UAE: Franchising in a Pandemic

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As we enter Q2 of 2021, the global economy is still very much feeling the effects of the COVID-19 virus. We’ve crossed the one-year anniversary of when we started to see lockdowns and closures of businesses all over the world, with people encouraged to stay at home.

No one could have predicted the effects of the virus on the global economy and social life. Conversations around when things will get back to “normal” are few and far between – the focus is on adapting to this new “normal”.

We sat down with Mark Cunningham, the Global Development Officer at Smoke’s Poutinerie, to get a franchisor’s perspective on operating a global franchise business in a global pandemic. You can watch the full video interview here.
 
Founded over 10 years ago, Smoke’s Poutinerie is a Canadian poutine brand (loaded French fries – fresh cut potatoes, piping hot gravy, cheese curd and unlimited variations of toppings). Smoke’s Poutinerie currently has franchised restaurants in Canada and the United States, with ambitious expansion plans for the Middle East and the rest of the world in place. 

A few weeks before the UAE government announced a lockdown in Dubai, the company had just signed a deal with a UAE franchisee to open its first restaurant in Dubai in early 2020. 

Q: What was SP’s initial thoughts when the lockdown was announced?

A:  We knew we would be behind schedule with the opening. There were a couple delays with the actual opening of the restaurant because of the restrictions, but we continued to build out the restaurant making sure to follow all government guidelines. We also had some delays with food shipment as some items were coming out of Canada and Florida. Due to logistics and production, the process became drawn-out. The process is usually 100 days from placing an order until the shipment docks, but this time around it was around 150 days. There were also a lot of extra costs as a result of these delays. 

Q: Did you have to make changes to your system in order to adapt? 

A: We did a lot of Zoom training before we hit the market in Dubai.  A lot of our training is already built for online use, however, we would usually do this on ground. This time around we did a lot of this training in advance and online. This meant that we were able to open the restaurant soon after arriving – after 4 days, where usually it would be between 7-10 days. 

Q: Do you think anything good has come out of the pandemic? 

A: Franchise interest has gone up! The calibre of the franchisees in the last 10 months has gotten stronger. It may have to do with people wanting more control of their working environment and their destiny. We are also getting interest from prospective franchisees who already have other franchise brands. Usually, especially in Canada, we were getting people who are completely new to franchising. On the international front, our enquiries from July until the end of 2020 were probably three times what we got in previous years. We are also able to streamline our marketing efforts via Zoom and find that we are talking to our franchisees a lot more than usual.

Q: What do you think the future of franchising looks like? 

A: We have seen great benefits of being part of a larger organisation. For example, our suppliers have been extremely supportive – whether that has been a free case of chicken or holding pricing. The good thing about the franchising industry is that we have built such strong relationships with suppliers over the years that we are able to benefit from. Another positive is that we are seeing changes in the landlord model. In North America (Canada in particular), landlords are being very cooperative with franchisees and tenants. We have even had a landlord become a franchisee! One of our franchisees decided that he wasn’t going to renew his lease once the term was up. The franchisee sold the assets to the landlord and the landlord ended up becoming our franchisee. It is the first time we have seen this, but I can potentially see this happening more frequently. Landlords would rather take over franchises than have properties sitting empty.
 
While it may seem that the pandemic has only brought chaos and uncertainty, there are certainly some positives to come out of it. From a franchising perspective, franchisee clients have commented on how beneficial it has been to be part of a franchise network and receive support from an organisation. In contrast, other clients operating standalone restaurants have been inundated with having to adjust their delivery processes, updating technology, keeping up with new systems and ensuring that ever-changing government regulations are being adhered to. Franchisees have received great support and do not have to tread these often expensive and burdensome waters alone. From getting assistance when it comes to negotiating rent relief with landlords to receiving template notices/circulars when communicating with customers, the backing franchisees have received from the network has been invaluable. The future of franchising appears bright and so far, the franchise model has proven that it can stand the test of time. When all this is said and done, we will all be looking forward to going out and having a great meal with our loved ones!