PUBLISHED BY SCOPE MANAGEMENT CONSULTANCY, ABU DHABI, UAE
DATE: 6TH June 2021
Franchisees companies in different countries are encountering grave challenges threatening business operations & continuity. They are obliged to meet certain specified payments times and terms to the franchise owner, in accordance with the abiding franchise agreement. While, Labor laws protect the right salaries payment, the drop of sales & income left franchisees with low margins for salary payments, for malls rent, for suppliers and bank loans installments. This lead to many downsizing their operations, staff, and looking for alternative ways to reach customers.
Franchise associations moved positively with endeavors to address the situation and inform and helping franchisees of benefitting from available government aids for businesses and conducting webinars about ways to overcome the pandemic. Some like the Australian franchise association changed the franchise code of conduct to increase the collaboration from the original owners (franchisors) taking in consideration helping the franchisees throughout the crisis period.
Main Governments & Associations Endeavors
Lebanese Franchise Association facing the pandemic coupled by devastative explosion in Beirut, plead for assistance of World Franchise Council, to send messages to the Franchisor companies in France, Italy & Spain to take in consideration Lebanese crisis situation & collaborate with franchisees on issues of obligations & charges. In some country’s governments provided direct money support for rent cost in Malls and other locations and asking property owners to reduce cost or defer installments. In Australia the Government ask property owners to issue new contact for lease for companies taking the pandemic difficulties in regard.
In Russia, a different approach was taken by asking landlords to reduce lease with a certain percent to be legible for tax reduction according to reduction of rent cost percentage. Also, the Government directed all banks to reduce interest rate of loans taken previously and facilitate repayment of installments.
Britain in response to its Franchise Association, the government asked franchisors to cooperate with franchisees in deferring of due payments and helping in their recovery, beside creating three funds to offer soft loans for affected companies. France, Finland and Argentine also formed funding facilities to assist in recovering.
Germany offered remarkable funding and support to franchises, SMEs and even big companies threatened by pandemic impact, in an all reaching stimulus plan affording 130 billion euro of direct finance alongside rent reductions, tax weaver. SMEs in trouble can receive payment from the government for its employees to cover 60% to 80% of the wages .
IFA in USA availed many initiatives for franchise support with government business support programs.
UAE Franchise Association FAD offered information and guidance on possibilities to access the different facilities declared by the Central Bank for affected businesses, through the banking system. Also in the UAE, a 50 billion dirhams allocated by the UAE government to banks to be able facilitate soft loans to companies in need in for all different activities, also the government issued reductions in fees for business licenses. Further more, UAE Franchise Association FAD conducted 10 days well attended franchise awareness webinars, focus on the relation of the parties and their commitment to a win-win relationship, beside advising franchisees digitally transform in the time of crisis to reach customers , including training introductory program how to use digital marketing as a business empowerment tool and optimum use of social media.
Why Supporting Franchise Business
Countries around the world support franchising for its essential role in:
- Theeconomies and rewards
- Tremendous benefits for local investors
- Availing new business opportunities
- Having opportunities of certain features not like other business opportunities,
Franchising is packed with business success factors, such as:
- like expertise, practices, capabilities,
- Full of eager for continuous support, training and transfer of knowledge.
- Less business costs
- Coupled with less or no risks of failures of business startups. 80% of startups fail, a world known average.
Role of the Franchise in UAE
Franchise is of paramount importance for UAE economy because of the real added value. It is an advanced model of doing business for all sectors and activities. The old idea of that franchising is only for business Food & Beverages have now changed, new concepts and innovative ideas classify it as a successful model for all activities, recently we witnessed the spread of social franchise around the world and manufacturing franchise, also the movement to new sectors like tourism, construction.
Scope consultancy experts advise is to have more support for the spread of franchise to all sectors in UAE. There is a need of smart franchise strategy to guide and lead the franchise development. Scope can actively participate in making it a reality.
SCOPE MANAGEMENT CONSULTANCY, ABU DHABI, UAE