Like many small businesses, we've been having a lot of conversations over the past few weeks around small business ownership and the impact that this situation is and will have on businesses with multiple employees as we come out the other side of lockdown. Now although franchising is by no means a fail safe business model, it can provide the franchisor with certain risk reducing factors that an employee model simply can't.
So for example, in a franchise model, the head office function usually runs considerably lighter because the franchisees shoulder most of the responsibility for the day to day operational tasks, the lease and overheads. Now the advantage to the franchisee will be in the support of an experienced franchisor to assist with any HR or operational support required, as well as marketing the brand to get the phone ringing again.
Another feature within a franchise model is the requirement of franchisees to take out certain insurances, which can and should include business interruption and profit loss insurance. These policies should be in the name of both the franchisee and the franchisor. Now, as I said, a franchise model is not a failsafe growth model for businesses, but if it's set up correctly, it can mitigate some of the risks experienced in an employee model.