keep your franchise business stable during the pandemic


As per the FCA (Franchise Council of Australia), the franchising industry in the country has approximately 80,000 individual franchised outlets with an estimated value of over $180 billion. Across the nation, franchising is a robust sector. It encompasses many massive well-recognised brands to smaller operations offering professional services, real estate, gardening, food and retailing services.

Like most other businesses, the franchise space too, has experienced upheaval during the pandemic. Economic conditions are under enormous pressure and are looking bleak, increasing the pressure on revenues. It also means that commercial leasing agreements are increasingly coming under greater scrutiny and franchisees are having to make tough calls on staffing.

The Importance of Strong Business Relationships

Maintaining functional working relationships between franchisees and franchisors is crucial now, more than ever before. Today, many businesses in this sector have found themselves faced with making tough decisions to ensure viability in the long term. This also makes maintaining a strong business relationship crucial.

Every franchise network has some contingency plan in place to stay afloat during a difficult time. The pandemic has been unprecedented and created stresses and pressures for franchising businesses big and small. However, as a community, franchisees are dynamic and persistent.

They always try to find ways and means of doing things that will help solve the issues they face. But in the current situation, many things that might have worked in regular times don’t any longer.

Things to Focus On

Here are some aspects you can focus on to keep your franchise business stable during the pandemic.

1. Self-assessment is Crucial

It is necessary to carry out some self-assessment, whether you are a franchisee or franchisor. Some things you should be asking yourself include:

  • Are you entirely honest with the opposite party?
  • Are you keeping the other party’s interests in view, while taking into account the overall effect of the pandemic?
  • Are you responding appropriately to the current circumstances and making timely and objective decisions?
  • If you are a franchisor- are you having discussions with your franchisees regarding potential changes you plan to implement to protect your business?
  • Are you considering imposing conditions that aren’t currently required for the express purpose of protecting your business?
  • Are you fair and unbiased?

Franchisors and franchisees must sit across the table and have discussions regarding challenges that both the parties may be facing. Working together can help find practical and doable solutions that will benefit both parties.

Be Proactive With Communication

Since everyone is currently under a great deal of pressure, it is but natural that some disputes will arise. When dealing with these disputes, it’s crucial to try your best to solve these problems in line with the processes mentioned in the franchising agreement. As long as everyone acts honestly and fairly, it means you are working in good faith. The approach the franchisor and franchisee take at this point will have a bearing on your business relationship after the COVID-19 crisis has blown over.

About Franchising Fees

Many franchisees have suffered significant losses due to a considerable dip in business or temporary closure. If franchisors continue to charge the standard franchise fees in these circumstances, that can mean they are breaching their duty of good faith. But most credible franchisors are supportive of their franchisees and are doing everything they can to see that their business partners can stay afloat during the pandemic.

Most are doing everything practically possible to protect their legitimate business interests adequately. That is crucial as it will be a significant contributing factor to the long-term sustainability of any franchise network. Some franchisors have provided their franchisees with a reduction, waiver or deferment of fees.

Once these issues have been dealt with and settled, there are certainly other areas that franchisees need to focus on as well:

  • Make sure that you are meeting all your obligations listed under the franchising code of conduct.
  • Review and update your business continuity plan. This will help ensure that your business has the necessary resources and tools to continue operating in the current conditions and post the pandemic too.
  • Check and assess your finances because the outgoings of your business remain even during lax periods such as these. Thoroughly assess your outgoings and determine which areas you can apply for assistance or cut costs. You must have a frank discussion with your franchisor at the earliest. That will help them provide guidance and implement measures to reduce the overall financial impact on your business and your livelihood.
  • In these times, supply chain disruptions are inevitable. You might find it challenging to source raw materials and maybe facing cash flow problems as well. Discuss all your concerns with your franchisor as and when they crop up as they can help and support you as much as possible.
  • Depending on the type of franchise you have, you may be able to go virtual or offer delivery services (in case you are in the food business). In franchising, adaptability is everything, and that can help you tide over this rough patch.
  • Always keep the communication lines between you and your customers, stakeholders, and employees open. After all, this situation has impacted them too. So, if you are altering your operational processes, changing your business timings or introducing any other changes, make sure you communicate these to everyone in the equation.

Support in Different Forms

Know that you can get help via the Franchise Council of Australia and the Australian Competition and Consumer Commission. The COVID-19 Resources section on the FCA website has a lot of helpful information for both franchisors and franchisees.

The pandemic has disrupted lives and businesses everywhere, and to some degree, it has slowed down the development of new franchising ventures, not just in Australia, but throughout the world. However, this is the time to reevaluate your business and fine-tune systems and operations.

It’s the best way to come out of the other side of this situation with minimal impact on you-professionally and personally. Check out moderated forums online and get guidance from the ACCC. Maintain your positivity and prepare for a more sustainable and brighter future.

If you want any additional information or support and pointers on how to get through the current situation with the least impact, contact the experts at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact us form, and one of our experts will contact you as soon as we can.

Thanks for reading,
The Franchise Institute Team
1300 855 435

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