Expert crisis management advice for franchisors
The traditional Easter holidays have been and gone. For some, such as our front-line health workers, this annual holiday was non-existent. For furloughed workers, the break perhaps blended into the past few weeks off work. For others, business carries on in one way, shape or form. But what about the 900-plus franchisors in the UK? What are they, or should they, be doing during these challenging times?
The answers to this crisis do not currently lie in the law or in the franchise agreement. In our view, franchisors should be keeping that franchise agreement in the bottom drawer for the time being. Instead, here are a few of our thoughts on some of the key issues for franchisors during this time:
1. Look after yourself
This may be a controversial opinion to some, but franchisors should ensure their own stability first. If a franchisor cannot weather the storm, it will not be able to help its franchisees.
While there may be a knee-jerk temptation to help franchisees by waiving management services fees - in whole or in part - this cuts off a franchisor’s own oxygen supply and may lead to solvency issues at head office. Accordingly, our first piece of advice is for franchisors to fit their own oxygen mask first before helping others.
2. Support your franchisees
Some industries are busier than others. Franchisors in the domiciliary care sector may be working tirelessly to ensure that their franchisees and their staff have the support and assistance they require. On the other hand, retail businesses are largely closed and franchisors in this sector may have less to do.
For the majority of franchisors, the support their franchisees require may be something in between. Our advice is to speak to your approved suppliers and negotiate delayed payment schemes, catch up with training modules and let the franchise divisions at the banks know your plans and the help your franchisees will need.
Franchisors will need to analyse what support their franchisees need during this time and who will be best placed to provide it to them at head office. It is particularly important that franchisors become well versed in the government guidance and support available to businesses. Get the business plan templates out the bottom drawer to help with funding applications and prepare template furlough letters for franchisee staff.
3. Communicate with your network
Communication is key to any franchise relationship and, in our view, franchisors should speak to their franchisees now more than ever.
A lot of new-start franchisees may be experiencing their first proper test in business ownership and franchisors should be communicating with these franchisees to offer them the support and guidance they need.
Even if a franchisee appears to be fine, it’s important that the franchisor keeps in contact to articulate clearly what support is on offer or what may be available from other sources.
4. Innovate and adapt
Necessity is the mother of invention and it has been interesting to see how franchise businesses have adapted to lockdown life.
Whether it’s online children’s entertainment classes or hastily arranged takeaway or delivery services being bolted on to traditional bricks and mortar establishments, we have seen a number of businesses rise to meet the challenge of finding ways to allow their franchisees to carry on trading during the lockdown.
Of course, it may be that not all businesses can be adapted to allow trading to continue. However, a franchisor can certainly innovate in small ways by using technology to host virtual team meetings or deliver online training courses to franchisees in order to take advantage of this quieter period.
5. Find opportunity in adversity
All this will pass. Lives will be changed and, arguably, the way we do business will change too. However, you don’t have to look too far or speak to too many people in the franchising industry before you hear about the potential opportunities that the quieter period may bring.
Over nine million workers are expected to be furloughed at the end of this scheme it may be that a significant number of those may have to face the prospect of redundancy if their employer is not able to pick up where it left off.
For existing franchisors, this means there may be a pool of individuals looking to take control of their own future by buying a franchise. Also, for businesses that have previously focused on organic growth, now may be the time to consider growing their business via franchising to remove some of the business overheads and day-to-day hassles of operating multiple, corporate-owned outlets.
The business format franchising model has proven time and again that it weathers economic storms and adversity well. So perhaps there is an opportunity for franchisors to take some time to focus on the future and how they are going to hit the ground running once the clouds lift.