Crisis Preparedness in Franchise Agreements: Key Considerations for Noida Businesses

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Many situations that revolve around a business could be controlled by an individual, but there exist certain crises or natural disasters which are beyond the control of any person and have the potential to disrupt the business forever if no pre-planning is done to deal with them. This necessitates the inclusion of clauses talking about the business continuity plans (BCPs). These BCPs are in-depth plans created to make certain that a company or franchise is capable of ongoing functioning even during a major disruption. These disruptions may include natural calamities, economic recessions, or pandemics. Basically, to deal with any unexpected event, certain protocols are predefined, which ensures that the franchise suffers a minimum negative impact.

Let us first discuss the key components of effective BCPs in franchises:
• A crisis management team shall be formulated for every franchise or for more than one franchise if they are in close proximity, consisting of decision-makers, communication coordinators and operational managers with experience in managing crises. The roles and responsibilities of every member of the team shall be specified beforehand and meetings shall be held periodically to ensure that the tasks are being managed effectively.
• Having clear communication channels for both internal and external communication is essential. Internal communication involves providing timely and accurate information to the franchise employees through means of emailing, intranet systems, and emergency hotlines. External communication involves ensuring that the customers, suppliers, investors, and the public are made aware of the franchise operations even during times of crisis through their social media handles, press releases, and customer service responses.
• Different franchises are operated at different places, so a common crisis management plan cannot be created for every franchise. This could vary from natural disasters, in which there is no human involvement, to cyberattacks or supply chain disruption, which could be because of human intervention. So, a proper risk assessment has to be conducted for every franchise to evaluate potential threats, and then plans are to be tailored accordingly.
• Nowadays, data is the new gold, and the one who knows how to use the data of its consumers effectively can rule in his sector. But due to the technological boom, cyber-attacks are also on the rise, which often leads to data compromise. To deal with such situations, regular backups of the data should be taken and stored in some cloud storage for easy accessibility. Also, regular data integrity checks should be made to ensure the safety of the data.
• Employees are one of the greatest assets in any business, and they can also be considered the roots of the business. Thus, it is the duty of the employer or franchisee to ensure that its employees are well trained and familiar with the BCP protocols and the procedures to be conducted during an emergency. Training can be provided by organising workshops, making them familiar with the BCP clauses of the agreement, and other intranet resources which enhance awareness among the employees.
After discussing the key components, let us discuss some benefits in relation to them.

So, following are some of the benefits of including BCPs in the franchise agreement:
• As popularly known, prevention is better than cure; the same is the case with BCPs. They help a franchise to forecast potential risks and vulnerabilities in advance and make the franchise diligent about adopting preventive measures. Making a plan in advance allows the franchise to deal with the crisis swiftly and keep themselves stable in such situations.
• No one can predict with 100% accuracy when a crisis will get over, and thus shutting down the franchise for the entire period of that crisis is not a solution. Thus, to enable the franchises to continue their operations smoothly even in times of crisis, the option of BCPs is often preferred. By utilizing alternative modes of operations like remote working or working from some other temporary location, the operational downtime gets minimized which helps the continuity of essential functions and services of the franchises as well.
• Stakeholders, including customers, investors, partners, etc., have certain expectations from the franchises that their needs will be met despite the challenges, and if those franchises fulfil their expectations, the trust and confidence of those stakeholders in the franchise will increase which eventually leads to the strengthening of the brand’s reputation and relationship.

The BCPs are very crucial in today’s world, but along with the benefits, certain challenges are also attached to these practices, which restricts franchises from opting for them.

Following are some of the challenges involved in the implementation of the BCP under the franchise agreement:
• Lack of sufficient financial and human resources could be a hindrance for smaller franchises when it comes to developing and implementing comprehensive BCPs.
• Unawareness among the employees or even in the franchisees could make them resistant to change and prepare and adopt protocols in case of emergency, especially if they feel that those protocols will be burdensome for them instead of a benefit.
• Having franchises in diverse areas creates the problem of formulating a uniform plan for all the franchisees for easy implementation. This lack of consistency hinders the franchisors as well, sometimes requiring them to formulate special BCPs for each franchise.

Let us discuss some effective solutions to deal with these challenges as well:
• Integrating modern technologies like artificial intelligence (AI), IoT, and cloud computing can amplify the efficacy of BCPs.
• To resolve the issue of one-size-fits-for-all plans, the franchisor can create modular BCPs which could be customized to a certain extent as per the location and crisis to fit the specific needs of each franchise.
• To guarantee that employees and franchisees are well-prepared to face real-world crises, conducting regular drills and simulations can help them gain hands-on experience in those potential emergencies. These exercises, in short, not only reveal the vulnerabilities in the BCP but also present valuable opportunities for enhancement.

In conclusion, it would not be wrong to say that crises are part of the journey of a franchise, and better planning of those crises beforehand enhances the chances of the franchise staying long and strong in the competitive world. The points mentioned above help to understand how a franchise can prepare itself to deal with crises situations and what the benefits and challenges are.
Authored by: Adv. Anant Sharma & Sahil Arora

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