How Franchisors Are Reacting to “Essential Business” Designations

The so-called “essential business” designation has been something of a godsend to businesses who have been allowed to stay open despite the shelter-in-place orders that have shuttered storefronts across the country. But just what qualities make a business “essential” remains somewhat of a mystery, and some businesses have been surprised to earn the designation.

Cindy Rayfield has been a franchise broker for 12 years, helping prospective franchisees from a range of backgrounds find franchise opportunities that match their goals and skill sets. Rayfield also happens to be a franchisee herself, owning two Cookie Cutters Haircuts for Kids salons in the Denver area. 1851 Franchise spoke with Rayfield to learn how the franchises she works with have been wrapping their heads around the “essential business” designation.

1851 Franchise: How have the brands you work with been reacting to the decision to classify some businesses as essential and, by implication, the rest inessential?

Cindy Rayfield: Classifying businesses this way in franchising is hard because just about every business can be considered essential to the people it serves. Most brands are not out there trying to create a new invention that people aren’t using yet. 

Most of the businesses designated as essential are home-service brands, but there are plenty of other types of businesses that I would argue are equally essential to people’s lives. My hair salons, for instance, are essential to our customers. As this crisis continues, I hope we’ll see some changes of how that designation is being applied.

1851: Is this type of distinction completely new for the franchise industry?

Rayfield: I think it is new, but it’s also something that brands seem to be quickly adapting to. I’ve noticed a trend at the conferences for the broker organization I belong to: we host more than 100 franchisors in a virtual conference room over two days, and we’ve started to see franchises naturally categorize themselves into two categories, roughly aligning with essential and non-essential, regardless of their industry.

1851: Are there brands designated as non-essential that are pivoting in an effort to become essential?

Rayfield: Yes and no. Non-essential brands are pivoting, but the adjustments they are making are largely in an effort to reach customers despite closing their storefronts. In my consulting work, I’m constantly asking brands, “what can we do to make our services essential to people, regardless of our designation?” Even if a store has to close its doors for 30 or 60 days, what can they do to keep making sales? For a lot of brands, that means pivoting to online sales.