Sunday, March 29, 2020

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)