Children's Lighthouse Franchise Uses Airplane Theory in Crisis
"If we're going to continue to help franchisees, we have to be as strong as we can possibly be," said Stephanie Russ, general counsel of Children's Lighthouse.
The "airplane theory"—place the oxygen mask on yourself before helping others—is guiding Children's Lighthouse execs through the pandemic, said Stephanie Russ, vice president and general counsel.
"It just came to me," she said about the concept. "We are a very franchisee-focused organization. We are 100 percent franchised, so duh, we've gotta be. If we're going to continue to help franchisees, we have to be as strong as we can possibly be."
The first order of business, at the beginning of March, was to evaluate and strengthen the financial position of the franchisor. Children's Lighthouse was started by brothers Pat and Mike Brown in 1997 in Fort Worth, Texas, and it's still family-owned.
"They made a decision several years ago to keep enough cash in the bank. We weren't looking for this monsoon, but we could weather a rainy day," Russ said.
The scheduled first quarter distribution to the owners was suspended to preserve cash, and financials were examined to model the worst, middle and best-case scenarios.
Then Russ & Co. talked with the 20-some corporate employees "with confidence and truth and honesty," she said. "We don't want you to worry. We're in a good position; we don't have debt; we own the building. We want everyone to not worry and focus on your job. That was just huge."
Children's Lighthouse centers provide childcare, so all 55 units were ultimately deemed essential (one county in Alabama initially closed a center but it reopened.) Not so for corporate and field staff. "Even the franchisees said, 'Hey, we're essential, but your people really aren't,'" and they were asked to stay away from the schools.
Russ reassigned corporate staff to take on other tasks that fit their skills. For example, a field coach in the Austin area is "always concerned about our menus, our food, nutrition, less sugar, sustainability. She's focusing on that now," working with vendors to make improvements.
Another franchise business consultant recently left a job in a Children's Lighthouse center, so she is "very in tune with what goes on in the classroom." She is working on developing district learning tools.
Russ herself switched her focus to helping franchisees with the Paycheck Protection Program, the CARES Act, the Family Medical Leave Act, and more. "These were employment issues that these franchisees were just losing their minds over," she said. "In the past, I would have been arm's length because of the joint employer stuff," meaning the risk of being held jointly liable with franchisees for labor violations. "But we said, look, we have to at least provide guidance and resources."
An example of where she weighed in: A franchisee was having difficulty spending the required 75 percent of the PPP loan she received on payroll. "She called me and said, 'I have a third-party cleaning company I use. Can I get rid of them, and just hire someone to do it internally, now they're employees?' Sure, you can do that," Russ replied. "To me, I'm not worried about that type of advice."
On the other hand, another franchisee said a particular employee called in sick when she wasn't, and asked if she could be fired. "I said I can't answer that question," and Russ advised calling an attorney—which could serve as another example of the airplane theory.