New strategies abound as global franchises find their footing
Illustration by Jonathan Hankin
Since mid-March, when most countries decided to close shop, to varying degrees, for the unforeseeable future, the world has grappled with balancing public health restrictions with the corresponding economic impact as they addressed the COVID-19 pandemic. There now appears to be some light at the end of the tunnel as economies have commenced and progressed through various reopening phases.
Franchisors, having been in the throes of pivoting and preserving their systems, are now exploring what the interim and ultimate new normal will look like, with no shortage of challenges.
The regulatory landscape continues to shift in many parts of the world, and international franchisors have the sizeable task of keeping their balance with the ongoing multi-jurisdictional health restrictions and risks as they develop and implement reopening strategies.
From a health risk perspective, international franchisors have had an easier time of reopening in cities where governments have a fair understanding of how COVID-19 had spread (and continues to spread), and the safety measures needed to curb further spread. Less ideal has been the scenario where the push to reopen came from public pressure.
So what are some of the key strategies that international franchisors have adopted in positioning themselves for the future?
Health and safety
To the extent that they had not done so during the shutdown period, international franchisors have had to devise enhanced health and safety policies and protocols for their franchise systems (and in some cases multiple versions) to comply with the reopening regulatory frameworks in all areas where they have franchisees. No doubt we have all seen the effects of these enhanced protocols in franchised businesses over the past months: physical distancing, sanitizing, wearing masks, shields and barriers, contact-free services, self-reporting measures, screening and testing at locations, recording names/numbers for potential outbreak follow up etc.
International franchisors have had to identify and develop supply chain relationships to source the equipment required in the circumstances, and to work together with their franchisees in implementing, monitoring and modifying these policies and protocols.
Appointments vs. walk-ins
A number of franchise systems are taking a more systematic approach to retail sales by requiring appointments and limiting the number of walk-ins compared to what once was permitted. The automotive industry provides a good example. Scheduling appointments also provides ample time to undertake disinfecting of vehicles and offices that have been used with previous customers. A similar approach has also been adopted by franchise systems in other industries such as real estate and professional services.
One business segment that has experienced significant challenges is the children’s activities industry. Franchise systems in this space, from childcare to tuition-based concepts to indoor adventure parks, had to reinvent the way they conduct their businesses. While there has not been a one-size-fits-all approach, some themes have emerged.
For example, reducing the number of participants and instructors present at any given time, as well as reducing parent involvement (i.e. establishing outside drop-off zones). Other key strategies have included reduction of shared toys and equipment, additional division of groups and shorter activity periods in order to stagger attendance where possible. Ensuring that young children follow protocols is no easy feat.
Staying online with limited reopened services
In previous columns, I discussed the ways in which the fitness industry pivoted and was able to stay afloat during store closures by offering online workouts. International franchisors have had to address how online content and services will continue in the reopening phases, as well as how access to the online content (and revenue from it) fits in with the existing memberships and franchisee operations.
This is one area where the disparate modes of reopening around the world has been of some advantage to international franchisors. It has provided opportunity to trial and stagger the implementation of various strategies in advance of rolling them out across all relevant jurisdictions. When considering their pre-COVID-19 typical environment, fitness centers have had to significantly revamp their spaces. This has included increased spacing for equipment, intermittent daytime closing for enhanced cleaning of equipment, and ongoing closures of ancillary services such as sauna and spa facilities.
One thing almost everyone missed in the early shutdown phase was the ability to dine out. Fortunately, many jurisdictions at least partially reopened in time for patio season. What that meant for some restaurants is they were either operating at low capacity or operating only if they have a patio. The expectation was that the start-up of restaurants would boost economies.
Curbside pickup and delivery continued as customers evaluated their own comfort levels on venturing out. Franchisors put in place systems where reservations were either encouraged or required, menus became disposable, ordering and payment happened through mobile phones to avoid customer-employee contact, and enhanced systems were implemented to ensure the safe handling of food both before and after dining.
For those out there who subscribe to the view that human nature includes an inbred resistance to change, you’d certainly be struggling to support that notion with all that’s taken place over the past several months. Particularly for international franchise systems, franchisors and franchisees have excelled at working together to brace for the impact of COVID-19, develop pivots, and to now emerge and explore various adaptations to their business models.
Andrae Marrocco is a partner and co-chair of the Franchise & Distribution Group in the Toronto office of McMillan LLP. His column World View covers international franchising in each issue. Reach him at firstname.lastname@example.org