Franchisees Are Fighting Back

Would Your Business Survive a Social Media Gaffe?

Today’s highlights include Facebook neutralizing another startup, a conversation about what the government should do next to support businesses, and a fresh take on the four-day work week.

THE 21 HATS SURVEY

Would You Risk Your Home to Build Your Business? Some business owners say borrowing against their home is simply the uncomfortable but necessary cost of doing business. Others say it’s a line they would never cross (especially if they want to stay married). Which stance is more common? Please complete our survey on business owners and debt, which will take less than a minute. We will all learn something about what entrepreneurs are willing to do to build a business when we report back on the results later this week.

SOCIAL MEDIA

A social media gaffe destroyed Sara Christensen’s business; now Christensen advises other business owners on how to avoid the same fate: “While Christensen maintains she only meant to give future job seekers guidance, what the rest of the world saw was an attack on a young job applicant ... The backlash was swift. In a matter of days, due to the death threats and attacks on her business, she knew her business was finished. Christensen had to leave the mastermind business behind and has started a new business consulting with business owners on how to avoid being canceled by the mob and how to respond if something negative about you or your business starts to go viral.”

• “Anonymize yourself online. Christensen advises that you make your address and information about your family as difficult to find as possible.”

• “Nothing goes up on the company's social media accounts without approval. You need more than one set of eyeballs on everything--and you still may make mistakes.”

• “Plan now. Who will you call? You need a crisis Public Relations Person and a lawyer at a minimum. Have them ready to go. You plan for natural disasters--you need to plan for social media ones as well.” READ MORE

FRANCHISING

The pandemic is tearing apart the already fraying relationship between franchisees and franchisors: “Stressed by the hit to business from the coronavirus pandemic, store owners and corporate bosses at Subway, Econo Lodge and other companies are bickering publicly as never before. Companies are asking franchisees to buy equipment and adopt new safety protocols, moves they say are necessary to reassure customers during the pandemic and to grow thereafter. Franchisees are pushing back on store upgrades, promotional discounts and fees they say are excessive and undermine their profits.”

• “‘I get that franchising isn’t a democracy, but at the same time, it’s not a dictatorship,’ said Keith Miller, who was among Subway franchisees resisting when the company asked operators during the summer to offer two foot-long sandwiches for $10, a price they said was unprofitable.”

• “Interest in franchising has been rising and looks set to grow further as some of the people who have lost jobs in the pandemic strike out on their own. Inspire Brands Inc. said laid-off workers have been asking about starting outposts of its restaurants, which include Arby’s and Jimmy John’s Gourmet Sandwiches. 

• “One franchise-led chain attributed the tensions partly to the pandemic, which has led to the temporary or permanent closing of about 33,000 franchise outlets, according to the trade association.” READ MORE

THE 21 HATS PODCAST

Because of last week’s holiday, we did not record a new episode for this week: In our most recent episode, Jay Goltz talks about the advice he wishes he could give his younger self, specifically to raise his prices. “I was growing at 20-, 30-percent a year,” Jay tells us. “It was nonstop chaos, and so, yes, it would have slowed the growth down, but I would not have gotten into the bank thing, of borrowing from the bank.” Jay and Dana White also discuss the value of mentors and some big lessons they’ve learned about hiring. The episode is titled “She Was a Hiring Goddess.” You can listen wherever you get podcasts, or here:

STARTUPS

Despite looming antitrust concerns, Facebook is buying Kustomer, a customer-relationship management startup: “The deal values Kustomer at close to $1 billion, said two people with knowledge of the talks. Kustomer, which is based in New York, had raised roughly $170 million in venture funding, according to data compiled by Crunchbase. The deal, which is subject to regulatory approval, could provide businesses and customers more support for interactions that occur on Facebook and its other apps, such as WhatsApp, Instagram and Facebook Messenger. More than 175 million people contact businesses using WhatsApp, Facebook said.”

• “‘Messaging provides a better overall customer experience and drives sales for businesses,’ Dan Levy and Matt Idema, executives at Facebook and WhatsApp, said in a company blog post.”

• “Facebook is facing the glare of regulators for buying up promising start-ups and neutralizing them as a competitive threat.” READ MORE

HUMAN RESOURCES

Consumer goods giant Unilever is testing a four-day work week in New Zealand: “Nick Bangs, chief executive of Unilever New Zealand, said from Monday its 81 staff would begin working four days a week while being paid for five -- and no, that won't mean its workers will be doing 10-hour days. ‘The whole premise is not to do 40 hours in four days.’ Bangs said the business would not be shutting down as a whole for the fifth day but workers would be staggered and take either a whole day or two half days off a week.”

• “‘This is about the ultimate form of flexibility. We want to work through it with each individual and say, What is going to work best for you to enable you to be at your best?'"

• “Part-time workers will have the same opportunity to work 80 per cent of their hours for 100 per cent of their pay.”

• “Bangs said it would trial the change for 12 months -- enough time to allow it to get through the initial ‘honeymoon phase.’” READ MORE

ENTREPRENEURIAL ECOSYSTEMS

Tony Hsieh tried to transform Las Vegas by attracting other entrepreneurs: “It was his own personal sandbox, a real-life Sim City that he spent $350 million to build in a neglected corner of Las Vegas, just north of the flash and crowds of the Strip. ... That year he moved Zappos’s headquarters into the old City Hall building. He tried to increase the number of what he called ‘collisions’ between interesting people in streets and cafes by adding public art and making downtown more walkable. He pitched his friends on moving their start-up ideas to his sandbox, luring hundreds of entrepreneurs.”

• “‘I remember standing on the corner at Eat and looking both ways and seeing nothing — like, nothing, [Natalie Young] said of the time before she opened her restaurant.”

• “But after it opened, and as Mr. Hsieh’s investments attracted more businesses and people, downtown became a destination, she said, and suddenly parents and children were arriving on bicycles at her restaurant’s front door.” READ MORE

GOVERNMENT SUPPORT

What should the government do for privately held businesses now? Led by CEO Ami Kassar, Philadelphia-based loan broker MultiFunding is convening a group of leaders who are on the front line of helping American entrepreneurs and business owners through the pandemic. The group will gather virtually on Thursday from noon to 2 pm ET to discuss what Congress should do next to support businesses. To view  the discussion live, CLICK HERE. To request the video, SEND AN EMAIL HERE.

THE COVID ECONOMY

States with few restrictions are spreading the virus beyond their borders: “As the number of COVID-19 cases skyrockets nationwide, the extent of the public health response varies from one state — and sometimes one town — to the next. The incongruous approaches and the lack of national standards have created confusion, conflict and a muddled public health message, likely hampering efforts to stop the spread of the virus. The country’s top infectious disease expert, Dr. Anthony Fauci, said last month that the country needs ‘a uniform approach’ to fighting the virus instead of a ‘disjointed’ one. Nowhere are these regulatory disparities more counterproductive and jarring than in the border areas between restrictive and permissive states; for example, between Washington and Idaho, Minnesota and South Dakota, and Illinois and Iowa.”

• “In each pairing, one state has imposed tough and sometimes unpopular restrictions on behavior, only to be confounded by a neighbor’s leniency. Like factories whose emissions boost asthma rates for miles around, a state’s lax public health policies can wreak damage beyond its borders.”

• “‘In some ways, the whole country is essentially living with the strategy of the least effective states because states interconnect and one state not doing a good job will continue to spread the virus to other states,’ said Dr. Ashish Jha, dean of the Brown University School of Public Health. ‘States can’t wall themselves off.’” READ MORE

California’s governor warns that the state is on the brink of a stay-at-home order: “Of particular concern is California’s intensive care unit capacity. Currently, about 75 percent of the state’s 7,733 ICU beds are occupied — with 1,812 of them filled by coronavirus patients. Unless things change, the state could exhaust its existing ICU capacity by mid-December, according to projections Newsom presented.”

• “‘It’s brutal. It’s astoundingly bad. ... They’re seriously, seriously bad numbers,’ said Dr. George Rutherford, epidemiologist and infectious-diseases control expert at UC San Francisco. ‘We don’t have any place to decompress patients, because stuff that’s just as bad is going on in Oregon and Nevada and Arizona. We are here on our own, and this is a natural disaster. And we need to be able to avoid the worst parts of this as much as possible. And if there were ever a time for prevention and heeding advice, this is it.” READ MORE

--Loren Feldman