The implementing of the Federal Government’s 3 Stage plan will not mark an immediate return to the “old normal”.
Moving forward into such an uncertain world requires a detailed relaunch plan.
The three stage plan
As the Federal Government has announced its 3 stage plan and the States and Territories have started to re-open their economies, we are moving into a new phase of the COVID-19 pandemic.
The Federal Government has made it clear that each of the States and Territories will implement the 3 stage plan at their own pace.
There have been warnings from the various levels of government that an increase in activity is likely to lead to an increase in the number of coronavirus cases. Whether there are renewed restrictions will depend on the scale of any resurgence.
Know the current state of your business
A good starting point in the preparation of a relaunch plan is a review of how your business has been impacted by the COVID-19 restrictions.
You should first consider the current financial health of the business. Financial statements should be up to date and budgets should be prepared so that you can make an informed decision of what steps the business will take at each stage. For example, some businesses have decided that it is not profitable to reopen during stage 1 of the 3 stage plan, due to the limit on consumer numbers.
Before any decision is made on whether to open your business, you will need to consider the terms of any franchise agreement under which the business is operated.
For example, a force majeure clause in a franchise agreement which enabled a franchisee to escape liability for failing to operate the business due to government restrictions may cease to apply at stage 1 or stage 2 (even if it is not financially viable for the business to re-open).
Assess your supply chain
Ensure that your supply chain meets your current needs. Not all of your suppliers will be operating at their full capacity. The following questions may assist with your assessment:
Where are your suppliers located? Does this present any logistical issues?
Are there any suppliers who are not operating?
Are any of your suppliers facing cash flow or financial challenges which may effect their long term viability?
Do you have alternate suppliers in place for any suppliers who are not operating or who may have or who are likely to fail?
What are the lead times for supplies?
What contingencies do you have in place for supplies with extraordinary lead times?
In a franchise system, the ACCC has indicated that it expects franchisors to be continuously reviewing the franchise system’s processes and supply arrangements, making adjustments, and being flexible with requirements to help ensure its franchisees’ businesses remain viable.
Assess consumer demand
Consumer demand has changed during the COVID-19 pandemic. This has been partly driven by the health emergency leading consumers to prioritise health and wellness products and services and partly driven by the loss of consumer income. It is not clear what the “new normal” will look like.
You should think about how to re-establish connections with those consumers who may have developed new habits during the COVID-19 restriction period.
Some businesses have attracted customers during the COVID-19 restriction period that they would not otherwise have attracted. In these circumstances, consideration should be given to whether the business is able to retain these customers as the 3 stage plan is implemented.
Other businesses have adapted and changed the products and services they provide to customers. In these circumstances consideration should be given to whether any resources need to be diverted to these new offerings.
In a franchise system, the ACCC has advised that a franchisor and franchisee can agree to make changes to a franchisee’s product or service offering on a temporary basis.
However, if the franchisee does not agree to proceed with a material change proposed by the franchisor, which is outside the terms of the franchise agreement, the ACCC expects that the franchisor will not charge any new or additional fees to the franchisee for this changed service.
Know the COVID-19 Legislative Amendments which apply
In addition to the various federal and State grants, legislative amendments have been made to assist businesses during the COVID-19 pandemic. You should ensure that you are familiar with any legislative amendments that are relevant to your business.
The legislative amendments include:
– amendments to commercial leasing legislation based on the Commercial Leasing Code of Conduct;
-relief for financially distressed businesses;
-amendments to allow online meetings for companies.
Should you require further information on these or any other franchising issues contact us.
The information in this article is general in nature and is not intended to address the circumstances of any person or other entity. Although we do our best to provide timely and accurate information, we do not guarantee that the information in this article is accurate or that it will continue to be accurate in the future.
- Posted by Ana Haarsma
- On May 14, 2020
- 0 Comments