The impact of COVID‐19 on franchising in emerging markets: An example from Brazil

Abstract

The outbreak of COVID‐19, the disease caused by the SARS‐CoV‐2 virus, has had significant economic, political, and social consequences worldwide. The franchising sector, consisting mostly of retail and service businesses, is an example of an industry that has been deeply affected. The experiences of franchising stakeholders in Brazil highlight the strengths of the franchising model in such situations. This investigation, based on primary data from webinars with food service, education, retail, and business‐to‐business service companies in Brazil, coupled with reports from commercial and franchising entities, reveals how the COVID‐19 outbreak has affected the franchising sector. It illustrates the measures that were taken, the negotiations that take place between suppliers and landlords, the adaptation of business models, the effects on franchisor‐franchisee relationships, and the impact the pandemic has had on relationships with customers. The strategies adopted by Brazilian franchisors and franchisees suggest lessons for other franchising companies in similar situations, such as those in developing and emerging economies.

The Impact of COVID-19 on Sustainable Business Models in SMEs

“…Although some industries have shown a certain level of resilience or even found a new operating niche, most small and medium-sized entrepreneurs in the services industry found themselves in "new normal" operating environments. The negative impacts of the pandemic have been reported in all spheres of life, and have had economic, political, social, and psychological consequences [1][2][3]. However, the strongest impact has been on human health and the perception of human health [4].…”

“…In order to slow down the pandemic, several countries have suspended business activities, and have adopted social distancing in order to reduce human-to-human transmission of COVID-19. This has led to lockdowns, reductions in consumption, the closure of communities, and the elimination of businesses [1]. Numerous economic experts see this pandemic as a metaphorical "black swan" event, "that is, a surprising, unpredictable event of great significance and severe consequences that dramatically changes the political and economic environment" [5] that may cause business failures [6,7].…”

The Psychological and Academic Effects of Studying From the Home and Host Country During the COVID-19 Pandemic

“…The emergence of the new coronavirus disease 2019 in December 2019 in Wuhan, China, and a global outbreak of the COVID-19 pandemic in March 2020 have resulted in an unprecedented lockdown of national economies and social distancing restrictions, which had far-reaching economic, political, and social (Bretas and Alon, 2020;Nicola et al, 2020) but also educational consequences. The nationwide closures of educational institutions in 143 countries (UNESCO, 2020) have led to the transition from the conventional to the online learning mode, which dramatically changed studying and working patterns (de Haas et al, 2020).…”

The Influence of COVID-19 in Retail: A Systematic Literature Review

“…In the retail sector there is an interdependence between stakeholders and, in an epidemiological context, the flexibility in the relationships of these parties is crucial for an effective response [37]. In times of crisis, retailers may have taken on an opportunistic role, to inflate prices of goods, with higher demand, and oligopolistic behavior has emerged through a break in the supply chain, by holding greater market power.…”