Franchisors Need to Prepare for Recovery Now. Here’s How.

For nearly a decade, Morgan Geller has been helping franchises navigate the legal intricacies of franchise sales and disclosure compliance issues. In addition to drafting franchise disclosure documents and agreements — projects that have given her an intimate knowledge of even the most obscure details of the business — Geller also advises franchisees and prospective franchisees on the purchase of new units. Geller’s expertise extends across segments, with clients in food service, health and wellness, dry cleaning and fitness.

Geller’s clients, like just about every business owner around the world right now, are attempting to fortify their businesses for an uncertain future. We talked to Geller to learn what she sees for the future of the franchise industry and how brands should prepare to recover.

1851 Franchise: Given the uncertainty surrounding just about every business, how can franchise brands start to plan their post-COVID recovery now? 

Morgan Geller: Businesses should not sit idle and take a wait-and-see approach; they need to proactively deal with the present reality in order to ensure continuity in a post-COVID world. Indeed, if a company takes action now during this transitionary period, it will be better positioned to pivot as necessary and achieve growth in the long-run.  

Most importantly, businesses should embrace flexibility and innovation in order to be better prepared for our new normal. It’s going to be a while before people feel comfortable being around others like before. For example, restaurants should be prepared to implement and market more spacious seating, while other businesses should start creating virtual and at-home experiences. All businesses should be prepared to implement heightened standards for cleanliness and sanitation to ensure the safety of employees and customers.

Furthermore, certain businesses will see increased demand and should prepare accordingly to meet consumer needs and provide high customer service. For example, beauty and healthcare companies will most likely see a surge of post-COVID appointments and scheduling. These businesses should prepare by implementing appropriate software and technology, such as scheduling, reminder and customer management tools.

Especially in franchising, businesses should anticipate bankruptcies or extended periods of disruption within the overall ecosystem. This does not only include assessing and monitoring a franchisee’s financial health by the franchisor but also preparing for and addressing the solvency risks of certain key customers, suppliers and manufacturers.

Lastly, it is important to manage cash flow during this transitionary period and to explore raising capital, as necessary, to generate cash to make up for declining sales.

1851: Are there segments that are going to be better positioned after this crisis than they were before? 

Geller: During the COVID-19 pandemic, the closing of physical stores and public spaces combined with social distancing have accelerated the move to purchasing goods — especially food — online. E-commerce has gotten a boost as a result of the COVID-19 crisis and will most certainly continue to grow post-COVID.

Other industries and segments that will be better positioned are technology, software and healthcare. Businesses have had to embrace new software and technology in order to innovate and pivot amongst COVID-19, so these industries are more necessary than ever before. We are seeing businesses invest in technology innovations that they would not have otherwise.  

1851: What segments are going to be worse off after this crisis?

Geller: It is no secret that the industries most affected are travel, leisure and hospitality. These industries will feel the effects of COVID-19 even after stay-at-home orders are lifted, given that it will take time for people to feel comfortable resuming normal travel and being in close contact with others.  

In addition, as people are turning to on-demand and becoming accustomed to at-home workouts, gyms and fitness companies may not have the same customer base as they did before this crisis. These businesses will have an uphill battle to compete with online fitness applications and platforms, such as Peloton. Ultimately, any business that relies on crowds to fuel their business will not bounce back the way other businesses will.

1851: What are some changes or pivots businesses have made that are likely to stick around after the crisis? 

Geller: One of the largest changes we’ve seen is how many businesses have adapted by embracing the work-from-home culture. Today more than ever, businesses are learning how to — in some cases they’ve been forced to — communicate and collaborate via virtual platforms, and we are beginning to see how efficient these practices can actually be. These changes will certainly result in some companies adopting new workplace habits and cultures going forward.

Another change we’ve seen is how delivery services and restaurants have pivoted. More restaurant operators and brands are implementing their own delivery platforms in an effort to avoid or reduce the costs associated with third-party delivery services, and restaurants, especially the independent and smaller brands, are experimenting in ways that they never have before. For example, local Italian restaurant Macchialina, based in Miami Beach, now offers make-at-home pasta kits, which can be picked up or delivered directly by the restaurant to customers wishing to recreate their favorite pasta dishes from the regular menu. The kits come with freshly made pasta, sauce and add-ins as well as instructions. Consumers, especially on the local community level, are engaging with restaurants in a way never seen before. Other restaurants have offered prix fixe meals and virtual wine tasting via virtual experiences where the restaurant will deliver the food and wine while guiding the customer through a virtual tasting course online. Given that it will take time for consumers to get back to dining out at pre-COVID levels, combined with the fact that consumers are demanding more unique experiences, these changes will most likely stick around at some level.

1851: How do you expect consumer habits are going to change as a result of this crisis? 

Geller: The most obvious change will be consumers’ heightened expectation to feel safe, clean and secure, and for businesses to meet those heightened standards. Consumers will also continue to desire to feel connected with others while also feeling safe. This will lead to customers searching for more virtual and at-home experiences.  

Many consumers are also buying groceries and food online for the first time, and new habits have developed with food consumption within the home. Furthermore, as consumers are experiencing increased self-service options such as kiosks and self-checkout, these expectations will certainly remain.

1851: What do you think businesses and business leaders can learn from the coronavirus crisis? 

Geller: I think after any crisis or natural disaster,  businesses will learn the importance of having a crisis management and communications plan. Those businesses that already had such protocols in place were better positioned to respond and to communicate with their employees, vendors, franchisees and customers. In franchising specifically, franchisors can learn how critical leadership is at the top level. Franchisees are looking for answers, and while a franchisor may not have all the answers, I think leadership has learned that transparency, education and empathy can go a long way in terms of building goodwill.  

This crisis has also taught businesses how important collaboration and communication is outside of corporate headquarters. Leadership can learn from others within the business, especially those at the local level, in order to identify opportunities at the other end of this crisis.

1851: How should brands reposition their marketing post-coronavirus?

Geller: As a general starting point, brands should prioritize and invest in marketing now and increase engagement with its customers. Now, as well as immediately post-COVID, is not the time to be exploitative, but to really understand and listen to customers and be more creative than ever as the crisis continues to evolve. This may involve changing messaging and content. Customer behavior and desires will be different, and those brands that have taken the steps to obtain consumer information and preferences  — maybe in the form of analyzing data or obtaining answers to customer surveys — will be the best positioned to grow amidst our new normal.

This is also a good time for brands to build repetitional goodwill, as people will remember those brands that took this opportunity to give back to the community, those in need and our first responders. For example, cruise lines have offered their ships to provide much-needed space for hospital beds. Companies can also donate food to food banks or continue to pay employees even though their businesses are closed.