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McDonalds-Drive-thru-Orange-NRN.jpg Nancy Luna
Franchisors like McDonald's Corp. say they will help owner-operators with relief packages.

Financial relief coming to quick-service franchisees hammered by coronavirus pandemic

Subway, McDonald’s, Yum Brands, Chick-fil-A and Qdoba announce owner-operator relief packages that include deferrals of franchise royalties and rent payments

The parent companies of the nation’s largest and most beloved brands, whose restaurants are primarily run by franchisees, are putting together relief packages to help small business operators hammered by dine-in closures tied to the COVID-19 pandemic.

Yum Brands on Friday said it has established a Global Franchise Health and COVID-19 Support Team to “urgently assist” KFC, Pizza Hut and Taco Bell franchisees impacted by the coronavirus outbreak. 

“As an immediate step, to help our US franchisees with cash flows during this challenging time, we’re deferring all 2020 capital obligations for remodels and new unit development through the end of this year and working with US franchise leadership to implement royalty deferrals and advertising adjustments,” the company said in a statement sent to Nation’s Restaurant News.

Subway, McDonald’s, Chick-fil-A and Qdoba have also announced various forms of relief, including deferral of franchise royalties and rent deferrals.

Subway, the nation’s largest restaurant chain by units, is 100% franchised. On Friday, the company closed dine-in operations at nearly 28,000 U.S. restaurants, making it one of the last big chains to make such a decision. 

The Milford, Conn.-based company said supporting its franchisees, many of who own multiple units, is the company’s “top priority.” 

Financial relief enacted, thus far, by the sandwich chain includes: reduction in royalty payments by 50%; suspension of advertising funds for the next four weeks; support with rent abatement, reduction and deferral. 

“We will continue to assess and respond quickly to the rapidly changing landscape,” the company said.

Earlier this week, McDonald's Corp. said it is "working with franchisees around the world in order to evaluate operational feasibility and support financial liquidity" including rent deferrals.

"We are also working closely with suppliers on contingency planning for continuous supply," according to the SEC filing.

On Wednesday, Atlanta-based Chick-fil-A announced plans to give franchises “the financial flexibility to make the best decisions to care for their people.”

“Chick-fil-A has put in place a comprehensive plan to help offset financial hardship to their businesses related to the current crisis,” the company said. “Additionally, Chick-fil-A owned and operated restaurants are providing paid sick leave for team members who have a confirmed case of COVID-19.”

When asked to provide more details about its financial relief plan, Chick-fil-A declined to comment. 

On Friday, San Diego-based Qdoba Mexican Eats, said it is offering franchisees royalty defferal for eight weeks. The fast-casual chain has 730 restaurants in the U.S. and Canada. Of those, about 380 are run by small business owners. 

“The move will enable QDOBA franchisees to protect cash flow during these unprecedented times where restaurants are adhering to the CDC guidelines for social distancing and the U.S. government’s mandate for dining room closures,” the company said. 

CEO Keith Guilbault said it is looking out for its franchise owners, who are taking the necessary precautions to keep both the community and their employees safe. 

“QDOBA understands the plight of our franchisees during these unprecedented times, and we are committed to supporting our local business owners in any way we can,” Guilbault said in a statement. “Our focus with every decision is to be in the best position possible to address this downturn and continue to be a dependable choice for our guests.” 

The company is also hosting daily webinars to keep franchisees informed as impacts from the outbreak are constantly changing.

For example, over the last 24 hours, governors from California and New York asked residents to stay at home as much as possible. That makes restaurant delivery and takeout services even more critical to consumers. 

“We don’t take this situation lightly and feel that all of the small business owners within our network are counting on us to have their back and do what’s right,” Guilbault said.

Contact Nancy Luna at [email protected] 

Follow her on Twitter: @fastfoodmaven

For our most up-to-date coverage, visit the coronavirus homepage.

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