How can Franchisors support franchisees during the coronavirus?

The franchise industry has not been immune to the effect of the Covid-19 Pandemic. As a result, franchisors may want to consider some of the following measures to ease the burdens, both financial and otherwise, that their franchisees are currently enduring.

The first option is for the franchisors to lessen the amount of royalties collected from the franchisees. For example, franchisors could delay royalty payments for the next couple of months and then have the franchisee start slowly paying them back on a month to month basis. Of course, a franchisor could also lessen the percentage charged monthly or even forgive royalty payments altogether.

The second option is to maintain open lines of communication with the franchisees. While this is most likely already a standard operating procedure, there is a greater sense of urgency than usual during these trying times in which the franchisees may require immediate assistance from the franchisor.

The third option is for franchisors, who are typically in charge of nationwide advertising, to have an appropriate advertising campaign that emphasizes social distancing, and keeping both the customers and franchisees safe.  In the alternative, the advertising or marketing fee could be waived altogether during the pandemic, freeing up much needed cash for the franchisees.

The fourth and final option is to transfer the resources meant for recruitment and dedicate them to the maintenance and upkeep of current franchisees. During the ongoing pandemic, resources used for the recruitment of new franchisees can be put to better use serving existing franchisees, since many investors are unlikely to purchase a franchise during these turbulent times.

For more detailed information on how franchisors can assist franchisees, please contact franchise Attorney Mario L. Herman.