Like everyone else, franchise owners have just lived through an unprecedented public health emergency that dramatically affected everyone’s public and private lives. It is very possible that government restrictions completely shut down your business. You are left to wonder whether your business will survive. Future success may depend on how your franchise handled COVID-19 and the actions you take as we head into recovery.
Have You Reviewed Your Franchise Agreement as Your Franchise Handled COVID-19?
Your franchise agreement probably contains much language about legal obligations. It may also include provisions that can help you decide how to deal with being shut down. One of your first steps after this type of event should be to have your business lawyer or corporate counsel look over the agreement.
You might be looking for the answers to the following questions:
- What happens if my franchise is ordered to shut down?
- How will contracts with vendors and clients be handled?
- Will the franchisor continue to expect to receive royalty payments?
- Who will pay expenses related to the shutdown?
Your lawyer can assist with questions about your franchise agreement and how your franchise has handled the COVID-19 situation.
Have You Been Able to Re-Open?
Whether you stayed open during the government shut down or are reopening now, protecting employees and customers is probably your first concern.
You also must comply with state, local, and federal guidelines related to your re-opening. For example, Florida Governor DeSantis has issued executive orders setting out the phases of Florida’s recovery. Full Phase One allowed restaurants to open with 50% capacity as long as social they practiced social distancing. Restaurants were encouraged to provide outdoor seating whenever possible. However, bars and nightclubs had to remain closed. Some industries had to prepare and submit reopening plans to the state before moving ahead with their plans. Make sure you know where your business fits in.
Even in recovery, your business may have changed. In some cases, contracts may be difficult or impossible to manage.
Will You Have Trouble Meeting Any Contractual Obligations?
If so, you should talk to your business lawyer or corporate counsel immediately. You may be able to renegotiate some language, reach compromises, or even terminate your contracts. The important thing is to address problems like this as soon as you know they exist.
Are You Having Trouble with the Way Your Franchise Handled COVID-19?
The complexity of franchise agreements makes it difficult to understand all their potential consequences. This statement may be especially true during and after a crisis.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.