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Franchisor-franchisee relationships during a pandemic

On Behalf of | Mar 31, 2021 | Franchise Agreements

The impact of COVID-19 on businesses over the past twelve months has been well documented. Some had no choice but to temporarily or permanently shutter their operations. Others have remained open but continue to struggle with government-mandated restrictions and outright shutdowns.

Owners of franchise stores, restaurants, or gyms are feeling that pain as well. However, they are on the front line and have to answer to their franchisors. Many struggle to stay afloat, lacking the resources that their franchisors enjoy.

While words of support are important, it does not replenish the money in their diminishing coffers. Deferring royalty payments while franchise locations are not in operation only makes a bad situation worse. No money coming in means no money available for the franchisees.

Providing actual help makes a difference.

Working together to ensure success

Some franchisors have stepped up to employ creative means to help their franchisees. Some are sharing “real-time” information” to ensure open lines of communication. Others offer Zoom-like tutorials on how to apply for the Paycheck Protection Program. One major restaurant chain has gone so far as to provide cash advance payments and rebates that have totaled $70 million.

Franchisors have also adapted to a “new normal.” Many simplified their menus and reduced their space requirements. Most important was the incorporation of drive-throughs for restaurants that previously only offered in-store purchases. While curbside pickup has become a popular option, it does not always account for the last-minute lunch or dinner decision.

The franchisor-franchisee relationship is complicated, if not, at times, tenuous. Partnering together during a crisis and remaining flexible based on the conditions they are facing can maintain a solid relationship during and following a worldwide pandemic.

*NOTICE: This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.