Standing Strong Six months since September 11, franchising is moving forward.
By Devlin Smith
Opinions expressed by Entrepreneur contributors are their own.
Raza Manji headed toward his shop, same as usual. He boarded the train in Long Island, exiting at Penn Station. People were rushing out of the station, but Manji didn't think anything of it. He figured it was probably just a fire drill.
Manji crossed the street to his Sir Speedy location. The phone was ringing when he got in; it was his wife calling. In the time it took him to travel from his home to his franchise, two planes had struck the World Trade Center, and life, especially in New York City, took a turn.
"In September, we did not even exist," Manji says. "Our sales dropped 70 percent or so."
Manji closed his Sir Speedy printing franchise on September 12 and returned to find few new orders coming in. "We were hit hard, because about 5 percent of our business was coming directly from the World Trade Center, and many of our other customers had dealt with companies in the World Trade Center as well," he says.
As sales slid, Manji had to figure out how to keep his business afloat. Closing was not an option. "Closing would not help," he explains. "If you close, you still have to pay the rent, the phone bill and so forth." Drastic measures were taken--all employees had their pay cut by 10 percent, and one employee was laid off.
While Manji was reorganizing his business, Sir Speedy corporate stayed in touch with him and their other New York City franchisees. "Our main job here was to contact each one of those centers," says Ron Zayas, vice president of marketing for Sir Speedy. "We wanted to know what we could do to help. In some cases that might have meant suspending royalties, providing additional personnel or trying to send some work their way. In some cases, it just meant talking to the employees and helping them develop a way of measuring when it was appropriate to go back out and start contacting customers."
US Franchise Systems Inc. also had to answer those questions for franchisees of its Best Inns, Hawthorn Suites and Microtel hotel brands. With business travel down, the franchisor's three chains were losing business post-September 11. "We put 22 of our people on the road for the Microtel brand, essentially trying to develop business in these hotels' local markets," explains president and CEO Michael Leven. "By the end of this month, they will have made thousands of sales calls and developed hundreds of good, qualified leads for the properties to help them get a share of the existing business."
US Franchise Systems also let franchisees postpone paying 50 percent of their royalties for 10 months. "If they were tight for cash, they could hold on to 50 percent of the royalties. It was sort of like a no-interest loan for the 10-month period," Leven says.
As Leven and Zayas were working within their systems to keep existing franchises open, two franchisees faced another challenge: opening their doors in the aftermath of the attack. On October 1, Ken Ross and Chris Fong took control of the formerly corporate-run Maui Tacos franchise location near the Empire State Building.
Even though operating a franchise near a tourist destination when there are no tourists may seem a bit daunting, Ross and Fong never doubted their decision to take the franchise over. "I'm an eternal optimist," Ross says. "[September 11] was unfortunate and doesn't represent the future. We're still a viable company."
Optimism has been a driving force in franchising since September 11. "It's hard to find anything favorable coming out of such a horrific event, [but] franchising finds the silver lining," says Don DeBolt, president of the International Franchise Association.
In response to September 11, the IFA presented a session at its February conference called "Doing Business After 9/11." Only 12 people attended the session, compared with the hundreds who attended other conference sessions. DeBolt considers that significant. "The message is that the franchising community may have missed a couple of beats, but it certainly stayed on the mark and just kept on going," he explains.
Going forward meant, in some cases, scrapping goals and plans. "We had to reinvent the wheel," Manji says. "We realized we had to start thinking again about what we do. We're refocusing."
Sales projections, for one, were reassessed. Manji's shop suffered last year not only because of September 11, but also due to the recession. This year, though, Manji sees things going up. "We've had to change our sales goals. Our new goal is to aim for year 2000 [figures], whether that's realistic or not," Manji says. "I believe that if you don't start aiming for something, you'll never achieve it."
