Managing Your Franchise Network During the Coronavirus Crisis

March 31, 2020


The current Coronavirus crisis has resulted in a huge amount of uncertainty and nervousness within the franchise community and the business world at large. If you have a franchise network it has never been more important and relevant for you to communicate with your franchisees.

The following article, co-written by Kevin Thomas, Lime Licensing and Stephen Thompson, Darwin Gray, will hopefully help you and your franchisees face the difficult journey that lies ahead, and ensure that your business is in a stronger position to meet the new challenges that it will face when the crisis ends.

Carry out a financial assessment

Managing a network requires a solid infrastructure to ensure that your franchisees get the support they need in running their businesses, and that costs. In the first instance you should carry out a financial assessment of your business to include revenue, overheads, cashflow and any reserves you may have. This is really important as “cash is king” and a business will find it extremely difficult to trade without a steady influx of cash. Understanding your financial position will help you plan your short, medium and long term future, and help identify areas that will affect how you manage your network.

Get your franchisees to do the same

It is as important for your franchisees to assess the financial health of their businesses as it is for you. They need to understand how their finances will affect their decision-making process during this uncertain time.

Contact your franchisees and encourage and explain to them the benefits of undertaking a financial assessment of their business. By doing this you are showing them that you care about them and their businesses, which helps build trust between you and your network.

Financial concessions

It is highly likely that your franchisees may ask you for help during this period, with the first port of call most likely being the monthly royalty. It may be that they ask you to suspend the fee until the crisis is over, or that you offer a discounted fee. Ultimately the decision is yours to make but always exercise caution before making any such concessions, as you need to maintain a revenue stream from the network to ensure that you can maintain your own business.

Whilst finance is often at the forefront of the minds of most business owners, consider whether there are any other ways in which you can help your network; this will obviously depend on the type of business your network operates. If you do consider a payment freeze or holiday maybe don’t immediately offer it across the board – take each case as it comes. Not everyone will need your help, so why significantly reduce your revenue stream if you don’t need to? Remember to advise those you do help that this is a short term measure and any unpaid royalties will still need to be paid when the crisis is over.

Communication, communication, communication

Franchisees will feel lonely and isolated during this time and may think that they are the only ones with problems. Many franchisors don’t understand the importance of communication, particularly in hard times, thus building a barrier between themselves and their franchisees.

By having regular and positive communication between yourself and the network you can break down the barriers, help ease these feelings and importantly help your franchisees to realise that you are all in this together. Keep your franchisees informed and the lines of communication open. Likewise encourage your franchisees to keep their customers informed of events, as customers need to understand what is happening with their suppliers also.

Franchisees need to know that you are on their side, that you are all pulling in the same direction, and that ultimately you will all emerge stronger for a bright future ahead. 


Kevin Thomas, Regional Director and Franchise Consultant, Lime Licensing

Stephen Thompson, Managing Partner and Head of Franchising, Darwin Gray



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