March 31, 2020
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.
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.
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.
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.
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.
Contributors:
Kevin Thomas, Regional Director and Franchise Consultant, Lime Licensing
Stephen Thompson, Managing Partner and Head of Franchising, Darwin Gray
I have worked with Darwin Gray for a number of years and the level of service, professionalism and timely response is second to none. I would highly recommend Darwin Gray to any business.”
Darwin Gray have provided us with a first-class service for many years now. They really take the time to understand our business and develop relationships which results in advice and support that is contextualised and effective.”
We have worked with Darwin Gray for several years and have always found their services and advice to be first class.”
An extremely professional and sincere company who make time for your queries and understand the need to break down certain facts and information to ensure everything is understood perfectly. I would highly recommend the company to anyone looking for any type of legal advice”
PSS has worked with Darwin Gray for many years. We have always received an excellent service. Prompt and professional advice and support.”
We have used several departments within DG recently and we have been very pleased with an effective, efficient and down to earth service. Very happy thus far and I expect that we will continue to use DG.”
Darwin Gray offer us truly superb services. Very professional, quick and services available bilingually which is very important to us, highly recommend.”
My “go to” in urgent and time sensitive cases for direction, support and advice. The team are quick to respond to calls or emails for advice and support on all matters. Always explain complex matters in a way a lay person can easily understand.”
