Lara Sinclair — 2 October 2020
Most franchisors have taken an active role in helping franchisees to navigate the changed landscape, impacted by the COVID-19 pandemic, with the most common areas of concern including landlord issues, the “wellness” of franchisees and corporate staff, and franchisee financial performance, according to a recent survey from the Franchise Council of Australia.
So how are franchise organisations and franchisees around the globe working together to survive and thrive?
A large majority of franchisors have reported assisting franchisees with landlord negotiations at a time of reduced revenue for many. Controlling fixed costs when revenues may be lower is a key requirement for a franchise to negotiate this period successfully.
They are also providing advice and assistance on how to access government support programs and comply with new regulations affecting the provision of products and services.
Around 7 in 10 franchise organisations are offering increased marketing support, according to the FCA survey. The strategies quoted in the report are borne out in franchise markets internationally.
For example, US pizza chain Papa John’s is spending USD$80 million to increase marketing and franchisee support, including the launch of a new advertising campaign to promote brand ambassador Shaquille O’Neal, and making additional contributions to its national marketing fund.
Real estate chain, Ray White, which uses Outfit to automate its live data-led campaign promoting local real estate market figures, shifted marketing spend into digital and social channels over above-the-line advertising. The need to communicate with customers during COVID-19 boosted franchisee adoption of branded marketing collateral to 95% and the resulting ‘blanket’ coverage has led to year-on-year growth in live listings, registered bidders and pre-approved loans.
Many chains, such as Australian financial services provider Bendigo Bank, which operates a mix of owned and franchise outlets, have reported creating COVID-19 marketing ‘packs’ to help brands communicate key issues such as hygiene measures and social distancing requirements to customers.
Baked goods chain Baker’s Delight also put brand automation technology to good use assisting franchisors to localize on-brand marketing materials to quickly reassure and continuously inform customers as the pandemic hit.
Mandated marketing support is regarded as one of the strengths of franchise networks in a recessionary environment.
Increased communications is important in times of difficulty and crisis. Franchise organisations are boosting the distribution of helpful content to franchisees where they can.
US Planet Fitness franchisee, Omar Simmons, credits best-practice knowledge-sharing throughout the fitness chain network in areas such as landlord negotiations, marketing, and development as key to the brand’s ability to adapt to the changing landscape.
US senior care company Best Life Brands also reports offering virtual ‘discovery days’ to help onboard and train new franchisees.
A majority of franchisors have extended direct financial relief with close to 8 in 10 either offering a royalty reduction or deferral to affected franchisees. One in two offered a marketing fee reduction or deferral, according to the FCA.
Flame Broiler, the Korean inspired rice bowl restaurant, has announced that its corporate officers will not draw any salaries in an effort to sustain corporate staff. The brand is also forgiving some franchisee advertising fees and lowering royalty fees from 5% to 3%, among other support measures.
Interestingly, in the UK, Seniors Helping Seniors implemented a pay increase for carers providing in-home care for seniors.
“The business has proved sustainable and recession proof during COVID and we are growing as more and more families realise they want the care for their loved ones to be delivered at home by the same person who they will genuinely get on with, so celebrating our carers for all their amazing skills and dedication was a priority for us,” the organisation commented.
More than one in two franchise organisations are introducing new products or service offerings, the FCA survey indicates.
In the US, pretzel chain Auntie Anne’s started selling DIY pretzel kits, enabling families to create their own pretzels at home; meanwhile Boutique fitness brand StretchLab pivoted almost overnight, turning studios into virtual studios with its online ‘Go’ platform.
In Australia, fast food chain McDonald’s began selling milk and bread from its contactless drive-through outlets.
Across the board, franchise systems are upping the ante when it comes to developing, communicating and implementing more stringent hygiene requirements.
In the UK, mobile massage provider Massage2Mummy experienced a new acceptance of its in-home service delivery model once massage treatments were allowed again in July. The company added personal protective equipment and an extra layer of pre-appointment health questions to its regular service.
Some franchise systems reported offering a re-opening training program to ensure staff were aware of the new processes and procedures for sanitation and cleaning and to provide franchisees with peace of mind about their own safety.
The most effective forms of franchisee support will vary between networks and locations, with suburban locations often faring better in the current climate than city locations because of the trend towards remote working.
Whatever the formula that best suits a particular network, the ability to offer regulatory advice and royalty relief, to continue marketing, to share information and best practice, and to maximise outcomes for resource allocation should hold franchisees and franchisors in good stead as they work together to navigate the difficulties of 2020.