AS THE WORLD TURNS

 It has been a while since I last posted. In fact, it was at the outset of the pandemic, that post was COVID-19 - Captain Obvious! The theme of that post was that franchise systems - franchisors and franchisees - need to cooperate to survive the pandemic. So how is it going?

One of my favorite law professors, who, after 40 years, I still stay in touch with, passed on this article from the Wall Street Journal: The Franchise Relationship That Powers Small Business Is Fraying. You can draw your own conclusion as to whether the headline is accurate... but everyone has to admit that all businesses are under strain at this time and, franchised businesses, are no exception. 

In my practice, I have seen a few potential buyers decide that "the time just isn't right." Perhaps, a solid decision. And, I am aware of a number of franchisor clients who have struggled through the worst of it and developed strategies to survive. My guess is that the restaurant business is most effected. You can share your experiences by commenting on this post. (Please use the normal comment button at the bottom of the post as the image below is just a picture)

Changing topics, I came across another Wall Street Journal article that caught my eye -- Big companies urge Biden, Congress to address climate change. 

How is this relevant to franchising? Well, like the virus, I believe ALL businesses should seriously work on Climate Change matters. What can you do in your system? While we contemplate what 2021 may bring, think about Climate Change -- waste reduction and recycling-sponsored sites come to mind. Is it time for a call to action in your organization?

I hope your business is striving or at least surviving in this time of challenge. Take some time to consider the contributions you can make to improve our future. It is truly a time for reflection.

Wishing all a happy and healthy holiday season!

COVID-19 - Captain Obvious!

If you are sitting at home (working?), you likely need no further reminders about the pandemic.... multiple law firms, accounting firms, banks, and sundry other businesses have provided "public service" announcements just to tell you they care. To be sure this is a transforming moment; the question is: will it be for better or worse? I am going with better but ...

The franchise industry is greatly effected and truly disrupted. Earlier this week, the ABA Forum on Franchising conducted a webinar: "Franchising in the Time of COVID-19: Managing Coronavirus-driven Disruption in Contracts, Supply Chains and More." It was informative and worth reviewing (you can review the materials here). Some topics were obvious and while others insightful.

So franchisors, franchisees, and franchise practitioners find ourselves in uncharted water. The most common refrain is "I have never witnessed anything like this in my lifetime!" When talking with colleagues in NYC, Chicago, and good-old Ohio, the word surreal typically surfaces ... empty cities, crowded grocery stores, closed parks, runs on toilet paper, and cancelled travel. (I was supposed to in Portugal this week) No clue on the toilet paper except perhaps it is used to fight off some of the BS coming from Washington as we ping-pong from one daily report to another.

Whether it is a dire harbinger of economic Armageddon or sound financial responsibility, I read in the Chicago Tribune that McDonald's just borrowed a billion dollars. (read it here)

The Forum presentation covered the most imperative topics (Chinese supply chain disruptions, Force Majeure, royalty waivers, importance of communication, and the like). But, looking back on it, not enough attention was paid to system cooperation. So here are some quick observations from Captain Obvious:

• Should franchisors provide affirmative help to franchisees? YES
• Should franchisees be proactive in communicating with each other and the system officers? YES
• Should franchisors consider royalty deferment or total abatement? YES
• Despite the concern about "joint employment liability," should franchisors offer guidance about the recent emergency employment regulations and employee financial aide passed by federal and state governments? YES
• Should franchisees look for ways to help franchisors? YES

Just like all of us practicing the new social guidelines, franchisees and franchisors (and those of us who support them) are in this together. Cooperate first, argue later.

Let's be careful out there! (Hill Street Blues)