Supporting the Franchise System During the Next Phase of the Pandemic

Joe Fittante, admin July 1st, 2020

Many local communities and states have started lifting COVID-19 stay-at-home orders allowing businesses to reopen, while others are requiring businesses to once again shutter their doors. Our franchise team is busy providing guidance to our franchisor clients on how they can assist their franchisees with reopening and how they can best support franchisees located in hotspot communities potentially facing another round of business closures. The following is a summary of some of the ways a franchisor can support its system during this next phase of the pandemic—support which should be balanced by providing general guidance that is not specific to any particular franchised location. Franchisees should be reminded that all guidance is provided with the understanding that franchisees are individually obligated to comply with all local, state, and federal laws.

Maintain a Consistent Communication Strategy with the System

As businesses continue to reopen, and just as importantly if some businesses that reopened must now close again, franchisors should continue to maintain strong and consistent communications with their franchisees, just as they did at the onset of the pandemic. Franchisors should provide timely and clear guidance to the entire system on reopening issues such as heightened cleaning protocols, social distancing measures, operational changes and procedures for handling workplace exposures. If franchisors are going to continue any relief offered to the system, such as continued royalty relief, this should be clearly communicated, as should any additional relief provided to outlets that must close again. In terms of these reopening protocols, the franchisor should work with its franchisee advisory committee in rolling out the protocols and attempt to obtain its buy-in before rolling them out to the system. A strong franchise advisory committee can be used to help stress to the franchise system the importance of following the reopening protocols.

Focus on Brand Marketing

Franchisees have enough on their plates and should be able to rely on the franchisor to produce brand marketing that projects a strong image of a safe and thriving business concept. Franchisors can also invest in brand marketing that informs customers of any systemwide changes resulting from the COVID-19 pandemic, including describing enhanced safety measures to provide assurances to potential customers.

Provide Guidance on Reopening (or Reclosing) Protocols

Reopening protocols will largely be driven by local and state requirements but that should not stop a franchisor from providing general guidance and resources for reopening plans. Franchisors should encourage franchisees to create plans that contemplate reduced hours, reduced capacity, curbside service, and social distancing. Relevant resources should also be provided, like links to state health information, the CDC’s website and the National Retail Federation’s Coronavirus Resources for Retailers. Franchisors should also be prepared to revisit their prior guidance on temporary business closures if franchisees are forced to close their doors again and consider what new information can be provided to support franchisees faced with repeated closings caused by local orders or internal exposure to the disease. Template communications for franchisees to use to notify its customers of a reopening or reclosing will also be appreciated by the system.

In connection with their reopening protocols, franchisors should also consider whether they will require franchisees to mask their employees and if so, provide guidance on the type of mask and address any prohibitions related to accessorizing the mask with non-brand messages or images.

Assume Exposure is Inevitable and Prepare the Franchise System

Franchisors should encourage their franchisees to be proactive and develop a protocol in the event of coronavirus exposure by an employee or customer. Franchisors can assist with providing customer notification templates, cleaning, and disinfecting protocols developed by the CDC, and additional resources from local, state, or federal agencies. Again, much of the franchisee response will be dependent on local laws and regulations but additional resources provided by the franchisor will help its franchisees quickly respond in a manner that focuses on the health and safety of employees and customers.

In the same vein, franchisors should have a protocol to address any negative publicity resulting from COVID-19 exposure at a location. A franchisor should have a reactive policy statement that it can immediately post to social media to address any negative social media impacting the brand arising out of a COVID-19 exposure at a location. It should also have a reactive statement that can be used by the franchisee of the affected location. A franchisor should also have clearly stated requirements as to when it will require a location to close due to COVID-19 exposure and when it will allow it to reopen.  If the franchisor maintains company-owned locations, the franchisor should determine the point at which it would be unable to successfully operate a location due to COVID-19 exposures to employees of the location and then communicate at what point it would require a franchisee to reduce or shutter its operations based upon employee COVID-19 exposures.

Address Franchisee Non-Compliance

The entire franchise system may not be onboard with following local or state requirements or systemwide operational changes. For example, a restaurant franchisee may not abide by customer capacity restrictions or a fitness center franchisee may open its business before a state has lifted its mandated closure restrictions. Franchisors should be prepared to address these issues as consistently as possible with clear communication to the franchise system and, in some circumstances, to brand customers. Franchisors will also want to remind franchisees of their obligations in their franchise agreements, particularly when a franchisee decides either to reopen late or not at all.

These resources are intended to focus on the phased reopening of franchised businesses. Additional resources applicable to franchisors and other business owners can be found in our COVID-19 Resource Center.