How Franchises Can Cut Costs During the Coronavirus Pandemic

With companies across the country forced to temporarily close their doors due to the coronavirus pandemic, there’s no shortage of business owners wondering how they’re going to make it out on the other side. One of the major benefits of being a part of a franchise system is that franchisees have a built in support system through the franchisor, and right now, franchisors across the globe are looking for ways to save not just themselves — but their local owners — money. 

Aaron Stahl, president and CEO of P3 Cost Analysts, helps brands optimize their bottom lines regardless of the state of the economy. Now that things are indefinitely stalled, he says that not cutting costs can have dire consequences. 

“Normally, we’re working with our clients to help them save money so they can reinvest in things like employee benefits, growth or distributing profits,” said Stahl. “Now, in a situation like this, some business owners need cost reduction services to keep their lights on.” 

One simple thing that brands with brick and mortar locations can do to cut costs is reduce their trash services. This is especially helpful for restaurant groups or service brands that are no longer serving customers in-house. 

“A lot of people don’t know that businesses can adjust their trash services as needed, but they can,” Stahl said. “If that’s something that you’re looking to do, make sure that you don’t extend your current agreement with your hauler. Most haulers use service changes as a chance to get clients to sign new paperwork that extends their services. That’s what locks people into bad contracts.”

Another thing franchisors can do to save money is appeal property taxes. According to Stahl, whether it’s done this year or next, finding an expert who has successfully appealed property taxes can help drive value back to a franchisee’s bottom line. 

Additionally, franchisors can look into what they’re spending on telecommunications. “It’s a small thing, but it has the potential to add up,” said Stahl. “It’s worth going through every phone line and extension to see what’s really being used. You might be paying for something that isn’t in use.”

Utility expenses may also need to be reevaluated. “I’d recommend that franchisors engage with a professional auditing firm to take a look at their fixed cost on the utility side,” Stahl continued. “There are markets around the country where business owners can shop around and get bids from different energy suppliers. Now is also a good time to lock in pricing since natural gas and electric prices are low.”

In addition to cutting costs, the current pandemic gives franchisors the opportunity to look at the aspects of their businesses that determine their bottom line. According to Justin Waltz, vice president of operations for Big Blue Swim School*, now is the time to rebuild any aspect of the business that isn’t working in order to save money down the line.

“During this down time, we have the opportunity to take our strategic plan, tear it up and make every element of our business fight its way back in,” said Waltz. “Now is the time to look for places where we can make cuts and evaluate areas of the business that aren’t functioning. This is also an opportunity to bring back old customers while taking a look at customers who may not be worthy of our business. The same goes for vendor partners—we have the opportunity to be more efficient. Instead of looking for ways to cut costs, look at the business itself and find ways to get better.”

Now, franchisors also have the opportunity to provide resources for franchisees that they may not have had time to prioritize before. While ongoing education or new training courses may not lead to cost savings immediately, over time, the benefits will pay off.

“We’re developing core competencies that we never thought about before,” said Waltz. “For example, I’m giving public speaking classes for my team. It’s optional, but people are excited about it. Our executive team is also offering classes on email and time management. As leaders, these are all things that we may not have had the time to do in the past. Now, we have nothing but time on our hands to help franchisees develop their skills, which will ultimately make our business more efficient.”