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What COVID-19 Means for the World of Franchising

02-03-2021 by Emily Hagen
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The state of the world today is not something anyone could have predicted and is certainly not quite like anything our generation has seen before. COVID-19 has gone beyond being just a global health crisis and has now touched just about every component of our lives, both personal and professional. 


As a business owner, you may be struggling to stay afloat amidst forced closures, public uncertainty, and social distancing limitations. Independent business owners, franchisors, and franchisees alike are all nervous about what the future holds for the state of the economy and their own livelihood. 


Sadly, we’ve seen many businesses already succumb to the mounting pressure of the pandemic. 


The interruptions to business come in the form of supply chain disruptions, mandated closures, staffing shortages, fewer sales, limitations on services, and increased health and safety requirements that might be difficult for small businesses to keep up with. 


But all is not lost! While this is no doubt a challenging time, there are several programs and initiatives that you can take advantage of as a business owner to make it through to the other side. 


One day soon, this will all be behind us. And while many parts of our lives are likely permanently changed, everyone is ready to welcome back some sense of normalcy. Make sure you take the steps now to ensure that you will be open and ready for business when that time comes. 


Let’s dig into exactly what that means for your business (or your plans to start a business of your own.) We’re going to focus on franchise businesses in this article, but much of the advice laid out here can be applied to just about any business format.


Be sure to stay up to date with how the COVID-19 situation unfolds, and keep up to date with the latest information in the franchise industry by subscribing to our blog. 

For Franchisees

If you’ve been thinking about investing in a franchise, you may be wondering if that is still a good idea. The COVID-19 pandemic may have paused your plans or even initiated a hard stop altogether. The best thing for you to do is to not let fear cause you to pull the plug prematurely. 


While you certainly want to be cautious, even more so than before, when investing in a franchise, you may not need to put your plans on hold. 


Several industries are actually thriving during our new era of social distancing (perhaps it’s time to open up a cleaning franchise?). Even within industries that have taken a hard hit, there are certain franchises that have found innovative ways to adapt to the current situation. 


Take, for example, CITYROW, a boutique fitness studio franchise. CITYROW has launched new programs to provide additional options for customers that might still be hesitant to work out in a class setting. These include outdoor rowing classes, rent-a-rower programs, limited capacity open row sessions, and access to online classes through their CITYROW GO mobile app. 


Any reputable franchisor recognizes that this is a difficult time for their franchisees. Many are offering discounted franchise fees while we continue to face this struggle together. 



The Outlook

According to a study from Franchise Insights, prospective franchisees are more likely now than ever before to go through with a franchise purchase. As the pandemic pushed through into the summer, even some of the hardest-hit industries, like restaurants and food service, experienced a surge in franchise interest. 


Making an investment into a franchise now could prove to be very profitable, as consumers are gearing up for the time where we can put all of this worry and isolation behind us. 

Resources for Business Owners

Legislation that has been passed in response to the pandemic includes the IMPACT for Small Businesses Act (Immediate Measures to Protect Against COVID-19 Threats for Small Businesses Act). The purpose of this bill is to increase small business lending to $50 billion, to waive certain fees for new businesses, to increase individual loan amounts, and to increase loan guarantees. The IMPACT for Small Businesses Act also works in conjunction with Economic Injury Disaster Loans, or EIDLs.


Additional resources:


What Does All This Mean for You?

If you decide to move forward with your franchise purchase during this time, you may also benefit from certain financial incentives, including: 


  • Higher loan approval rates

  • Lower interest rates

  • Easier access to Small Business Administration (SBA) loans


Now, more than ever, you may want to weigh the benefits that franchising has over starting your own independent business. The COVID-19 pandemic is a perfect example of a situation where you want the support of a franchisor behind you. 


The benefits of being a part of a franchise system include:


  1. A strong support system and a clear roadmap

  2. A tried-and-true business model

  3. Brand recognition and customer loyalty

  4. Earlier profitability

  5. Easier access to funding

  6. Training

  7. Peer support

  8. Real estate assistance and territory protection

  9. Marketing perks

  10. Scalability and growth potential


Be sure to do your due diligence when making your investment decision. Take a close look at the franchisor’s business model and plan of action for business interruptions (looking at their response to COVID is a great way to see where their priorities lie). 


Of course, never feel pressured to do anything before you’re ready. This is your future—it’s a big decision, and it is YOUR decision, no one else’s. 


So whether you’re ready to get started or you simply want to explore your options, check out available franchises in your area!

For Franchisors

Proactive, well-planned measures are always better than a haphazard, reactive response. Develop a crisis management plan if you don’t already have one, and be sure to tweak it as you go along to better fit the needs of the situation.


Always have a plan for the worst-case scenario, even if you never have to use it. Consider business interruption insurance to cover expenses related to disasters and extreme circumstances. 

Support Your Franchisees

Your franchisees are such an important part of your business. Without them, your franchise business would not exist. Keeping up morale with your franchisees will not only help them make it through the roughest times, but it will also instill confidence and trust. Word of mouth goes a long way in franchise development, and if your franchisees have good things to say about you, you’ll be much more likely to attract new prospective franchisees to help you grow your brand.


Here are some specific steps you can take to support your franchisees

  • Adjustments for limited staffing

  • Social distancing protocols for staff and customers

  • Enhanced cleaning protocols and adequate supplies

  • An open ear to listen to your franchisees’ needs (what is it that they are struggling with, and what can you do to alleviate it?)


Some resources that you might find useful:

  1. Interim Guidance for Businesses and Employers Responding to Coronavirus Disease 2019 (COVID-19)

  2. Coronavirus (COVID-19): Small Business Guidance & Loan Resources

  3. U.S. Chamber of Commerce Guidance for Employers to Plan and Respond to the Coronavirus


The Force Majeure Clause of the Franchise Agreement allows for extenuating circumstances to change certain requirements, such as the time frame for franchisees to build out and open their location. The Franchise Agreement also specifies how to handle supply chain interruptions and who that responsibility belongs to.


Learn more about how franchising is likely to change as a result of COVID-19:

  1. Coronavirus and Franchising

  2. Franchise Registration States Attempt To Accommodate An Industry Impacted By Coronavirus

Adaptability Is Key!

According to Yahoo Finance, franchises that adapt to the evolving situation are setting themselves up for a quick recovery once regular business operations resume. By having a plan of action, you are that much closer to recovering and keeping your company alive and well.

If you didn’t already have one, the COVID-19 pandemic likely convinced you that you need to have a contingency plan in place. Your franchisees are likely relying on your support to see this pandemic, and the impact on business, through. 


If your business is recession-resistant, now is the time to put that claim to the test and make adjustments to policies and procedures as needed.


The most important things during this time will be open communication, enhanced safety protocols, and back-up vendors to avoid interruptions to the supply chain.


Deadlines, travel requirements, and special offerings may need to be adjusted for the foreseeable future. Adaptability will be key, now and until an effective vaccine is developed and distributed for the virus. 


Even then, there will be some lasting and permanent effects on how we do business as a result of living through this experience. It’s very likely that things will never quite return to business as usual. We’ll all have to adapt to a new normal. 


It may seem like the threat of the virus is fading, but it still remains an imminent threat to the health of the U.S. population. Keep wearing your mask, wash your hands, and practice social distancing wherever possible! Let’s not undo our efforts to combat this virus and keep our communities healthy and safe!

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