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As part of our ongoing special coverage of Covid-19 and its impact on franchising, we’re asking franchise leaders how they’re responding to the effects of Covid-19 at all levels of their business. Below we offer an overview from 5 franchise brand leaders on how they are assisting their franchisees during Covid-19. If you have a story to tell about what you’re doing to support your brand, franchisees, customers, or suppliers please email us at stories@franchising.com.
(British Swim School, Home Clean Heroes, Pool Scouts)
For British Swim School, corporate is indefinitely providing deferment of royalty and will do so for a time upon restarting. Other fees are being deferred including technology and marketing to lessen the financial burden for our franchisees. We've also worked with each of the vendors our franchisees work with to negotiate lower fees, deferment of fees, and/or pausing of services to eliminate or reduce every cost possible.
(Club Pilates, CycleBar, StretchLab, Row House, Pure Barre, YogaSix, AKT, Stride)
We want to make sure our members are staying active during this time and allow our franchise owners to continue generating revenue. We have developed a full digital experience of on-demand workouts for active members with our newly launched GO platforms for each brand, extensive support for livestreaming classes at the local level, corporate-led livestreamed workouts, and online gift card purchases that directly support individual studios.
We’ve also made a number of financial accommodations for our owners to assist during this challenging time, including a 50% reduction in the marketing fund fee, free shipping on retail, and discounted retail. We’ve worked diligently with our vendors to negotiate concessions for owners across all departments, including marketing, sales, equipment, and lending partners.
To start, four weeks of 50% royalties (3% instead of 6%). We’ll revisit this as the situation evolves. We will have them pay it back at some point, but there’s no timetable yet. We have halted technology fund fees (POS), and our co-op and national ad fund fees have been reduced. We’re trying to be as responsive as we can to our franchisee community. Many franchise owners are not paying themselves, same as we are. We still have to preserve cash flow on our end, while remaining sensitive to the needs of our franchisees. I’m proud of our president, Jason Smith, who has taken on the role of main communicator with our franchisees. He’s the clearinghouse for communicating with them about new restrictions, legislation, etc. Franchisees don’t have the time to sift through all that, and he’s being as consistent, reliable, and factual at updating them as he possibly can.
(Pie Five Pizza, Pizza Inn)
At both brands, we immediately revised our marketing calendars and our offerings to maximize value to guests and drive sales. We also moved quickly to execute agreements with delivery service providers with favorable terms for our franchisees, such as lower commissions, online brand protection, and launch marketing initiatives. We recognize the need for off-premise and are doing what we can to expand the commerce footprint for franchisees.
In the current environment, everyone is competing for a small share of restaurant dining. We want to help our franchisees be successful in their local markets by creating compelling offers that provide value to guests, matching the needs of both small and large families. We’ve actively marketed offers in each local community and shared new ideas and best practices. Three of our new offers we created for Pizza Inn were immediately in the top five of our most redeemed offers online, accounting for nearly 40% of all redemptions.
Our Pie Five franchisees in the Kansas City market created Build-Your-Own Pizza kits. The idea came from their team, but the brand’s head of operations and franchise business consultant were very hands-on and worked tirelessly to coordinate support team departments, from IT to marketing and purchasing.
Most importantly, we’ve maintained an open dialogue with our franchisees. Some have brought great ideas to us that are working for their location, and we’ll communicate those to the rest of the system. For example, one franchisee put up some simple yard signs and banners letting everyone know they were still open for takeout and delivery. So we sent a communication out to the system with the idea, along with print-ready assets they could easily get up immediately. Another franchisee put up a tent in his parking lot and sold pizzas from there for certain lunch and dinner hours, creating a makeshift “drive-thru” for added convenience for guests.
We send out regular communications to both brands on new marketing initiatives, environment dynamics, and the impact of the CARES Act on franchisees, including information on how they can apply for various governmental relief programs. After the bill passed on March 27, we had an all-franchisee call for each brand shortly afterward to talk through the specifics of the stimulus program and answer any questions.