Coronavirus and Franchising Webinar: FranNet CEO Jania Bailey

The Coronavirus continues to cause many businesses to hit the pause button, if not altogether cease operations, and brands of all sizes within the franchising industry are strategizing the right moves for survival. 

To that end, 1851 Franchise publisher Nick Powills and Charles Internicola, founder and partner of the Internicola Law* Firm, are covering the Coronavirus and its impact on the franchising industry through a webinar series titled “Coronavirus and Franchising: Mindset + Strategy to Recover and Grow.”

In today’s morning webinar, Powills and Internicola spoke with FranNet CEO Jania Bailey. 

Here are key insights from their discussion. 

Both individual people and brands need to find a balance.  

This is a time of great uncertainty and extremes. Brands are either afraid to do anything or of doing too much, so they need to find a balance between the two. 

As more people work from home, they must ensure their work does not consume them. They must know when to disconnect. 

People must also learn when to unplug from the news. From stock market crashes to the attacks of 9/11, there are no historical precedents for the Coronavirus crisis. There are growing death reports every day. Individuals must learn when to unplug from the constant negativity. 

There is a tremendous amount of fear, which is understandable. This is why we must find that balance and not let fear consume us in a way that won’t allow us to take steps to preserve our companies. 

The franchising industry is not without its vulnerabilities. Some fast food brands, for example, are trying to survive on drive-thru alone, and that’s not an easy path forward. The issues we are facing now are real, and we must stay on top of them while also planning for what to do when this crisis passes. 

Brands need to look at their money. 

Brands need to understand what cash reserves they have. They must also look at their expenses and decide what are the must-haves and the nice-to-haves and shut off the latter group.

Brands must have a realistic view of their financial health and have 30-, 60- and 90-day plans. At this point, no one knows what will happen 90 days from now, so brands need to reassess their plan every 30 days going forward. 

Coronavirus and the ensuing crisis will not go away quickly.

Everyone needs to be realistic: this is going to be a long-term problem. As soon as the problem begins to go away, that does not mean we can flip on the lights and go back to normal. Brands must remember they are responsible for employees and have plans laid out for best-case and worst-case scenarios. 

We are going to lose a lot of businesses, and small businesses will go faster than franchises. Franchisors are currently doing massive outreach to their franchisees and offering relief measures, such as cutting royalties. Individual business owners do not benefit from that kind of support. The franchise industry can celebrate this benefit and know there are some powerful franchisors out there who are doing everything they can to help their franchise systems. 

Franchisors can expect a more thorough franchisee validation process. 

Prospective franchisees will be even more diligent about reviewing franchise opportunities, which is why brands need to think about franchisee validation. Future prospective franchisees will want to know how the franchisor supported the system during challenging times. If franchisees say the franchisor did nothing, that brand is done. Showing empathy and support to existing franchise owners is going to make all the difference. 

Brands need to proceed with caution in all things. This is a good time to talk to franchise candidates and consider giving them a break from the discovery process. Let them decide whether to proceed. 

Many people are working from home now and are online. There is a lot of activity around the franchising industry that will bring in new franchise candidates, but these are not people who will jump in and be done with the discovery process in 90 days. They will be meticulous and take their time. 

Some segments will hurt more than others. 

Established franchisors will weather this crisis. This situation is more worrying for emerging brands. We’re going to see some weeding out of the weaker organizations. Any brand with cracks in its foundation will have those cracks show up pretty fast right now. 

Emerging brands should stabilize their cash flow. It’s tough for them to cut royalties. They need to hand-hold their franchisees right now and be on the phone with them and be an empathetic ear. The franchisor should advise them on how to stabilize their cash flow and what they should do, business-wise. Emerging brands should also hold town meetings and get on video-chat platforms like Zoom so franchisees can see them and feel connected.

To register for all of this week's Coronavirus and Franchising webinars, click here.