Managing and preventing franchise problems

Starting a franchise is an exciting step for new business owners, so the last thing you want to think about is it all going wrong. But, as a franchise owner, it’s your responsibility to make sure you have developed plans just in case the worst happens.

Starting a franchise business

It’s easy to assume that nothing will impact you or your business, but disasters can and do strike when you least expect it. What if there is a flood or fire that destroys your business premises? What if electrical cables are damaged during a storm? What if important technology and equipment is stolen?

We all hope events such as these will never happen to us, but hope isn’t enough to stop a franchise business falling victim to unfortunate events beyond the franchisee’s control. Research shows that, in the UK, around half of all businesses that don’t have a recovery plan and suffer a disaster are likely to fail within a year.

To remain in business after a disaster requires preparation. Therefore, it’s crucial to have a recovery plan in place so your critical franchise information is protected and your business can keep running even in a worst-case scenario. As a franchise owner, you will have the support of the franchisor, but it’s naïve to think that you’ll easily pick up where you left off after a catastrophe.

So, when you’re starting a franchise, make disaster planning one of your key priorities.

What can a disaster recovery plan do?

• Protect stock, equipment and the building
• Protect the local community
• Stop employees getting injured or killed
• Help get the business up and running again quickly

What possible disasters should you prepare for?

The first thing you should do when you want to create a recovery plan is work out which disasters are most likely to affect your business. Analyse the area surrounding your premises and think about any natural disasters that could create problems. This could involve flooding, rock fall or even sink holes. If you’re setting up a business in a location with more extreme weather patterns, you may need to prepare for earthquakes, hurricanes or blizzards.

It’s also a good idea to put measures in place for power cuts, the loss of water supply and fire. Whether these factors affect the entire neighbourhood or just your business, you’ll need to be ready to counteract them. Less common but more dangerous eventualities include the collapse of your business premises, the spilling of a flammable liquid and the release of toxic substances. The latter two could be the result of an accidental or deliberate act by your employees or by the public but, either way, they require immediate action.

Finally, we come to something that’s often overlooked by business owners, but that can cause significant disruption to business operations: illness. Everyone knows that coughs and colds can wipe out a workforce for a good few days, particularly if you work in the food or healthcare industries. But widespread illnesses and contagious diseases can also have a significant impact on the number of customers you attract.

Creating a disaster recovery plan

We’ve compiled a list of steps for developing a recovery plan. By following them, you can have peace of mind that your franchise and your livelihood will survive, no matter what gets thrown at it.

1. Pull together a list of important contact names, numbers and addresses. If the emergency plan needs to be activated, use this list to touch base with key people and keep them informed of developments. You may also want to add details about your clients and any insurance companies you hold policies with.
2. Whether your franchise sells products or services, you’ll need to develop a communications strategy to limit the loss of customers while the business is responding to the disaster. If you have physical premises, you can post notices on doors and windows. You may also want to phone, email or send letters to customers to inform them of any changes to the business. It’s down to you to work out which strategy is best for your franchise unit, but you’ll need to put a plan in place before disaster strikes. This way, you can convey a calm and professional message.
3. Identify the items you’ll need immediately, should the worst happen. It may be things that you don’t currently have or need to store. A back-up generator, for example, may seem like an extravagant expense, but it would be invaluable if your power is compromised at any time. Work out whether it’s worth purchasing these items in advance. If you decide it isn’t, find suitable suppliers and make a note of their details so you can source the essentials quickly if you need to.
4. Document each stage of the plan in clear English. When all the franchise information has been documented and a plan is in place, you should duplicate it and keep a copy yourself. It would also be helpful to share a copy with another employee and store a copy off-site. In the event of a disaster, your priority, after making sure that you and your staff are safe, is to get hold of the plan so the disaster recovery processes can be implemented.
5. Show the disaster recovery plan to existing staff and add it to your recruitment documentation. Allocate specific roles and responsibilities to your employees. Make sure everyone knows who to inform if disaster strikes, and what action they should take to save lives and reduce property damage.
6. Refer back to the plan from time to time and make sure they remain relevant after changes to your operations. Hold regular meetings to discuss the procedures with employees and ensure they work well by organising regular drills. Remember, the most important thing is getting all your employees – and any customers or clients – out of the building safely.

Other tips and tricks to bear in mind

• Regularly back up digital data files and install firewalls to protect your technology from viruses and cyberattacks. Store hard copies of important documents in a secure box – off-site, if possible.
• If your business does suffer a disaster, you may be able to relocate to another site in the short term. This doesn’t mean you should pay for office space that isn’t being used for the entire term of your franchise contract, but you should be aware of possible alternatives in case they are ever needed.
• Contact suppliers and see if you can establish some sort of agreement whereby they can meet the demands of your customers while you cannot. For example, is there any way they could temporarily supply products directly to your clients?
• Make sure you have the correct level of insurance in place. Many entrepreneurs buy insurance to cover the cost of repairing or rebuilding business premises, but overlook the importance of protecting against disruption to the business itself. When developing your disaster recovery plan, you should take the time to review your insurance policies to identify any gaps in the coverage.
• From the moment your business is up and running, start putting some money aside for emergency situations. Depending on how much you’ve managed to save when the worst happens, you may be able to buy anything not covered by your insurance policy and continue trading almost seamlessly. You may even have enough saved to continue paying your employees and take your business through the recovery phase with limited negative impact.

Prevention is better than a cure

Of course, as a franchise owner, you’ll hope that your carefully crafted disaster recovery plan is never used. It’s great to have a plan, but your chances of having to use it at all are minimised if you also put several prevention measures in place.

Here are our top tips for preventing disasters:

• Regularly inspect your office space, business unit or shop to ensure they adhere to relevant building and health and safety regulations. Depending on your contract, you may be responsible for repairing and restoring the property. Either way, finding problems early on could avoid costly renovation work or loss of business further down the line; as they say, “A stitch in time, saves nine”.

• Contact suppliers you rely on and ask them whether they have disaster recovery plans in place too. Your franchise business may be negatively affected if they are victims of a disaster and can’t provide you with the same products or services as they usually would.

  Summary

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It’s important to be prepared, but it’s also worth remembering that business continuity isn’t the same as business as usual. Unfortunately, no matter how meticulous you are in the development of your disaster recovery plan, you can almost be certain that you will have overlooked something.

The key objective of the plan is to limit the impact on your business in the event of a disaster. Knowing you have a ‘Plan B’ in place will make you a more confident and secure franchisee, enabling you to continue operating and bringing in money even in devastating circumstances.