Source: French Franchise Federation
The coronavirus-covid 19 crisis is having a severe impact on the economy as a whole, with trade, franchise networks and their franchisees in the front line. Following the decrees of March 15 and 16, 2020 (supplementing the decree of March 14, 2020), the vast majority of franchise outlets are at a standstill, and are bearing the full brunt of this health and economic context of exceptional scope. Other brands, authorized to open their stores, are facing a drastic drop in business due to a lack of customers.
The French Franchise Federation (FFF), the professional federation for franchisors and their franchisees, has been surveying its members for several weeks now, and its findings are clear:
86% of businesses are at a standstill, and 23%* are thinking of closing for good
In this unprecedented period, the FFF recognizes that the government has put in place exceptional measures (partial activity, state solidarity fund, deferral of social security and tax charges) which are important to highlight, as they have helped to support the cash flow of businesses since the imposed closure of shops, and for several weeks to come.
Following President Emmanuel Macron's speech on April 13 announcing the reopening of certain businesses on May 11, franchise networks and their franchisees now face several major uncertainties:
- which businesses will be affected by the opening on this date, and what will be the timetable for others, notably hotels and restaurants?
- what sanitary measures will need to be implemented to welcome the public?
- how long will it take to return to pre-crisis activity?
The French Franchise Federation would like to draw the attention of the public authorities to the essential prerequisites for the reopening of sales outlets, to enable retailers to restart their business in the weeks and months ahead. In this context, we would like to :
- THE EXTENSION OF STATE AID AND THE APPLICATION OF THE PRINCIPLE OF VARIABILIZATION OF EXPENSES DURING THE RECOVERY PERIOD
As we all know, business recovery will be gradual for franchised retailers, and the return to pre-crisis sales levels will be long and complex. For this reason, to help them get back on their feet, we would like state aid to continue after decommissioning, over several months, on the basis of a payment pro rata to the sales generated over these periods. The partial activity scheme should also be maintained . An observatory could be set up to monitor the resumption of activity by sector.
- INDEXATION OF RENTS TO SALES PERFORMANCE
Over the past few weeks, the FFF has joined forces with other retail federations to reaffirm that simply postponing charges, mainly rent, will not be enough. Deprived of sales for weeks on end, companies will need cash to get back on their feet and continue trading in the months ahead. State-guaranteed loans cannot be used to pay rent deferrals. Last week's request from the French Minister of the Economy, Bruno Le Maire, for the cancellation of 3 months' rent for very small businesses 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 cry of alarm raised by all businesses and players in the retail sector.
We are calling for fairness in rental assistance measures, and for retailers to be able to benefit from the same conditions regardless of the nature of their lessor (large real estate companies, SCPI/private lessors), and whether or not they have been targeted by the closure orders.In this context, the demands formulated in the open letter addressed to the Prime Minister, the Minister of the Economy and Finance and the Minister of Labor are as follows:
- Cancellation of rents during the closure period,
- Indexation of rents to actual business levels in the coming months, from the time of reopening
- CLEAR GUIDELINES FOR DECONFINEMENT PROCEDURES
Franchise networks and their franchisees need to get organized now to prepare for the reopening of their outlets and ensure the safety of customers and employees. We would like the protection and safety measures to be validated by the public authorities, communicated and costed as quickly as possible. In order to respond to the specific problems of each sector, it is imperative that they detail the modalities for each type ofactivity, leaving no room for interpretation.
- SEAMLESS STANDARDIZATION OF RULES ACROSS THE COUNTRY
To ensure an optimum start-up, all government aid and health and safety regulations must be applied in the same way, regardless of the organizations involved in the scheme. It is therefore essential that they are implemented uniformly throughout the country.
- A RELAXATION OF REGULATIONSREGULATIONS ON SUNDAY WORKING, OVERTIME AND SALESAND SALES.
To enable sales volumes to recover, despite reduced capacity due to security measures, it would be advisable to relax the rules governing Sunday working, and to exempt overtime from tax.
A later date for sales and a longer period should make it possible to meet the need for destocking without causing too much damage to margins. This also means relaxing the rules on reference prices before sales.
" The current situation is economically dramatic for the retail sector. Franchisees and their brands, most of whose outlets are closed, are extremely worried about their business and the recovery period.This new phase needs to be prepared as quickly as possible, and we are uncertain about many of the essential prerequisites for reopening outlets", Véronique Discours-Buhot, General Delegate of the FFF.
*Figures from a survey carried out by the Conseil du Commerce de France in collaboration with the FFF.
