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How to Start a Convenience Store in Ontario
This guide is designed to help you navigate through federal and provincial government programs, services and regulations that apply to starting a convenience store in Ontario.
TABLE OF CONTENTS
- Basics To Getting Started
- Industry Overview
- Regulations
- Financing
- Taxation
- Managing Your Operation
- Associations
- Other Resources
Starting a business can be a rewarding undertaking, but it comes with its challenges. Before starting a business in Ontario, it is wise to do your research. There are several issues to consider such as regulations, financing, taxation, managing your business, advertising and much more.
- Business Start-Up Info-Guide
- Financing for Starting a Business Info-Guide
- Taxation Info-Guide
- Employment Regulations Info-Guide
Convenience stores offer quick and friendly service, handy locations, a variety of merchandise, and extended hours of operation. This publication focuses on starting an independent convenience store. However, many convenience stores are franchise operations.
Convenience Store - a small store that is open every day until late evening or 24 hours a day, and specializes in selling basic food items, such as milk and bread, a variety of small dry-goods items, and can including movie rentals.
Convenience Store/Gas Station - a convenience store combined with a place for supplying motor vehicles with gasoline, motor oil, water, etc.
Franchise - the privilege, often exclusive, of selling the products of a manufacturer or providing a company's service in a given area.
For further information:
please call 1-800-665-4232
visit the website: Canadian Franchise Association
Business Regulations Info-Guide
This document will assist you in navigating federal, provincial and municipal regulations that apply to a number of industries and businesses in Ontario.
For further information:
see the document Business Regulations Info-Guide
Examples of licenses, permits and regulations that could apply to you when starting a convenience store in Ontario may include, but are not limited to:
Canadian Food Inspection Agency (CFIA)
Canadian Food Inspection Agency contains information on food safety, including food safety tips.
For further information:
please call 1-800-442-2342 or 613-225-2342
Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA)
The Ministry of Agriculture, Food and Rural Affairs website contains information on food safety, including the Food Safety and Quality Act, 2001.
For further information:
please call 1-888-466-2372
visit the website: Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA)
Ontario Ministry of Health and Long-Term Care
The Ministry of Health and Long-Term Care web site contains information on health issues, including locations of Public Health Units and publications on food and water safety.
For further information:
visit the website: Publications: Food Safety
Video/DVD Rental License
Businesses selling or renting videos directly to the public (including by vending machines) require a Film Exchange Retail Licence. Businesses distributing videos to other retailers require a Distributor's Licence.
To obtain an application form, clients should contact the Ministry of Government Services (MGS), Theatres Branch at 416-314-3626 or toll-free 1-800-268-6024.
Music License
Performances of music in public, i.e. offices, stores, etc., require a licence. This licence is necessary whether the music is performed by live or recorded means.
For further information:
please call 416-445-8700 or 1-800-557-6226
visit the website: Society of Composers, Authors and Music Publishers of Canada (SOCAN)
The Smoke-Free Ontario Act
As of May 31, 2006, the Ontario government has prohibiting smoking in all enclosed workplaces and enclosed public places. The legislation also ensures only those 19 years of age and older can buy cigarettes and will phase out the display of tobacco products.
For further information:
please call 416-326-4846
visit these websites:
Ministry of Health Promotion
Smoke-Free Ontario Act
Related legislation:
Health Protection and Promotion Act
Food and Drugs Act
The Canada-Ontario Business Service Centre has created documents, which provide an overview of some of the main financing options for individuals starting and operating a business in Ontario, including programs offered or supported by the government.
For further information:
please call: 1-888-745-8888
see these documents:
Financing for Starting a Business Info-Guide
Financing for Established Businesses Info-Guide
Dealing with Business Taxes
All businesses must be aware of the various taxes that may apply to their product or service. Depending on the type and location of products or services being offered, federal, provincial and/or municipal business taxes may apply.
For further information:
see the document: Taxation Info-Guide
Below are links to publications that cover some of the tax requirements for convenience store owners in Ontario.
Convenience Stores
This 'Pointer' provides basic Ontario retail sales tax information relating to items sold by a variety or convenience store, a smoke shop, a gas bar that sells other goods, or a kiosk.
Basics of Retail Sales Tax
This 'Pointer' explains the basics of Ontario retail sales tax to those starting a small business in Ontario or who are already operating one.
Snack Foods, Beverages and Candies
The information in this guide explains how Ontario retail sales tax applies to snack foods, beverages, and candies.
Overview of Tobacco Tax
In addition to providing general information on the application of Ontario's tobacco tax, this bulletin outlines the specific registration, reporting, remitting and record-keeping requirements of Ministry-designated and non-designated tobacco wholesalers, retailers, importers, exporters, interjurisdictional transporters and consumers.
Application for Vendor Permit (PDF - 371 KB)
This form is to be completed when applying for a retail sales tax Vendor Permit, for purposes of charging and collecting retail sales tax.
Purchase Exemption Certificates
The information in this Guide explains the use of Purchase Exemption Certificates (PECs) and valid identity cards to claim exemptions from Retail Sales Tax (RST).
Discount Coupons
The information in this guide explains how Ontario retail sales tax applies when various types of coupons are redeemed towards the purchase of goods.
Insurance
Insurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, you may wish to ask other business owners in your area to recommend one.
The following list is included to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with your insurance agent.
Basic insurance:
- fire insurance (extended coverage on buildings and contents);
- liability insurance (depending on the type of business);
- burglary protection (theft coverage); and
- dishonesty insurance (covers thefts by employees).
Marketing/Advertising
Word-of-mouth advertising and good public relations are often the best ways of promoting your business. Depending on your market and its size, also consider flyers, business cards, brochures, newspapers, radio, the phone book and the Internet. Also bear in mind that a satisfied customer is good advertising. Referrals are also a valuable way of making customers aware of your products or services.
A website is also a good marketing tool. It should have details to describe the location (your address, telephone and fax numbers, and directions on how to get to your establishment), hours of operation, services offered, credentials and anything else you think may be of interest to potential customers. However, once you launch a website, you should update it on a regular basis.
Participating in community events is another way of advertising your business. You may also hold events that will promote your business. No matter how you choose to market your business, it is wise to track how your clients became aware of your establishment - this may help determine your future advertising strategies.
The Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada. The Act, which is administered by Industry Canada, defines which marketing practices are illegal and the process of complaint investigation.
For more information:
please call: 819-997-4282 or 1-800-348-5358
visit the website: Competition Bureau
Market Research
Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your potential clients and competitors is a critical first step in market investigation and development of a marketing plan.
In developing a marketing plan, your primary functions are to understand the needs and desires of your clients, select or develop a service that will meet their needs, develop promotional material that will make them aware and ensure service delivery.
For more information:
see the document Market Research for Your Business
Selecting Professional Services
The use of professional services is essential to the success of a small business. Professionals can provide knowledge and expertise in the areas where you may have little. They can round out your management team to ensure your business is operating efficiently.
As an entrepreneur, there are four main areas of professional services with which you may consult:
- lawyer;
- insurance broker;
- accountant; and
- banker.
Setting Up a Pay System
Pay administration is a management tool that enables you to control personnel cost, increase employee morale, and reduce work force turnover.
Setting the right price
Setting the right price can influence the quantities of various items that consumers will buy, which in turn affects the total revenue and the profit in the store. In the end, the right price for the product is the price that the consumer is willing to pay for it. Hence, correct pricing decisions are a key to successful retail management.
Basic Bookkeeping
A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis.
Note: All staff working with cash should be trained to recognize counterfeit currency.
The legal requirement concerning financial records specifies that there be a permanent, accurate and complete record of your daily income and expenses. There are many types of record books and bookkeeping systems available. For example:
- double entry bookkeeping;
- commercial bookkeeping systems;
- one-write systems;
- computerized systems; and
- single entry bookkeeping.
Employing people
What are the rules on working conditions in Ontario?
The Employment Standards Branch of the Ontario Ministry of Labour is responsible for the administration and enforcement of the Employment Standards Act, which provides for minimum terms and conditions of employment in most industries.
For further information:
please call 416-326-7160 or 1-800-531-5551
see these documents:
Employment Regulations Info-Guide
Employment and Training Assistance Programs Info-Guide
Choosing a Location
Choosing a location for your store may be your single most important decision. Do your research and in particular, consider these factors:
Population - The Grocery Trade Association states that to sustain a convenience store, between 500 and 1 000 people must live within a 1.6 kilometre radius. If people have to travel more than this distance, they are more likely to go to a supermarket for a major shopping trip. Also check an area's future development plans and projected growth rates.
Competition - Although a convenience store's competition is mostly from other convenience stores, it can also come from supermarkets. Study all competitors to see if the local market can support another operation.
Traffic - Impulse purchases make up a good percentage of convenience store sales, so high volumes of pedestrian and vehicle traffic passing your store is critical. Try to locate near schools, parks, sporting facilities and other businesses to increase traffic.
Selecting Your Inventory
Keep ongoing, accurate inventory records in order to continually monitor the ratio between your stock and actual sales. This helps to minimize lost sales and money tied up in inventory, as well as to determine the demand for different products.
For example, a convenience store in a resort area will likely stock a more complete line of goods. Wherever your location, you must be able to estimate product demand. The Convenience Store Journal suggests a typical breakdown, however, your own mix will depend on your location and target market needs.
Groceries | 26% | Cookies/Snacks | 7% | Ice Cream | 4% | Candy | 3% |
Soft Drinks | 12% | Frozen Snacks | 5% | Health/Beauty | 4% | Meat | 2% |
Dairy | 10% | Non-foods | 5% | Produce | 3% | Tobacco | 2% |
Deli Items | 7% | Magazines | 5% | Baked Goods | 3% | Other | 2% |
Suppliers
- General line wholesalers - Join a cooperative of independent store owners to purchase in groups to gain volume discounts. Approximately 25% of Canadian grocery stores belong to such cooperatives which give advice in merchandising, management and finance.
- Speciality wholesalers - Bakeries, delis and produce suppliers often offer lower prices than general line wholesalers. They may also stock shelves and help you estimate demand.
- Service merchandisers - Non-food items, such as health/beauty aids, housewares and magazines are sold by service merchandisers. They can also deliver, stock shelves, price items and help estimate demand.
Packaging and Labelling
Businesses or individuals wishing to buy bulk foods for resale must comply with packaging and labelling regulations. These regulations are administered by the Canadian Food Inspection Agency (CFIA).
For further information:
visit the website: Canadian Food Inspection Agency
Selling Lottery Tickets
Selling Ontario Lottery Gaming Corporation (OLGC) tickets
On June 28, 2007, the Government of Ontario announced that it was establishing new regulations to strengthen the integrity of the lottery system and assigned responsibility for administering the regulations to the Alcohol and Gaming Commission of Ontario (AGCO). These new regulations include:
- A lottery retailer registration program;
- Enforced rules of conduct for lottery retailers.
As a result of these changes, beginning January 1, 2008, all retailers selling Ontario Lottery and Gaming Corporation (OLG) products must be registered by the AGCO. In addition, individuals or managers employed by a lottery retailer and who act on behalf of the retailer by overseeing, coordinating or exercising significant decision-making authority over lottery product sales and/or managing compliance issues with respect to the sale of lottery products will also require registration.
For further information:
call: 1-800-522-2876
visit the website : Notice to Retailers Affecting The Sale of Ontario Lottery and Gaming Corporation Products (PDF 17.62 MB)
In order to become a lottery retailer, a request must be made directly to the OLGC by using one of the following methods:
- by mail: OLGC Contact Centre, 70 Foster Drive, Suite 800, Sault Ste. Marie, ON P6A 6V2;
- by e-mail: OLGCinfo@OLGC.ca; or
- by fax: 705-946-6788.
For further information:
visit the website: Ontario Lottery Gaming Corporation (OLGC)
Selling Break Open tickets - Alcohol and Gaming Commission of Ontario (AGCO)
A license is required from the Alcohol and Gaming Commission of Ontario in order to sell Break Open tickets.
For further information:
please call 416-326-8700 or 1-800-522-2876
visit the website: Alcohol and Gaming Commission of Ontario - Break Open Ticket
Selling Tobacco products
In order to sell tobacco products, retailers are required to have a retail vendor permit by the Client Accounts and Services Branch (CASB).
Ontario levies a direct tax on every consumer of tobacco products. Tobacco tax is collected by retailers from their customers and is remitted through their supplier. Retailers must ensure that they purchase tobacco products only from a wholesaler who has a valid wholesale dealer's permit or from an importer who has a registration certificate, issued by the Client Accounts and Services Branch (CASB). If a retailer is operating as an importer of tobacco products, the retailer must have an importer's registration certificate issued by the Client Accounts and Services Branch (CASB).
The stocking or selling of cigarettes that do not bear an Ontario tax mark (yellow tear strip) is prohibited. Unauthorized possession of unmarked cigarettes may result in penalties, fines, imprisonment and forfeiture of the product.
For further information:
please call 1-800-262-0784
visit these websites:
Summary of Tobacco Tax Rules for Retail Dealers
Overview of Tobacco Tax
TT 5-2001 - Cigar Tax Changes
TT 2-2002: Cigar Tax Changes: Invoicing Requirements for Retailers
Tobacco Tax Legislation
Tobacco Tax Act
GENERAL - R.R.O. 1990, Reg. 1034
REFUNDS - R.R.O. 1990, Reg. 1035
RETURNS AND REFUNDS - R.R.O. 1990, Reg. 1033
SALES OF UNMARKED CIGARETTES ON INDIAN RESERVES - O. Reg. 649/93
Retailers of tobacco products must also contact the municipality in which the business will be operating.
Tobacco Products - Related Regulations
The Tobacco Act - Health Canada
Smoke-Free Ontario Act
Cost Control
You must have procedures for controlling inventory and costs. Ask people in your industry for information about procedures for:
Purchasing - Most of the time, purchasing is done over the telephone, by fax, or online. Therefore, often no contract is signed between the purchaser and the supplier; it is essential that you choose your supplier carefully;
Receiving - Check all deliveries against the Purchasing and Receiving Form, in three ways: quantity, price and quality (temperature); packaging should be intact. Make sure specifications are met. Careful recording will show short shipments, price variations and weight differences;
Budgeting and Projecting - Establish a cash budget and maintain cash flow projections on a continual basis;
Storage - Ensure refrigerated and frozen products are quickly placed in a cold storage. Storage temperature for dry goods should be between 10-21oC, frozen goods should be -18o C or less, and refrigerated goods. Rotate your stock to ensure that oldest items are used first before the new stock.
Making a profit is the most important objective of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits you must raise revenues, lower expenses, or both. To make improvements you must know what's really going on financially at all times.
Furnishings and Equipment
There will be certain equipment and furniture you will need in your place of business which will allow you to perform your services. It is suggested to make a list of the required equipment and its cost to you. An important factor to consider, when choosing equipment, is the after-sales service and repair, and their affordability.
- Used Equipment - Consider buying used equipment as a cost-saving measure. Sources of used equipment could be a convenience store that is closing or dealers in second-hand equipment. The drawback to this approach is that, often, there are no guarantees with the purchase.
- Leasing Equipment - Another alternative is to lease equipment to help keep start-up costs down.
There are many associations that may be of use to convenience store owners. Although it is not necessary to join a convenience store association, there can be advantages in becoming a member because they:
- promote and exchange marketing and promotional ideas among members;
- establish and encourage high standards of quality and professionalism;
- represent and advocate on behalf of members.
Examples of associations include, but are not limited to:
Canadian Health Food Association
Ontario Convenience Stores Association
National Association Convenience Stores (NACS)
National Convenience Store Distributors Association
Retail Merchants' Association of Canada (Ontario) Inc.
The Retail Merchants' Association is run by retailers for retailers, and offers a broad range of programs designed to keep independent retailers strong and profitable and provides an online advertising initiative called Real Time Merchant Advertising. Association members can also be eligible for lower credit card merchant discount rates.
For further information:
please call 416-293-2100
visit the website: Retail Merchants Association of Canada Inc.
Retail Council of Canada
Retail Council of Canada's mission is to be the voice of retail in Canada by providing advocacy, research, education and services that enhance opportunities for retail success and increase awareness of retail's contribution to the communities and customers it serves.
Additional resources which may help convenience store owners include, but are not limited to:
You may find books, magazines and other relevant print material at business service organizations in your community that provide Canada Ontario Business Service Centre (COBSC) information. Contact the COBSC at 1-888-745-888 for the location nearest you.
Statistics
Retail and Wholesale Sales - Statistics Canada
Retail Trade
Wholesale merchants' sales, by province and territory
Quarterly Retail Commodity Survey - Statistics Canada
Average weekly earnings (including overtime) in the trade, transportation, storage, - Statistics Canada
Websites of Interest
Canadian Council of Grocery Distributors
The Canadian Council of Grocery Distributors (CCGD) - Publications
Canadian Federation of Independent Grocers
Canadian Federation of Independent Grocers Newsletter
Canadian Partnership for Consumer Food Safety Education
Ontario Convenience Stores Association
Food Recalls and Allergy Alerts
Related Reading
Need more information?
Click: Canada Business
Call: The Business Info Line, a collaboration between ServiceOntario and Industry Canada, at 1-888-745-8888
Visit: Find a Community Partner Location near you
DISCLAIMERS
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.
Some of the organizations listed above are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages.
