Should I Buy a Business or a Franchise?

Want to be your own boss but not sure which way to go about it? Here, you can weigh up the pros and cons to see whether buying a franchise or a business would suit you best:



One of the positives of buying a franchise is the increased number of loan options available to you.

Brand names and a transparent track record of cash flow are preferred by banks and other lenders, so choosing a franchise will make it easier to secure funding. Franchises that have fewer locations may be less attractive to lenders as they have not quite proven the feasibility of the business in all types of environments.

The franchise will often provide information and advice regarding financing the acquisition.

However, unlike buying a business, you will have to pay for the use of their name through your sales (for example, McDonalds charges 5%) and contribute to the national marketing spend.

You will also be asked for an initial franchise fee, and you will need some working capital.


Similarly, success in financing the purchase of a business will be determined by the type of business you want to buy. If you go for a business that has had a rocky financial past, a bank will be more reluctant to lend to you.

One of the slightly more tricky aspects of buying a business is that you should be prepared to pay a larger proportion of the price upfront – around 30 to 50 percent, and be able to finance the rest. However, if you still want to buy a business but don’t have the cash up front, there are several other ways that you can do so.

You could co-op buy the business – maybe with someone else who previously wanted to buy it but didn’t have enough money. Lease with an option to buy is another possibility whereby a down payment is made, enabling you to lease the business as a minority stockholder.

Implementing an ESOP (Employee Stock Ownership Plan) would provide you with capital by selling stock to employees in the business. You could also use the assets of the business to get financing from factors, finance companies and banks…..Continue reading at Should I Buy a Business or a Franchise?

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December 5th, 2013 Business Update

A sell-off in Japan overnight as the Asian market caught up with the US.  China in contrast was off just 0.20%.

In Europe at midday markets are flat on no changes in from the ECB as Mario Draghi held his monthly press conference.  There has been some inflation pick-up and reduction in unemployment causing pause in any changes.

In the US the Initial Weekly Jobless Claims were released and declined 23000 from last week to 298000.  Also, Q3 GDP has been revised to 3.6% up from 2.8% and estimated at 3.1%.  Some solid economic numbers leading into the Non-Farm Payrolls tomorrow morning.  Markets are slightly higher.

Canadian futures are trading lower on bank earnings this morning.  Both RBC and CIBC beat on the bottom lines while TD missed.  Revenue was strong at all three however CIBC missed on the top line.  RBC announced that CEO Gord Nixon will be stepping down next fall, which is a little early for a bank CEO in Canada.  TD is splitting 2-1 and increased the dividend by a penny.  CIBC had some one time charges that caused weakness in the quarter.

Gold continues the downward trend off 23.00 to 1224, oil is up a nickel to 97.26 and the loonie is stronger this morning up 0.11 to 93.79.  US and Canadian 10 year bonds are trading a little lower this morning yielding 2.86% and 2.67% respectively.

Lastly, I have added another interesting piece from the Pimco Conference that I attended a couple of weeks ago.  The income story is an important one to most of my clients and most Canadians.  With low real interest rates and it would seem the rise in rates to come, one of the biggest dilemmas currently is how to invest in the asset class while preserving capital and generating a reasonable amount of income.  The article speaks of how Pimco sees the next year and what they do to try and provide a reasonable solution.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

December 4th, 2013 Business & Market Update

After the sell off in North America yesterday, Japan following overnight with a 2% decline however, China in contrast was higher by about 1.3% on a stronger currency.

Europe is following suit with declines of about three quarters of a point at midday.

In the US the ADP Private Payrolls for November were released and beat by a large margin coming in at 215000 vs. 170000.  This number is the precursor to the Non-Farm Payrolls that will be released by the US government on Friday morning.  Estimates after last months big beat are averaging 166000 new jobs for November.  Futures are trading lower by about a quarter point.  Bond prices are falling pushing the 10 year yield in US bonds to 2.82% and in Canada to 2.62%.

Canadian futures are also down by about a quarter point after strong earnings from the National Bank.  The bank beat on both bottom and top lines, declared a stock split and a dividend increase.  Today at 10am the BOC will release the latest policy statement in regard to interest rates and the general state of the economy.  Interest rates are not going to move, however, the Governor’s comments will be closely watched.

Gold is trading lower by 4.00 to 1215, oil is up 0.77 to 96.82 and the loonie is off another 0.17 to 93.75.

I would seem the correction is upon us which will provide some solid entry points across the board in equities.  I continue to hedge fixed income positions to take advantage of the slowly rising interest rates while maintaining a strong cash equivalent position that will be available to take advantage of higher rates down the road.

November proved to be another good month in all mandates as the changes that have been made over the past couple of months continue to pay off in regard to performance.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

December 3rd, 2013 Business & Market Update

Some strength overnight in China as the service sector continues to produce strong numbers in November.  Markets in China were up 0.69%.  Japan also rallied on an additional $53bn of stimulus that will be put into the economy in the first quarter of 2014 to offset some tax increases.  Markets there were up about a half a point.

In Europe, factory orders continue to be weak as November numbers came in at a 4 year low, however the UK construction sector continued to expand in November showing that economy continues to decouple form the rest of Europe.  Markets in the region are off about 1.50%.

Us and Canadian futures are both off this morning by about a quarter point on profit taking and continued concern the tapering will occur sooner than thought.  Our US strategist Tony Dwyer again this morning confirmed his conviction on the equities market while indicating a correction could occur.  His summary:

Summary. Our fundamental thesis — (1) historically low inflation, (2) ultra-easy Fed, (3) positive trajectory in the economy and EPS, and (4) valuation expansion — remains firmly in place. Until we get consistently stronger economic numbers OR core inflation expectations begin to rise aggressively, we expect the Fed to stay on course and keep short rates pinned through 2014. Even with the prospect of a correction in the market, we continue to urge investors to not fight the Fed or the tape, and with the uptrend in place, the economy in the fundamental sweet spot and the SPX trading at 16x our conservative 2014 estimate of $115, our conviction level for SPX 1,955 in 2014 remains high. Our favored sectors looking out into 2014 remain the Financials, Industrials, Health Care and Information Technology.

Chrysler reported November auto sales increased at 16% vs. 11% estimated.  Also, BMO released their earnings which beat on both top and bottom lines, however about $0.19 per share came from securities gains which has traders selling off the stock in the premarket.  The company also raised the dividend by 5.5% and authorized a $15bn share buyback.



Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

December 2nd, 2013 Business & Market Update

Some good news out of China overnight as November Manufacturing outpaced estimates, however markets there were off about a half a point.  Japan was flat.

In Europe, at midday markets are mixed with the EuroStoxx Index down about a fifth of a point contrary to positive news out of the UK as manufacturing there was also stronger for November.

US markets are back at full speed today after the extended long weekend and it would seem that while the shopping spree down there was strong sales numbers were lower due to deeper discounts.  Futures however are marginally stronger this morning.  Canada is following suit up slightly over Fridays close.

Gold is off 14.00 to 1237 on the continual strengthening of the US Dollar, oil is up 0.38 to 93.10 and the loonie continues to fall off about 0.14 cents to 94.08 the lowest level in two years.  Bonds are trading lower this morning with the US and Canadian 10 year notes yielding 2.77% and 2.58% respectively.

Tomorrow marks the start of the big Canadian banking oligopoly announcing earnings as BMO is first to report.  National will report Wednesday, CIBC, RBC and TD on Thursday and BNS on Friday.  Generally estimates are suggesting slight beats across the board with the possibility of dividend increases from TD and RBC.

I have added some further insight from the Pimco Due Diligence Conference that I attended recently in regard to the US Housing market which Pimco has done exhaustive research on in regard to their investment in non-agency mortgage backed securities.  While there has been a solid recovery, there is a great deal of room left in many regions of the country for continued growth.  A key takeaway was the fact the residential real estate is a market of houses not a housing market.  The difference is the fact that not all markets are the same (Manhattan vs. south Florida as an example).  A national number indicating housing starts, pricing and permits does not provide a realistic picture regionally of where value lies.  Not surprisingly, when asked about the Canadian market, for the most part the response was that it is overvalued.  Of course the same analysis applies in regard to regions.  I am sure you will find it very interesting.

Lastly, while on the road Thursday and Friday last week I was unpleasantly surprised at the traffic in the town of Peterborough, ON (population 135,000) due to the Canadian version of Black Friday.  I had meetings most of the day in town and it was like driving around in downtown Toronto.  I saw accidents on the road and in parking lots, line-ups at banks, gas stations and malls that were insane.  All to get a deal on something that is probably not needed at the end of the day.  While I understand it is good for the economy that the consumer is out there spending, I wonder at what cost from a debt perspective?  This is one US tradition that I would be happy to export back to them!!

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 26th 2013 Business & Market Update

Overnight in Asia markets were slightly lower as oil markets recovered after the slide yesterday based on the Iran nuclear deal.

Europe at midday is flat despite some continued strong numbers coming from the service sector that is adding jobs at the fastest pace in more than 6 years.

US and Canadian futures are also flat this morning despite strong Housing Start and Permits numbers for October. The estimates of 933,000 were beat handily by the actual number coming in at 1,030,000. These numbers are late in coming based on the government shut-down that occurred earlier in October. The Case-Shiller Housing Index was also released this morning and it showed a year over year 13.29% increase which was in line with estimates.

In Canada, the Finance Minister suggested late yesterday that the budget would be balanced in 14 months which is sooner than was anticipated only 10 days ago. Good news none the less if you believe the shell game that is played in government finance. Also, the big news out of Canada today is the new deal that the NHL struck with Rogers Communications. The deal valued at $5.2bn will run over 12 years and give the media company total control of the NHL property in Canada. In essence CBC and TSN (Bell Media) are out. Rogers has suggested they have a deal with CBC to broadcast the Sat night game of the week and will maintain the French and other language options that the CBC offers. The deal takes about a quarter of the CBC’s total revenues which will hurt the crown corporation. TSN it would seem is out other than some regional games where they have some ownership rights (Leafs, Winnipeg etc.). For those of you that like Don Cherry and Ron Maclean it would seem for now they are still on Sat nights and will be doing some playoff games.

Gold is up about 3.00 to 1245, oil is up a couple of cents to 94.12 and the loonie is down 0.06 to 94.81. Debt markets are flat this morning with US and Canada 10 year bonds trading at 2.73% and 2.55% respectively.

Lastly, as I mentioned yesterday I would be providing some insight into the conference I attended last week and start the process this morning with an article by Mark Kiesel, Head of Global Bond Portfolio Management for Pimco. The theme was what not to buy and finding the sweet spot in the debt and equity markets based on the current environment that we are ensconced in. I found Mark quite positive, down to earth and pragmatic in his big picture view which translated nicely into his sector analysis. Take the time to give it a read it you have a moment.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management
Canaccord Genuity Wealth

November 25th Business & Market Update

With this week being the start of the holiday season in the US, markets will be fairly quiet going into the Thanksgiving holiday on Thursday and while markets will be open Friday volumes will be much lower.  I will be on the road Thursday and Friday in and out of meetings both days, but accessible and will be checking in often.  The Morning Blog will be attachments only Thursday and back to normal Friday.

Overnight in Asia, markets were mixed with Japan up 1.5% and China down about a half a point.  Japan’s rise is on top of analysts suggesting that Abenomics starting to take effect as the deflationary period in the region is coming to an end.  China on the other hand after a 7% move higher in the last week alone was off on profit taking.

Europe is up a about a half a point on solid US markets, the Iran nuclear deal with the US suggesting the country will curb further nuclear development and comments from the ECB that the region will not slip back into a full recession as growth continues to be positive.

The US and Canadian futures markets are higher this morning by about a quarter point on much of the above news along with the fact the dollar is stronger this morning.

The stronger US currency is causing more concern for gold investors as the commodity is off 10.00 to 1234.00, oil on the Iran deal is down 1.20 to 93.563 and the loonie is trading lower by a quarter cent to 94.80.  The US and Canadian 10 year bonds are lower this morning with yields at 2.75% and 2.59% respectively.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management