COVID-19 Considerations for Restaurant Franchise Systems

COVID-19 has forced businesses to transition quickly into a new environment if they are going to make it. Here are some of the following recommendations franchise systems and, more specifically, restaurant franchise systems can implement.

First, it is still vitally important that a restaurant franchise is following CDC, Federal, State, and Local guidelines for combating COVID-19. If nothing else, a business should demonstrate a good faith effort in trying to implement all of the guidelines.

Second, restaurant franchises should think about gearing more towards delivery. Although, this is more of a business decision rather than a legal one and should be done on an individual case by case basis. The benefit of orienting your business around delivery is that you would still be able to operate during a lockdown.

Third, restaurant franchisees should consider talking to their landlord about their lease agreement. It is advised to have competent counsel present when speaking with your landlord. Maybe you can arrange for rent relief or flexibility in the payment schedule. If the lease agreement has a Force Majeure provision, then the restaurant franchisee might be entitled to rent forgiveness. Force Majeure provisions were discussed in the In re Hitz Rest. Grp. case, which was discussed in a previous blog (link).

For more information, please contact franchise attorney Mario L. Herman.