by John Francis

Is This For Real? YES, Now What?

Mar 25, 2020 1:59:56 PM Franchise Planning, Franchisees, Franchisors

With the unexpected Covid 19 CoronaVirus outbreak, so much has changed over the past few weeks for everyone, including the franchise industry. Even though people and businesses were unprepared, we’ve seen a tremendous response on what can be done...

So what are people doing to handle the crisis?

Over the last few days, I’ve been very busy speaking with my clients, reading and studying, paying attention to everything I can get a hold of, and trying wherever I can to help. There have been varying degrees of impact across my franchise-related client base. Although I am witnessing many businesses that are closed or closing, I am also seeing various opportunities that are coming from all this.

For example, a janitorial service brand that instead of cleaning on a regular schedule, they are offering deep-cleaning and disinfecting services so that when their clients employees are allowed to return to work, their facilities are completely sanitized. On a different note, a construction retail-buildout company is asked to delay the completion of a new franchisee location, delaying the grand opening of a new location until better times, the franchisee owner is seeing an opportunity. Those that are laid-off are being picked up by other locations that are remaining open. There is opportunity in a crisis, sometimes hard to find, but it’s there, always.

Helpful Resources

If you weren’t already aware, the International Franchise Association (IFA) are offering a number of useful webinars that can be found here.These are being recorded and available to members and non-members alike. I’ve participated in many and find them to be well done.

Other industry associations are coming together, such as attorneys, accountants, suppliers and other franchise industry groups are organizing themselves to share ideas and best practices. There is a lot of great information being shared right now, and if you’re working from home like a lot of us are, take advantage of the resources available to you. Lots to learn!

Make Sure You are Communicating

Through all this current chaos, what is most important and most critical in your business is communication. Whether it’s to your internal and external audience, and marketplace, your communication will serve an important purpose at this time. My advice is to always be open and honest, be calm and consistent and have a structured message before you send it out to your various audiences.

Some great points when crafting your messages:

  • Create a script, be prepared in advance, as much as possible
  • Make sure you organize your points, keep it clear, logical and organized
  • Know what you’re going to say before you say it, try not to improvise, rather plan ahead
  • Clearly state the facts, not the emotion behind the decisions
  • State the “why” behind the decisions being made, share the impact
  • Maintain flexibility / agility, things will change, there is plenty of uncertainty, you’ll need to be able to change again and again as this crisis unfolds over time.

One effective way to get your message across is creating webinars or videos that are easily accessible to your employees and franchisees and social media. Using personal presentation along with slides and graphs and bullet points. Some brands are already doing this, and I think it’s a very effective way to communicate in this fast moving and dynamic situation.

Understanding the Difference Between Layoffs, Furloughs and Pay Cuts

When it comes to the employees, as an owner, it’s important to know how you manage the options and choices for your cash-flow, either taking a pay cut, making layoffs or requesting a furlough. If you’re lucky enough to suggest temporary pay cuts, they need to start at the top (with you) and you need to at least pay minimum wage to avoid other headaches. I’m seeing some employees are volunteering to take pay cuts as long as more of their reporting staff can stay employed, some taking as much as a 50% cut in pay.

With a furlough, you are releasing an employee of their duties with no pay, however, it’s only temporary expecting them to be able to return to work at a later time. Unfortunately, with layoffs, these are more permanent, with an employee being let go, because of circumstances that are beyond their control, and you don’t expect them to come back.

Don’t Forget Your Landlord

Be sure that you are communicating with your landlords what your circumstances are, so you can maintain a good relationship with them. Typically, I’d suggest you request a rent deferral or a rent abatement or some kind of negotiation to keep your store open until after this crisis passes. Gather and share data and facts about what you’re seeing in terms of traffic or volume of revenue so you know how to forecast how much you need to request. Not knowing how long this situation may last, maintain your flexibility and communicate your willingness to work it out. There are options to consider such as lease extensions and term restructuring. Everyone is dealing with this case by case, I heard the term ‘one size fits none!’

Lenders and Vendors

Most lenders are also offering relief in terms of payment deferments, SBA loans and other disaster relief programs and more are already being offered, and enhanced. My suggestion is to communicate and work with your lender to get the program that's best for you and your situation, there are many complexities and choices to consider. Probably there will be new government programs to be determined soon, make sure you’re exploring all the options and get professional help!

With vendors and suppliers, most businesses and brands are suspending non-critical accounts temporarily to maintain their cash. If you have a membership or other liability that is due, instead of paying the full amount, consider paying a small portion, and letting the vendor know you want to continue the membership or account as open and active, and will pay the rest at a later date. More likely, the vendor will honor that, knowing of the situation that everyone is in right now.

Opportunity In Chaos - what's new?

Now would be a great time to plan or consider new strategies for the remainder of the year while you have the free time. Every company I'm working with right now is redoing their budgets and forecasts because obviously everything has changed. Planning for revenues down twenty five percent, or down fifty percent, or more? Keep asking yourself and your team - What if? What if? What if? And they're making those assumptions and they're trying to forecast many expected decisions, and when they get there, they'll know what they need to do. Take away the emotion and speculation, try to gain some clarity and get comfortable with the uncomfortable.

Believe it or not, there are some folks that are now taking the time to work on new strategies and opportunities, things like setting up a new board of advisors, reconsidering and rebuilding their organizational structure, looking at new ways of offering and pricing their services, all things they wanted to work on but they were too busy to do it before. Now is a good time to do things of that nature, spend the time now to brainstorm and blueprint or plan for new initiatives.

When it's over?

I believe we'll be better and stronger on the other side of all this. There will be new experiences, new behaviors and new approaches that will keep this from ever happening again. Some of my clients are anticipating other competitors not making it through, and they are positioning for growth and ready to take advantage of those new locations, customers and new staff that'll be available. To whatever extent you can think beyond the immediate situation, start preparing for it, try to be proactive, after you’re done being reactive!

I also think there are some real-life silver linings to this. I’m used to working from home and have for many years. I think a lot of people are learning how challenging that can be, and they're also learning how fun it can be. The family time with your kids being home and everyone locked-in creates a certain amount of stress, and also creates great opportunities to connect and bond and be together, that's a real-life opportunity right there!

So - good luck, stay healthy and take care, and if you’d like to talk about your situation and connect to share some ideas with me, please reach out - I’m happy to help!

John Francis

Written by John Francis

About the Franchise Expert


John Francis is an enthusiastic, engaging, and entertaining public speaker because he speaks from experience and he speaks from the heart. Franchising is in his blood, and his parents were true pioneers in the industry, turning their family haircutting business into a 1,000-salon franchise empire. He has been a franchisee and a franchisor, and has a deep understanding of the issues both face. Book John to speak at your event, and you and your franchisees will learn how to look at your business in new, positive, and profitable ways.

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