Source: French Franchise Federation
The coronavirus-covid 19 crisis is having a severe impact on the entire economy, with retail, franchise networks, and their franchisees at the forefront. Following the decrees of March 15 and 16, 2020 (complementing the decree of March 14, 2020), the vast majority of franchise outlets are at a standstill and are bearing the brunt of this exceptionally severe health and economic crisis. Other brands, authorized to open their stores, are facing a drastic drop in business due to a lack of customers.
The French Franchise Federation, the professional federation of franchisors and their franchisees, has been surveying its members for several weeks and the findings are clear:
86% of businesses are at a standstill and 23%* are considering permanent closure
In this unprecedented period, the FFF recognizes that the government has put in place exceptional measures (partial activity, State solidarity fund, deferral of social and tax charges) which are important to highlight because they help support the cash flow of businesses since the imposed closure of shops and for several more weeks.
Following President Emmanuel Macron's speech on April 13 announcing the reopening of certain businesses on May 11, franchise networks and their franchisees are now facing several major uncertainties :
– which businesses will be specifically affected by the opening on this date, and what will the timetable be for the others, particularly hotels and restaurants?
– what health measures will be implemented to welcome the public?
– how long will it take to return to pre-crisis activity?
The French Franchise Federation wishes to call on public authorities to address the essential prerequisites for reopening points of sale, enabling retailers to resume operations in the coming weeks and months. In this context, we wish to:
- THE EXTENSION OF STATE AID AND THE APPLICATION OF THE PRINCIPLE OF VARIABILISATION OF CHARGES DURING THE RECOVERY
We know that the resumption of activity will be gradual for franchised retailers; returning to pre-crisis turnover will be long and complex. Therefore, to help them with this restart, we hope that the aid granted by the State will continue after the lockdown is lifted, over several months, based on a payment pro rata to the turnover generated during these periods. The partial activity system must also be maintained. An observatory could be set up to monitor the resumption of activities by sector.
- AN INDEXATION OF RENTS ON TURNOVER ACHIEVED
For several weeks, the FFF has been working with other trade federations to reaffirm that simply deferring expenses, primarily rent, will not be enough. Deprived of revenue for weeks, businesses will need cash to get back on track and continue operating in the coming months. State-guaranteed loans cannot be used to pay rent deferrals. The request made late last week by the Minister of the Economy, Bruno Le Maire, for the cancellation of three months of rent for VSEs forced to close by the March 2020 decrees is a first step that we welcome, but these measures are still largely insufficient and do not respond to the alarm raised by all businesses and retail stakeholders.
We are calling for fairness in rent relief measures and for retailers to be able to benefit from the same conditions regardless of the nature of their landlord (large property companies, SCPIs/private landlords) and whether or not they have been affected by the closure orders. In this context, the requests made in the open letter addressed to the Prime Minister, the Minister of Economy and Finance, and the Minister of Labor are:
• Cancellation of rents during the closure period,
• Their indexation on the reality of the activity in the coming months, from their reopening
- VERY CLEAR GUIDELINES REGARDING THE MODALITIES OF DECONFINEMENT
Franchise networks and their franchisees must organize themselves now to prepare for the reopening of points of sale and ensure the safety of customers and employees. We hope that the protection and safety measures will be validated by the public authorities, communicated and their cost assessed as quickly as possible . To address each sectoral issue, they will imperatively have to detail the modalities by type of activity without leaving room for interpretation.
- SEAMLESS HOMOGENIZATION OF THE APPLICATION OF RULES ON THE NATIONAL TERRITORY
To ensure an optimal restart, all government aid and health and safety regulations must apply equally, regardless of the organizations involved in the mechanism. It is therefore essential that they be implemented uniformly across the country.
- EASING OF REGULATIONS ON SUNDAY WORK, OVERTIME AND SALES
To enable us to regain some sales volume despite reduced capacity due to security measures, it would be desirable to relax the rules governing Sunday working and to exempt overtime from taxes.
A delayed sales date and an extended sales period should allow for the need to destock without significantly damaging margins. This also implies the relaxation of rules regarding pre-sales reference prices.
" The situation we are experiencing is economically dramatic for the retail sector. Franchisees and their brands, most of whose points of sale are closed, are extremely worried about their business and the recovery period. This new phase must be prepared as quickly as possible, and we are uncertain about many of the essential prerequisites for reopening points of sale," Véronique Discours-Buhot, General Delegate of the FFF.
*figures from a survey carried out by the French Trade Council in collaboration with the FFF