Franchisees & Covid-19: Multi-Brand Operator Shares His Ups, Downs, & Plans

As part of our ongoing coverage of Covid-19 and its effects on franchising, we’re asking franchisees what they’re doing to get through the crisis and come out the other side able to resume business. If you’re a franchisee with a story to tell about what you’re doing to survive, help your employees, or inspire hope in other operators, please email us at stories@franchising.com.

Eric Danver is a multi-brand franchisee with 25 years in franchising. He began with Papa John’s and today operates 18 locations. He diversified from food and operates 16 Hand & Stone Massage and Facial Spas, making him the brand’s largest franchisee. However, it’s his original brand, Papa John’s, that is keeping the cash flowing during Covid-19, as he’s had to shutter all his spas for health and safety reasons.

How has Covid-19 affected your business?

Our Hand & Stone business is closed and has been since March 17. We have kept all of our managers and regionals on payroll at their full salaries, but unfortunately, we had to lay off our other employees. For those who have been laid off, we are working to ensure they can take advantage of all state and federal benefits. For our Papa John’s business, we have seen a significant uptick in our business and have been running 30%-plus comparable sales over the last several weeks. This has not only allowed us to keep all of our current employees, but we actually are hiring more to keep up with the demand.

What are you doing right now to get through this?

We have been fortunate compared to many other restaurants and businesses with our Papa John’s, as this business has no seating and is all delivery and carry-out. We also still have monthly membership revenue coming in at Hand & Stone. The Hand & Stone model is different than gyms and most typical membership-based businesses in that our members never lose their packages; they simply roll over to the next month, where they can “bank” these services to use them in future months. We have opened additional benefits to our members as well to provide more value for staying with us. We certainly have lost members because of unemployment issues, but the majority of our clients are staying on with us and trying to help us through these extraordinary times.

Is your franchisor helping keep you afloat? How?

Hand & Stone has deferred marketing expenses that are usually billed quarterly, as well as some other small IT fees, but they are still collecting royalties on any EFT revenue. As I mentioned, our Papa John’s business is actually doing quite well because of the delivery component, so our franchisor is not giving any relief for obvious reasons.

How are you working with your suppliers?

On the Hand & Stone front, we are fortunate that the business has a low fixed cost and high variable cost structure, so there are very few vendors we are still paying, other than rent, utilities, etc., and we have been able to keep up on these thus far. In our Papa John’s business, we get all of our supplies from the franchisor and they have done a great job with keeping up with demand, as well as stocking up with some of the hard-to-get items like sanitizer, toilet paper, masks, and gloves.

What are you doing to help your employees through this?

For our Hand & Stone team, our 16 managers and 5 regional managers are still being paid. In addition to this, we recently bought 1,200 pounds of flash-frozen chicken and ground beef from a meat distributor and had our regionals race around to all of their spas distributing it. To get a head count, we put the word out through our Slack channels about our desire to do this. Then we did a “no contact” pickup where all of our team members stopped at their spa and got to see their manager and pick up their food. We gave out more than 200 packages of chicken and beef and our team was just so appreciative of the gesture. It was a good feeling knowing we could do something small to help them through this difficult time. I have also communicated to everyone that if anyone is going through a tough time financially to reach out to me directly. I have been blessed enough to be able to help out a few of these valued team members. Our managers are also staying in constant communication with their teams through Slack and Zoom, and I know our teams appreciate all of this.

What are you doing for your customers?

For our Hand & Stone business, we are trying to stay in communication with our clients as much as possible. Our managers are all manning the emails and phone calls, and have done an amazing job in freezing or terminating members when need be, as well as handling any concerns or questions clients may have. For our Papa John’s business, there is always a deal to be had and our customers are just so happy we have a “no contact” delivery and carry-out system in place. We also have been donating a ton of pizzas to hospitals and other places to try to thank our first responders and health care workers, who are just so brave and appreciated.

How are you planning to reopen and rebuild your business post–Covid-19?

Our franchisor at Hand & Stone is having weekly calls with all of the franchise community, and we are in constant discussions on what our business will need to look like upon reopening. I certainly know there will be a lot of consumer concerns for good reason, and we are going to do everything we can to ease these fears in how we do things. The safety of our clients and team members has, and always will, remain our #1 focus, but we also certainly want to get our people back to work as well as serve our valued clients.

What are you doing about cash flow, PPP, and keeping financially afloat during the pandemic?

We have applied for a PPP loan and are over the first hurdle with the approval process, so we are hoping to get funding in the next couple of weeks.

What else would you like to see from your franchisor or government?

To be honest, I am pleased with both. I think Hand & Stone is doing what they can to keep the franchisees supported, and that both they and Papa John’s are doing a great job with communication and providing guidance. In regards to the government, I think under the circumstances, they are doing everything they can, and if and when we get funded with the PPP loan, I would bump them up to say they’re doing an extraordinary job. I don’t think there could ever be anything government could do that would be fair or work for everyone, but the bottom line for me is that although this is beyond anyone’s control, I do believe they get it and are doing what they can to support small businesses.