By Eric Parker

The hot topic at the moment is ‘’the worldwide spread of the Coronavirus”. There is little doubt that this virus will have an impact on all businesses. Let’s examine the impact it could have on Franchising.

The Franchisor has a responsibility to support the Franchisees who have invested their life savings in the business. This is a big responsibility compared to having a chain of company owned branches.

The elements that could affect the franchisees are:

  1. Supply of goods – production in China has reduced or dried up in some instances and the supply chain for many products has been affected. The franchisor has to look for alternative suppliers and increase stock to cover the reduced supply.
  2. Depending on the industry, the sales volumes could be negatively affected i.e. the travel industry will be negatively affected as the tourist numbers are decreasing. If franchisees sales decline, the franchisor must increase their efforts to do financial benchmarking and ensure they have sufficient cash flow to carry them over this period.
  3. The franchisor must consider introducing elements to assist curbing the virus e.g. consider wipes /hand sanitizer at the entrance to the outlets. You can advertise this fact to put consumers at ease about going out to shop or eat out.
  4. Train the staff to increase hygiene standards e.g. hand washing at regular, pre-determined intervals. Should the staff wear gloves if they handle money? Internationally, Starbucks has banned the use of consumer travel mugs being refilled.
  5. Should staff be screened for illness regularly?  That may be controversial, but it should be reinforced that sick people should stay at home and recover instead of coming in to work and risk infecting others
  6. Assuming there is an out of stock situation due to reduced supply, retailers could consider introducing new alternative products

All the hygiene factors can be advertised, to give the customer peace of mind.

There is little doubt that the virus will play a major role in business development in 2020. It is imperative that the Franchisor remains on top of the situation, well briefed and ready to implement immediate changes should it become necessary.