There is no one-size-fits-all plan for how businesses should respond to the COVID-19 crisis. However, this article provides some guidance for businesses which are primarily consumer focused and use franchise and distribution networks to sell their products and services in order to help them to respond to the challenges ahead and hopefully even emerge on a stronger footing than before.
A British education is internationally regarded as the gold standard, as reflected in the dominance of British international schools. Done correctly, the execution of a school's international franchising strategy can become a core asset. However, the most appropriate structure must be determined at the outset, as restructuring an international licence is a complex, costly and time-consuming exercise.
Franchising provides a flexible model for growth or re-engineering, with a variety of structures to meet different needs. Of all of the structures, the joint venture franchise is the least understood and most likely to cause difficulties if not structured correctly. In order to understand why this is so, it is necessary to consider the rationale for using the joint venture model and the manner in which such a relationship should be structured.
Franchise rights tend to be granted on a 'pure-play' basis – that is, the franchisee is granted the right to open and operate physical premises selling products and services in an allocated territory, with the franchisor reserving its rights in respect of other channels, such as e-commerce. However, this model is becoming increasingly outdated. Various options exist for bringing e-commerce into the franchise system.
Restricted access to traditional sources of funding in recent years has seen a growth in alternative finance sources for new franchise businesses and ventures – in particular, mini-bonds and crowdfunding. These offer the franchise sector a real opportunity for growth, but it is important that both the franchisor and franchisee appreciate how these alternative financings work and the potential consequences of using them.
In a bid to increase consumers' awareness of their rights and provide greater protection, new regulations recently entered into force which implement certain elements of the EU Consumer Rights Directive. Franchisors need to ensure that their legal compliance programmes and those of their franchisees, including any related consumer terms and conditions, are in line with the revised requirements.
Social media platforms are a powerful tool for any business, but a number of legal risks can arise if they are misused, along with the potential to create more harm than good for a brand. For businesses that use third-party structures such as franchising, there is an additional layer of risk and opportunity. Franchisors should develop a clear online strategy while retaining ultimate control over their brand.
Franchisors can reap significant benefits from a successful advertising campaign – in terms of both attracting potential franchisees and gaining new customers or increased sales. However, a poorly conceived or executed campaign can not only reduce goodwill, but also prove costly to remedy. Therefore, it is important to ensure that marketing campaigns comply with relevant advertising laws and regulations.