look for more new territories to expand.

“Whether that becomes 30 locations or 70 by 2030, I'm less concerned about the number than making sure each one represents what Pokerrito stands for.”

Veteran franchisors have tips

Entrepreneurs with decades of experience in franchising say sure-footed, steady growth is wise, as is rejecting prospective franchisees who do not feel like a good fit for the business even if they have ample resources.

“It's always easier to say that no to someone before they start than six months into the game,” said Brian Scudamore, who in 1998 started franchising 1-800-GOT-JUNK? and has built it to around 150 franchises.

Scudamore also owns and built the 50-franchise WOW 1 Day Painting and the 50-franchise Shack Shine.

“If you bring on a franchise partner and they've paid a big fee and you haven't delivered what you've promised, or they're not happy and they want out, it's very, very difficult and expensive to part ways,” he said.

Scudamore added that he sees many young franchisors bring people into their businesses because they have money instead of people who have the skills and character traits needed to thrive.

Another big tip is to avoid franchising a business before it is what Scudamore called a “well-oiled, well-systematized machine.”

Franchises must rely on a system, and not the skill base of the founder, Scudamore said.

That is why it is hard to franchise surgery, he said, explaining that surgeons learn their skills over many years and are regulated to practice.

Health-care tasks, therefore, are very different from straightforward tasks involved in junk removal, house painting and window washing.

A successful franchising company must be able to consistently execute its offering in the same way in every city the owner wants to be in, Scudamore said. 

A key question Scudamore said he asks himself is: “Is it simple enough that you can create the technological systems and the operating systems that someone can repeat the success that you've created?”

Another key point is that successful franchises usually also have a point of differentiation. They stand out because of something distinctive that they offer, he said.

When it came to launching 1-800-GOT-JUNK?, Scudamore’s vision was to have shiny trucks, uniformed workers, on-time service and an upfront price list—something he said the industry lacked at the time.

Mistakes can happen.

Scudamore said one was getting involved with a moving company.

He said he thrives on positive energy, and that he parted ways with the company because of the feeling customers often had when jobs were completed.

“We discovered it wasn't a happy business,” he said.

Customers who have junk taken away are relieved. When they have their houses painted or washed, they feel the joy, he said.

Scudamore said that when someone’s possessions are moved, the customer still feels angst at having to unpack, or they find an item is missing or broken and they are not necessarily happy.

“Moving is a commodity-based business,” he said. “It is very, very competitive and we found it a challenge to truly stand out.”

Bruce Fox, who worked for years helping Boston Pizza expand its franchising and more recently helping steer Browns Restaurant Group to 83 locations, added some other lessons.

He said aspiring franchisors should hire a professional group of advisors because processes can be tricky.

Fox was COO at Browns and is now a business advisor at the company, which has 68 Browns Socialhouse restaurants as well as eateries branded Browns Crafthouse, Liberty Kitchen and Scotty Browns.

All of those locations are franchised except for one Browns Socialhouse and one Browns Crafthouse, said Fox, who sometimes acts as a consultant at his Catalyst Hospitality Consulting Group.

“You need an understanding lender too,” Fox said.

“That’s a banker who has actually seen inside franchise systems and knows what the capital requirements are, and the timing and what the cycles look like.”

Fox said one-time fees tend to rise along with the total investment needed to open a franchised location, and with expected annual revenue.

One-time fees also often rise based on the size of the franchised chain and how well established the franchisor’s brand is in a market.

Browns’ franchises pay a $75,000 one-time fee and then contribute an ongoing six-per-cent royalty.

Unlike many franchised chains, Browns does not require franchisees to pay a separate marketing fee. That is because, Fox said, disputes commonly erupt between franchisors and franchisees on what kind of advertising should take place.

Browns has no advertising at all, which eliminates that potential source for conflict, he said.

Moon’s Pokerrito charges a $30,000 one-time fee—something that Fox described as being “fairly low.” Pokerrito also charges a six-per-cent royalty and a two-per-cent marketing fee.

The total buildout cost for a franchisee at Pokerrito is likely about $450,000, Moon told BIV. In contrast, Fox estimated that a Browns Socialhouse buildout costs in the $3.5 million to $4 million range.

“The biggest lesson: franchising isn't about losing quality control,” Moon said. “It's about multiplying your impact through the right partners. Your first franchisee is the most important. They set the tone for everyone who follows.” 

gkorstrom@biv.com

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