International Franchises Take Market-by-Market Approach to Pandemic Response
The first comments from international franchising expert Bill Edwards, CEO of Edwards Global Services, weren’t exactly uplifting:
“This is my 46th year of doing international business … and I’ve never remotely seen the level of disruption we’re seeing today,” he said today, speaking on a webinar organized by the International Franchise Association.
“International travel is at a standstill … restaurants are closed down everywhere,” he continued. “India is trying to close down 1.3 billion people … and in Saudi Arabia, banks are closed, you can’t even go in to get money.”
Still, franchises are showing incredible resilience, and for those with franchisees operating in regions around the world, they’re planning for what’s next—even as situations during the COVID-19 pandemic are sometimes wildly different from market to market.
Edwards, along with Tao Xu, a partner at law firm DLA Piper with a focus on international franchising, gathered insight from several brands that are navigating the disruption. Here’s how franchisors, some with locations in more than 30 countries, are responding:
Snap Fitness—Ali McElroy, chief global development officer & chief legal officer, Lift Brands
The company created an internal COVID Response Team and adopted “guiding principles” to help steer its approach, such as “We will make decisions based on the well-being of employees, franchisees and our members;” “We will cease all non-essential spending and unnecessary expenses to responsibly preserve cash;” and “We will communicate promptly and as fully as possible to support everybody."
While Snap’s thousands of gyms in 20-plus countries are shut down following government mandates, the brand made its virtual workouts “free to everyone,” members and non-members alike. “They’re setting up the brand for future success,” said Edwards. “I think this is an incredibly smart thing to do.”
Snap’s franchisee support staff continue to provide daily updates and new resources, and the company is also addressing financial support with waivers and fee deferrals.
CKE Restaurants—Marc Mushkin, VP of international sales & development
As the company’s restaurants shifted entirely to delivery and takeout, procedures were distributed to international franchisees by regional GMs and support teams, including information on a non-contact drive-thru procedure “to remove any and all direct contact between the guest and our crew members.” Food bags and drinks are placed on a tray; the guests then take their order off the tray. All frontline crew members are required to wear gloves.
CKE has Carl’s Jr. restaurants in approximately 30 countries, noted Edwards, but the franchisor is “coordinating the PR and marketing to all their various customers” to ensure messaging is consistent. Regional GMs have set up Whatsapp groups specifically to facilitate regular communication.
Dairy Queen—Brad Houser, EVP of international development
The franchisor’s centralized PR management team is handling global communication, while daily updates provide franchisees with region-specific information on closures and openings, along with government legislation.
Operationally, there’s a focus on managing ingredient inventory and menu changes, with careful monitoring of shelf life as restaurants shutter dine-in service. The brand is having market-by-market discussions of royalty requirements or deferments.
“They’re monitoring on a country-by-country basis,” said Edwards, and in some regions are already looking at reopening restaurants.
Edwards also shared this comment from Jose Cil, CEO of Restaurant Brands International, whose brands include Burger King, Popeyes and Tim Hortons: “In many markets around the world, including North America, we are advancing cash payments and rebates to restaurant owners so that they have this much-needed cash when they need it the most—right now.”
“That’s something very few franchisors can do obviously,” noted Edwards, but brands need to look at “anything and everything” right now.