Overview

Most sales to Canadian companies are handled through relatively short marketing channels; in many cases, products move directly from manufacturer to end user. This is particularly true for industrial products. Ninety percent or more of prospective customers for industrial products are in or near two or three major cities. Canada’s consumer goods market is more widely dispersed than its industrial market. From a regional perspective, the country may be divided geographically into distinct markets, plus the territories, defined as follows: Ontario, Quebec, the West, Atlantic Canada, and Northern Canada.

Commercial Service offices in Canada can assist U.S. firms in locating qualified potential partners through customized matchmaking programs, such as an International Partner Search, Gold Key Service or Single Company Promotion.  For additional information, visit the Commercial Service Canada webpage on Services for U.S. Companies.

Using an Agent to Sell U.S. Products and Services

Although large industrial equipment is usually purchased directly by end users, nearly all smaller equipment, goods and related services, and industrial supplies are imported by wholesalers, exclusive distributors, or manufacturers’ sales subsidiaries. U.S. firms have historically appointed manufacturers’ agents to call on potential customers to develop the market. Most sales agents expect to work on a two-tier commission basis. Agents receive a lower commission for contract shipments and a higher rate when purchases are made from the local agent’s own stocks.

Consumer goods are usually purchased directly by Canadian wholesalers, department stores, mail-order houses, chain stores, purchasing cooperatives, and single-line retailers. Many of these groups have their own purchasing agents in the United States to whom you can market directly. Manufacturers’ agents can also play a role in consumer goods sales.

Establishing an Office 

U.S. companies can establish a representative office or branch offices, set up a sole proprietorship or partnership, or incorporate a wholly owned subsidiary or joint venture in Canada. Corporations can be public or private, and incorporated federally or under the laws of a province. For additional information, visit the Government of Canada’s Corporations Canada website.

Private or public corporations incorporated federally under the Canada Corporations Act may operate nationally or in several provinces. Provincial and territorial legislation requires you to register your corporation in each province and territory in which it will conduct business. For more information, visit the Government of Canada’s Corporations Canada Provincial and Territorial Registrar and the Justice Laws website.

While incorporating your federal corporation online, you can at the same time register your corporation in the provinces of Ontario, Nova Scotia, Saskatchewan, Newfoundland, and Labrador. Registration fees are minimal and vary by province. For more information, visit the Government of Canada’s Corporations Canada Provincial Registration of Federal Business Corporations information page.

Corporations incorporated in Quebec must adopt a corporate name in French under Section 63 of Québec’s Charter of the French Language. Extra-provincial corporations registered in Quebec must supply a French version of their corporate name. Firms considering establishing operations in Quebec should contact the Office Québécois de La Langue Française (Québec Office of the French Language) that helps companies comply with Quebec’s language laws. 

To access Canada’s ICS, visit the U.S. Department of State Investment Climate Statement website.

Franchising

Canada’s franchising sector stands as the nation’s 12th largest industry and holds the fifth position globally for market attractiveness, according to the Rosenberg International Franchise Center. In 2024, this robust sector generated US$85.9 billion in GDP contributions and delivered US$21.47 billion in combined federal and provincial tax revenues. Employment within franchise operations is projected to climb to 1.75 million by 2026, representing a 0.79% growth from the previous year.

The industry encompasses approximately 1,100 brands operating across more than 66,000 franchise locations, spanning over 50 distinct business categories. Hospitality dominates Canada’s franchise ecosystem, representing nearly 40% of all franchised brand names across the country. The wellness sector has emerged as another high-growth area, driven by shifting consumer priorities—health consciousness among Canadians surged from 56% in 2021 to 70% in 2023. This evolving landscape highlights franchising’s adaptability, with traditional hospitality maintaining its leadership position while wellness carves out substantial market share.

Educational services, particularly STEM-focused programs, are gaining traction as parents seek to prepare children for an increasingly digital economy. Meanwhile, service-based franchises in digital marketing, IT support, business coaching, senior care, and renovation services are expanding rapidly, benefiting from reduced operational overhead and growing demand for specialized professional services.

International Expansion Opportunities

Due to its proximity and cultural similarities, Canada serves as the primary international expansion destination for U.S. franchises. Over 500 of the largest U.S. franchisors have successfully introduced their franchise systems to Canada, with U.S.-owned concepts representing 55% of all franchise brands by unit count. The success of American brands stems primarily from brand familiarity and market potential combined with relatively low geographic and cultural distance risks.

Franchising presents an attractive, low-risk export method requiring minimal franchisor investment while effectively increasing brand recognition and expanding both customer base and distribution channels. The industry spans nearly 50 different economic sectors, including hospitality, automotive, and healthcare.

Regional Distribution and Growth

Ontario dominates Canada’s franchising landscape, with 56% of franchises headquartered in the province (primarily in the Greater Toronto Area) and 65% of all franchise outlets operating there. Significant expansion opportunities exist in the Prairies, Atlantic provinces, and West Coast regions. According to the Canadian Franchise Association (CFA), British Columbia is projected to experience higher growth with franchise locations increasing by 1.16%, while Atlantic Canada is expected to grow at a slower rate of 0.46%. Within specific sectors, franchise operations account for 35% of all restaurant sales and 45% of retail sales.

Market Entry Strategies

Successful franchising in Canada requires long-term commitment, with franchisors dedicating necessary human and financial capital, patience, and time for market success. The preferred franchising model involves incorporating a Canadian subsidiary to establish local physical presence. Alternatively, foreign franchisors may enter the Canadian market through direct franchising without creating a permanent establishment in Canada.

For Quebec market entry, franchisors should facilitate initial market penetration through master franchise agreements, area developer agreements, or area representative agreements with parties thoroughly familiar with the Quebec market and economy.

Regulatory Environment

One major challenge facing U.S. franchisors is navigating varying franchise legislation across Canada. While the Canadian federal government has no federal franchise laws, relevant federal legislation related to franchising requires monitoring. At the provincial level, six provinces—Alberta, British Columbia, Manitoba, Ontario, New Brunswick, and Prince Edward Island—have enacted franchise disclosure legislation. Quebec operates under civil law jurisdiction and, while lacking franchise-specific legislation, applies the Civil Code of Québec and the Charter of the French Language to franchising. Unlike other provinces, Quebec does not require mandatory disclosure, meaning franchisors need not provide Franchise Disclosure Documents prior to franchise agreement signing.

Direct Marketing

Direct marketing techniques that prove successful in the United States generally demonstrate equal effectiveness in reaching Canadian audiences. Market entry can be as straightforward as placing advertisements in magazines or on the internet. For comprehensive industry information, the Canadian Marketing Association and DM Magazine serve as leading sources for direct marketing insights in Canada.

Joint Ventures & Licensing

The Canadian legal system imposes minimal restrictions on joint ventures or licensing arrangements. Some joint ventures require approval from the Government of Canada under the Investment Canada Act, though most new ventures require only notification to the Canadian government. Foreign licensors face no registration or public disclosure requirements.

Express Delivery

Canada offers many of the same express delivery providers available in the United States. With nearly US$2.6 billion in goods and services crossing the Canada-U.S. border daily, express delivery providers represent experienced and reliable cross-border shipping solutions. Transit times for express services between major U.S. and Canadian cities typically range from overnight to three days, though additional customs processing may extend delivery times. Clear goods identification remains crucial for efficient shipping. Beyond private delivery companies, Canada Post provides a robust and reliable federal mailing system. Additional information is available through Canada Post and Canada Border Services Agency (CBSA) websites.

Recent Trade Developments

In early 2025, the United States significantly altered its de minimis policy and tariff regime through sweeping executive orders. Under prior February directives, the de minimis exemption for Canada and Mexico was initially scheduled for removal alongside 25% tariffs, though implementation was temporarily delayed pending customs capacity enhancements. On March 4, 2025, Canada imposed 25% retaliatory surtaxes on C$29.8 billion worth of U.S. goods, effective March 13, responding to U.S. duties applied to Canadian exports. Canada exempted most food staples and essentials from retaliation to protect domestic consumers and industries.

As negotiations continue under mounting pressure, Canada has signaled potential escalation of metals tariffs beginning July 21. The Bank of Canada warns that tariffs are fueling inflation, prompting consumers to increasingly source locally to avoid higher prices. These tariffs significantly impact food and beverage cross-border trade, raise costs on sporting goods, disrupt equipment procurement in hospitality and retail sectors, and intensify pressure ahead of the July trade-deal deadline.

Due Diligence

Canadian businesses maintain strong reputations for business ethics. Nonetheless, before signing a major contract or entering a long-term partnership agreement in Canada, U.S. exporters should perform appropriate due diligence on their business partners and agents. The Commercial Service offers an International Company Profile (ICP) service that conducts routine background checks on Canadian companies. For information on the ICP, please contact Commercial Specialist Abedin Kader at abedin.kader@trade.gov.