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Accounting for a franchise location starts with a fact that surprises new owners: the franchisor’s reporting format is not your tax reporting. You’ll probably send sales figures to head office every week, but the CRA only cares about your own books, your GST/HST, your payroll remittances and your T2 or personal return. Keep both sets, and keep them reconciled to each other.
Whose rules do you actually follow?
Two sets. The franchise agreement tells you what to report to the franchisor and how often. Canadian tax law tells you what to keep, file and pay. They overlap, but they’re not the same thing.
Your agreement is a private contract, so nobody outside it can tell you what it requires, and fee levels or approved software differ from brand to brand. Read the reporting clauses, list each report with its due day, and build your month-end around them. Sam in Calgary taped hers above the back-office desk. Her first month-end took a full Sunday. By the third, it took ninety minutes.
Whatever system you use, you remain responsible for the records. If a bookkeeper or another provider keeps them, you’re still the one who has to make sure they’re adequate. Records go back six years from the end of the last tax year they relate to, as the CRA puts it here:
Generally, you must keep all required records and supporting documents for a period of six years from the end of the last tax year they relate to.
CRA, where to keep your records and for how long, canada.ca
How does GST/HST work for a franchise location?
A storefront is almost always above the small-supplier line, which the CRA sets at $30,000 of taxable supplies over four consecutive calendar quarters for most businesses. You can register before you hit it, and most franchisees do from day one, because you’ll want input tax credits on the build-out.
The rate you charge depends on the province. The GST/HST calculator shows the difference on a $1,000 sale: $130 of tax in Ontario, $50 in Alberta and $149.75 in Quebec.
| Province | Tax on $1,000 | Total |
|---|---|---|
| Ontario | $130.00 | $1,130.00 |
| Alberta | $50.00 | $1,050.00 |
| Quebec | $149.75 | $1,149.75 |
If your point-of-sale system sets the tax codes, test a few odd items yourself. Some goods are taxed at a different rate or not at all, and the calculator uses the standard rate. In British Columbia it applies 12% to everything, so don’t use it for restaurant food there.
What will payroll cost on top of wages?
More than the wage, and franchisees are often caught out by it. Take one Ontario employee paid $3,000 every two weeks. The payroll remittance calculator estimates $961.03 to send to the CRA each pay period, and $228.41 of that is your own share of CPP and EI on top of the wages. The rest is held back from the employee’s pay.
That’s one person. With ten on staff, your cash flow on pay days feels different. The tool is an estimate and it leaves out items like WCB premiums or any provincial payroll tax, so your payroll service’s figure is the one that counts.
For a check on what an employee actually takes home, the take-home pay calculator is handy when you’re setting wages.
How should you set up the books around franchisor charges?
Give every charge its own account. Here’s a made-up month, with round numbers so the arithmetic is easy to follow. Say the location sells $20,000 before tax in Ontario, and the agreement takes a 6% royalty and a 2% marketing contribution (both invented for this example, so swap in your own percentages).
| Line | Working | Amount |
|---|---|---|
| Sales before tax | Given | $20,000 |
| HST collected at 13% | $20,000 x 13% | $2,600 |
| Royalty at 6% | $20,000 x 6% | $1,200 |
| Marketing at 2% | $20,000 x 2% | $400 |
The $2,600 of HST isn’t your money, so it waits in its own account until you remit it. The $1,600 that goes to head office is easier to watch against sales when royalty and marketing aren’t lumped together as one fee.
Which mistakes come up most?
Mixing the owner’s money with the store’s is number one. Pay yourself by a clear method, salary or dividends or draws, and record it the same way every time. If you run the location through a corporation, the T2 is due six months after year end, and the balance owing is generally due in two months, or three for some CCPCs, as set out in the CRA’s T2 Corporation Income Tax Guide.
Second, treating franchisor charges as one line. Split royalties, marketing contributions, rent and supplies into separate accounts. You’ll see which ones move with sales and which don’t. If you operate as a sole proprietor instead, the self-employed tax calculator gives a rough picture of tax, though it leaves out EI and doesn’t lower CPP for deductions.
Third, waiting for year end. Reconcile the bank, the sales tax account and payroll every month. It takes an hour, and it saves a weekend at tax time.
Where we got these figures
The small-supplier threshold and corporate filing dates come from Canada Revenue Agency pages checked in September 2026, and the record-keeping rule from the page quoted above. Sales tax and payroll figures are our own calculator results using 2026 data. We aren’t connected to the CRA or any government body, and filing dates for 2026 weren’t published when we looked, so check the CRA calendar.
Frequently asked questions
Do franchisees need a GST/HST account?
Above the $30,000 small-supplier line you must register. Many franchisees register earlier to claim input tax credits.
How long do I keep franchise records?
Six years from the end of the last tax year they relate to, per the CRA.
Is the franchisor's report enough for the CRA?
No. You need your own books, sales tax returns and payroll remittances.
What does payroll add to wages?
On $3,000 biweekly in Ontario our calculator estimates about $228 a pay period as your share of CPP and EI.
Can I use the GST/HST calculator for a restaurant in BC?
No. It applies 12% to everything there, so it overstates tax on some food.
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