Franchisees Not Satisfied With Many Large Systems' Relief, Attorney Says
"Franchisees are most disappointed with franchisors that have more resources to give relief, and they're not," said Kristy Miamen, an attorney at Dady & Gardner.
Nearly all franchisors are offering relief to their operators during COVID-19, often saying "we're all in this together," but a Dady & Gardner attorney who represents franchisees says they're not all feeling the love.
"I think franchisees out there are generally unsatisfied with what they're getting," said Kristy Miamen, adding it depends on the industry, and it depends upon the resources of the franchisor.
"Franchisees are most disappointed with franchisors that have more resources to give relief, and they're not. The big, big systems might be giving royalty deferrals vs. relief," for example, with the only difference between packages being the time franchisees have to pay the deferrals back. "Overall franchisees are feeling that more can be done in certain systems."
She said Restaurant Brands International, the parent of Burger King, Popeyes and Tim Hortons, is an exception to the sea of sameness she has seen in relief offers from large systems. "They're doing some really creative stuff," she said, citing an open letter published March 30 from CEO Jose Cil.
In that letter, RBI announced it was advancing cash payments and rebates totaling $70 million to North American restaurant owners. "We are continuing to look for other payments due to restaurant owners later in the year that can be advanced now," the letter said.
Also, for 3,700 eligible locations where the franchisor has property control at Tim Hortons in Canada and Burger King in the U.S. and Canada, RBI has temporarily converted rent structure from fixed plus variable to 100 percent variable rent. "In addition, we have deferred rent payments for up to 45 days to provide tens of millions of dollars in much-needed working capital to our systems," the letter said.
Like other systems, RBI is pausing obligations for new restaurants, remodels and significant equipment deployments.
In a recent Dady & Gardner webinar, Miamen outlined ways for franchisees to negotiate with their franchisor for relief. "Franchisees have to have realistic expectations, because franchisors are hurting too," she cautioned.
She advises "knowing your franchisor, what tone/approach works best. Some franchisors don't react well to something adversarial. Other franchisors don't respond" unless you're aggressive.
Find out what other franchisors are offering, and ask for something similar. Overall, be able to explain concisely "what is your proposal to the franchisor and be ready to explain, does it make sense?"