Aug 31, 2020 - Blog, Coronavirus, Franchise Articles by |

With the novel coronavirus pandemic affecting businesses across the United States in unprecedented ways, franchisors’ responses have largely fallen into two categories: There are franchisors that have stepped up to help their franchisees survive, and there are those that have chosen to aggressively enforce franchisees’ standard contractual obligations—even knowing that their inability to meet their financial obligations is a direct result of the COVID-19 crisis.

Franchisors Need to Support Their Franchisees During the Novel Coronavirus Pandemic

In a recent blog article, the International Franchise Association (IFA) writes that it is now more important than ever for franchisors to support their franchisees. As the author, Lauren Moorman, writes:

“[M]any of the most vulnerable franchise systems will be looking to mitigate those losses by scaling back spending and imposing new austerity measures for franchisees.

“This is a mistake.

“While budget-tightening will be unavoidable for most franchise systems, franchisors should be careful not to create new burdens or restrictions on franchisees. . . . Instead, franchisors in every segment should focus on fortifying their front lines, ensuring that franchisees have everything they need to stay afloat now and recover quickly later . . . .”

In order to help their franchisees weather the storm and ensure that their brands remain as strong as possible, the article recommends that franchisors take several steps during the COVID-19 crisis. Some of these steps include:

  • Listening to Franchisees’ Concerns – Franchisees are on the front lines; and, while franchisors are feeling the effects of the COVID-19 crisis as well, it is generally franchisees who are at the greatest risk for losing their businesses. By understanding what franchisees need, franchisors can tailor their response efforts in the most-effective and most-efficient way possible.
  • Helping Franchisees Pursue Financial Relief – While the federal paycheck protection program (PPP) stopped accepting applications on August 8, other financial relief options remain available. By leveraging their resources to gather and share information about these options with their franchisees, franchisors can help their franchisees remain operational.
  • Continuing Efforts to Grow the System – “Historically, down economies are ripe times for franchise sales.” By targeting prospective franchisees who are considering their options during the pandemic, franchisors can bolster the strength of their franchise systems.
  • Adapting to the Realities of the COVID19 Crisis – Unprecedented times call for unprecedented adaptations. By making the necessary changes (and allowing their franchisees to make the necessary changes) to adapt to the current times, franchisors can give their franchisees the best opportunity possible to survive.

Ultimately, franchisors that take the necessary steps to support their franchisees are likely to be those that bounce back the quickest once the economic impacts of the novel coronavirus pandemic subside. Franchisors owe their franchisees these efforts; and, in many cases, those that come up short can – and should – be held legally accountable.

Contact National Franchisee Lawyer Jeffrey M. Goldstein

Franchisee lawyer Jeffrey M. Goldstein has more than 30 years of experience exclusively representing franchisees and dealers, and he is actively counseling franchisees across the country during the COVID-19 crisis. If you have questions and would like to speak with Mr. Goldstein in confidence, we invite you to call 202-293-3947 or contact us online to schedule a free initial consultation.

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