Is a Franchise Better than an Independent Business in a Crisis?

Robin La Pere, Franchise Consultant, No Ordinary Businesses and Franchises

entertainment services and restaurants have been among the hardest hit while many maintenance, technology and food delivery services have thrived.

Another problem has been that not all franchisors responded to the lockdown in the same way. Green Acres, one of New Zealand’s longest-established and largest lawnmowing and cleaning franchises, was reported to have continued to demand fees, even though most

of their franchisees were no longer able to work and earn income.

But other franchisors set the standard for crisis management. McDonald’s is estimated to have foregone at least US$1 billion in deferred rent and royalty payments as sales slumped worldwide, and then gave franchisees US$210 million to rebuild sales as lockdowns began to ease in many corners of the globe.

The reason for all this apparent altruism is, of course, that franchisors understand that without franchisees, they don’t have a business. By helping their franchisees, they are helping themselves.

But many franchisors have realised that helping their franchisees financially is not enough. They know that if their franchises are to not only survive the COVID-19 crisis but position themselves for growth in the postcrisis world, they must fast-track technology development and product/service innovation and transform their business models.

And that means working more closely than ever with their franchisees to implement these changes, and even involving franchisees – who are closer to customers than the franchisors – in the change-making development and decision process.

Provide strong

demand and return on investment as a way of championing them before rolling them out to the network as a whole. With innovations such as drive-throughs, delivery services and contactless touchscreen ordering already in place, McDonald’s was well-positioned to meet the changes brought about by the pandemic.

Get ready for growth

There’s a danger that while franchise leaders are intently focused on dealing with current challenges, they will lose sight of their overall vision. But because the crisis is so deep and pervasive, many businesses can already see that their future will be quite different from the past, says veteran corporate leader, Rob Campbell.

“Executive teams and boards have swung into action, in my experience, remarkably quickly and effectively,” he says. “Many of them are change agents already remaking their businesses… they’re also working on how to emerge as better businesses.”

The question is: What will the world look like once the pandemic is over or at least contained? Once again, smart franchisors are working with consultants and government bodies to envisage future scenarios and using them to develop possible strategies. Just as importantly, they are collaborating with their franchisees, suppliers and other partners to become more agile, rapidly assessing changing situations and then pivoting to take advantage of them and become more robust businesses.

Robin La Pere is a franchise consultant with more than 20 years’ experience as a franchise manager, CEO and owner as well as a consultant, coach and speaker on franchising. Based in Auckland, New Zealand, he works with clients throughout Australasia and internationally. He is a specialist in business model development, strategic planning, process improvement and franchise recruitment marketing.

www.noordinary.co.nz

“Because franchise networks are geographically widespread, many have already developed smart ways to keep in touch using Zoom and other technology for remote communication.”