It is not worth the mental energy and distress to put pressure on yourself for what is out of your hands. Unproductive thoughts will put you on a never-ending cycle of “I have to figure it out, I have to figure it out.” That kind of spiraling activity just runs down your batteries.
Combating financial anxiety during a pandemic
Courtesy of BRANDPOINT
Photo by Aarón Blanco Tejedor on Unsplash
(BPT) – In the face of a global pandemic, financial anxiety is an everyday reality. Concerns surrounding personal finances, businesses shutting down and market volatility have us navigating new waters, experiencing more acutely than ever before how our financial lives are intertwined with our mental health. Amanda Clayman, financial therapist and Prudential’s financial wellness advocate, works with people to better understand the emotional connection we have with money.
According to Clayman, financial stress, while it may be inevitable in these times, does not have to control our lives. Even in the midst of this crisis, we can practice good financial and mental health and grow in our ability to maintain calm.
How to ease your mind and overcome financial distress
Clayman offers the below tips on how to ease your mind and overcome your financial distress during the days of COVID-19.
Allow yourself to feel a sense of loss: These big market changes may throw a wrench in the vision you had for retirement or your 401K. This is a scary realization, and a sad one. It is natural to have an emotional response, so let those feelings come and acknowledge them as they do. By not bottling up those sensations you are better able to say goodbye to your former plans and move forward. Additionally, looking your feelings in the face and comparing them to the reality of the situation provides valuable perspective that is key in the healing process.
Embrace uncertainty as part of the plan: Concentrate on the here and now, and don’t think too far ahead. It is common to try to manage anxiety by making a plan, but that’s going to be challenging when the future feels so uncertain. Try telling yourself, “I’m going to make the best plan I can based on what I know now. Then I’m going to trust that I will figure out problems as they arise and ask for help when I need it.”
Let go of what you can’t control: It is not worth the mental energy and distress to put pressure on yourself for what is out of your hands. Unproductive thoughts will put you on a never-ending cycle of “I have to figure it out, I have to figure it out.” That kind of spiraling activity just runs down your batteries.
Be intentional, not impulsive: Anxiety floods your mind with fearful thoughts of worst-case scenarios, tricking you into believing immediate action is necessary to fix the problem. It may feel like you are making progress initially, but these are not emotionally grounded decisions and can lead to costly mistakes. What you need is space for perspective, to differentiate between internal feelings and external reality. Try stepping away from the computer or going for a walk before making big moves. Remind yourself that you are safe right here, right now.
Don’t be a hero: You don’t have to bear this weight alone. You may feel as if providing financial security is all up to you, especially if you’re a caretaker or your kids moved home to ride out the pandemic. But this is not an individual problem, it’s a collective one we can face together. So reach out — take care of each other and ask to be taken care of in return. In addition to sharing your feelings with family and friends, be in touch with creditors, landlords and service providers about your concerns. They may be able to offer a payment holiday, partial payment or interest-only payment.
Explore new types of self-care
One of the most important lessons in combating any anxiety is to remember that you will not feel this way forever. In the meantime, let’s use these moments to explore new forms of emotional and financial self-care. With thoughtful reflection, we can foster a relationship with money that promotes mental health in even the most challenging circumstances.
We instill these mottos in those joining the Go! Go! Curry! family because we think they are not only useful for working in the curry restaurant business, but also essential for all human beings.
Go! Go! Curry!’s 5 Spirits & 5 Core Values
BY TOMOKO OMORI, CEO of Go! Go! Curry! America.
Hello friends,
Last time, I talked about my principles of managing a business that I learned while managing Go! Go! Curry! America. In my humble opinion, “Be positive and caring” is the most basic idea you can return to when you get stuck when running a restaurant franchise. Today, I’d like to introduce Go! Go! Curry!’s main mottos that we call the “5 Spirits” and “5 Core Values”, which we put into practice in everyday operations.
The 5 Spirits
1. Serve with a Smile
2. Communicate Well and Work as a Team
3. Help Each Other and Respect Each Other
4. Always Try to Improve
5. Think Positive Every Day
We instill these mottos in those joining the Go! Go! Curry! family because we think they are not only useful for working in the curry restaurant business, but also essential for all human beings. What they say is quite simple: do the right thing as a person. So I want our franchise business partners to be able to follow these mottos to establish an exceptional work environment.
We originally only introduced these as operational standards in each Go! Go! Curry! location, but we now employ them in our headquarters and support center as well, because they are universal business standards which can be applied to everything we do.
Also, I always encourage our employees to say “thank you” as many times as possible. “Thank you” is a beautiful phrase that everyone in the world can agree on. By saying it out loud, you can show appreciation and cleanse your mind.
All the things mentioned above are essential concepts as a human being and can be used to improve your character wherever you are. These are the foundations of our corporate culture.
Next time, I’d like to share our struggles and solutions regarding New York City’s rapid wage growth and outrageous property prices. Until then, take care of each other and stay genki.
If you would like to partner with us and own a restaurant, we are happy to share our experiences and knowledge to help grow your business!
About The Author:
Tomoko Omori was born and raised in Japan. She came to the USA alone to become an actress, where she received an AA degree from college majoring in Drama. She received a scholarship to study music at the American Musical and Dramatic Academy in NYC.
After working for TV broadcasting and a publishing company, today, Tomoko is the CEO of Go! Go! Curry! America, a grab-and-go Japanese comfort food restaurant franchise. There are over 75 locations in Japan, and 11 in the USA. She says, “Our mission is to serve our tasty curry nationwide in the USA and Canada to enrich the lives of our customers, employees, franchise owners and the communities we serve. Our vision is to create millions of satisfied customers, contented tummies and miles and miles of smiles for everyone!” Tomoko received the Nikkei BP Woman of the year award in 2015.
“Cybercriminals are continuously looking for ways to exploit computer system vulnerabilities and home networks are popular targets because so many of our devices — phones, TVs, computers, even appliances — are connected to them,” said Jane Li, Mercury Insurance director of product management.
5 Tips To Protect Your Network From Hackers When Staying At Home
By BrandPoint
(BPT) – Being home 100% of the time has become the new norm for many Americans, as social distancing is implemented in communities across the country to slow the rapidly spreading COVID-19 pandemic. Connected devices are being used virtually nonstop, as the homebound stream shows to binge watch and video chat with friends to help pass the time. Unfortunately, most residential computing networks aren’t regularly maintained and monitored to protect against security breaches. This presents hackers with a virtual playground of which to take advantage.
“Cybercriminals are continuously looking for ways to exploit computer system vulnerabilities and home networks are popular targets because so many of our devices — phones, TVs, computers, even appliances — are connected to them,” said Jane Li, Mercury Insurance director of product management. “Insurance companies like Mercury provide solutions to help financially protect homeowners and renters if they fall victim to a cyberattack. There are also steps they can take ahead of time to help prevent one from happening in the first place.”
Following are five tips to protect your home network — and the devices connected to it — from hackers.
Power down your devices. This disables the internet connection, cutting off access to any personal information stored on your computer, tablet or phone. Unattended machines are easy targets for hackers, especially if you’re asleep.
Secure your wireless network. Information accessed on an open network, including email passwords and sensitive bank information, is fair game for hackers. Don’t make their jobs easier — protect your Wi-Fi network with a strong password that’s difficult to guess. Wireless routers that are issued by cable providers are typically assigned a network name and password that’s easily located on a label on the device itself. These can be changed using your online account, so do this as soon as possible for added security.
Invest in anti-malware software. Malware — or malicious software — can be installed on your computer without your knowledge so hackers can damage your system, steal personal information or restrict your access to extort money from you. Anti-malware software helps protect against, detect and remove malware, stopping cybercriminals from doing further damage. Also, avoid downloading music or video files from suspicious websites, and clicking on links or email attachments in messages sent from unknown senders to help prevent malware from infiltrating your system.
Install recommended updates. Smartphone, computer, tablet and smart TV manufacturers, among other providers of connected devices, offer periodic software updates to protect against potential security breaches. Chances are, if an update is recommended, hackers have already discovered a way to access your personal property and information, so keep your software up-to-date. Set your devices to install auto-updates when possible.
Beware of phishing scams. Phishing scams aren’t new, but hackers continually use more sophisticated email — and even text messages — to trick people into providing their personal information. Once again, do not click on the links or attachments in messages from unknown senders.
Li suggests homeowners and renters consider adding Home Cyber Protection to their existing policies as an additional way to protect against hackers. “Even the most vigilant individuals can experience a cybersecurity breach,” said Li. “Having coverage to help recoup financial losses that are brought on by cyberextortion or stolen personal information can offer peace of mind during an otherwise stressful time.”
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In short, most operators, with a great deal of effort, should be able to generate enough sales, on premise and off, to satisfy their landlords, who will have become their partners, dependent on sales. Store level expenses will be largely variable, including rent, and there should be less upward pressure on the fixed costs at store level.
RESTAURANT INDUSTRY IN TURMOIL, BUT THERE IS A WAY OUT! By Roger Lipton
The world, as we have known it, is seriously changed for the foreseeable future. Restaurant and retailers will have to cope with lots of new requirements that deal with social distancing and testing.
PAYROLL PROTECTION?? NOT QUITE!
One of the current priorities is to access the Payroll Protection Program. Unintended consequences are already coming into focus. Restaurant operators realize that business will be slow after opening, which is still weeks or months away. If they spend 75% of the money, mostly for payroll and rent, in the next eight weeks to qualify for loan forgiveness, they will not have the resources to carry the predictable losses when they first reopen, and those losses will likely last for months at least. They have the option of holding the money, which will then remain a loan rather than a “grant. However, while the two year term, at only 1%, seems cheap enough, there is no way that cash flow will be sufficient to pay back the loan that quickly.
Some operators will therefore let their ex-employees remain on unemployment insurance for the time being, use the government capital to cushion losses after reopening, and deal with the ramifications two years from now. Other operators, will take the money, never reopen, and walk away. There are no personal guarantees, after all.
At the least, therefore, the program must be changed to allow for a sufficient payback period to recoup losses. We suggest this will happen, because the problem, and the fix, is so obvious. There are, predictably, other unintended consequences of this huge program that was implemented with such a rush, but we will leave that for another day.
RENT – THE BIGGEST FIXED COST
We are all reading about various companies, small and large, holding back rent. It’s understandable under the circumstances, and landlords realize that their world has changed as well. At the end of the day, we believe that percentage rents will be the new normal. The lessors have no real option. Yesterday’s rent structure is gone, and their alternative in almost all cases is to have empty space for perhaps years.
OFF-PREMISE CONSUMPTION BECOMES CRITICAL
Even after vaccines and treatments are in place, it is going to be quite a while before consumers are comfortable in close contact with strangers. We can be assured that dine in traffic will be at a lower level than previously. It therefore becomes critical for restaurant operators to do everything possible to build their off premise activities. Drive-thru locations, where applicable, can help a lot, but delivery (with or without third parties), catering, curbside pickup, packaged products to go are all brand building alternatives that can help to carry the physical overhead.
OVER-STORED NO MORE
Stated most concisely: there will be more closures than we have seen in at least fifty years (from today’s huge base). Far fewer chains will be expanding. Survivors will have less competition.
LABOR COST PRESSURE WILL ABATE
When the stores open, there will be less upward wage pressure than we have seen in the last few years and that we were anticipating would continue.
The cost structure will be more variable than ever before. It will take a while for negotiations to take place but rent will be based on a percentage of sales. Cost of Sales is variable and Labor is largely variable. Other Operating Costs at the store level (waste removal, bank fees, insurance, property taxes, etc.) can be negotiated lower. (It happens that I am affiliated with a Company that can help in this regard, with no up front cost.) Corporate Overhead can be scaled for the new world we are all living within.
In short, most operators, with a great deal of effort, should be able to generate enough sales, on premise and off, to satisfy their landlords, who will have become their partners, dependent on sales. Store level expenses will be largely variable, including rent, and there should be less upward pressure on the fixed costs at store level. Store level cash flow may not approach previous levels but should be adequate to support, if not enrich, a reasonable level of corporate overhead. Regional operators will have an advantage, with their proximity to the store level and their ability to respond quickly and efficiently to changing circumstances. National operators should decentralize to whatever extent possible for the same reasons. Dedicated corporate management should be able, in most cases, especially if not burdened by excessive debt, to lead their companies to survive, and even prosper over the long term.
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About Roger Lipton Roger is an investment professional with over 4 decades of experience specializing in chain restaurants and retailers, as well as macro-economic and monetary developments. After earning a BSME from R.P.I. and MBA from Harvard, and working as an auditor with Price, Waterhouse, he began following the restaurant industry as well as the gold mining industry. While he originally followed companies such as Church’s Fried Chicken, Morrison’s Cafeterias and others, over the years he invested in companies such as Panera Bread and shorted companies such as Boston Chicken.
Workplace talent drives success. It is not products, not marketing, not demand that ultimately make a company competitive. Don’t fall victim to fear and culture failures during these times. It will inhibit the future health and growth of your company.
Beyond The Covid19 Shutdown, Returning Workers will be Judging “Workplace Culture”
By Gary Occhiogrosso Photo by Austin Distel on Unsplash
As companies continue to evaluate their business in these challenging times, one of the areas many small business operators, and CEO’s of large companies, are investigating is workplace culture. As we ramp back up, many companies will be seeking employees. Many workers will be very focused on how companies treated their employees, vendors, and customers during the pandemic shutdown. Returning employees will also want to know that they, their work, and their ideas, make a difference. Make no mistake; the job market will be so robust that workers have the opportunity to pick and choose for whom they will work. Companies should take this time to revisit, and if necessary, reinvent their workplace culture if they intend to compete for the most qualified employees. Workplace talent drives success. It is not products, not marketing, not demand that ultimately make a company competitive. Don’t fall victim to fear and culture failures during these times. It will inhibit the future health and growth of your company.
Please review this article in the Harvard Business Review. It clearly and expertly advances the concept of workplace culture and how to improve your approach and practices to best advance your company in the upcoming turnaround.
Excerpt:
Today’s workforce wants to know that they’re making a difference within their companies. While work cultures are unique to every organization, the foundation of what enables a culture to thrive is the extent to which employees are empowered to be engaged, feel valued, and be heard. This is where leadership comes in.
For all our franchisor subscribers; we think this is big news especially in these trying time. Robert Cresanti- President and CEO of the International Franchise Association (IFA) have just notched a major victory in the battle regarding ASC 606 and the Franchise Revenue Recognition Rule.
Below is the Letter Mr. Cresati emailed to IFA members announcing the good news.
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Dear IFA Member:
I am writing to share an important, exciting – and non-coronavirus – piece of good news. This morning, the Federal Accounting Standards Board (FASB) delayed implementation of their ASC 606 revenue recognition rules for one year!
While addressing the economic impacts of COVID-19 has been our primary focus over the last month, we have continued to press forward with our other franchising priorities, particularly the 606 recognition rules as FDD filing deadlines loom ahead.
Over the last several weeks, IFA staff and members have had several important and direct conversations with FASB, including with the current Chair, Russell Golden, and other members of the Board and technical staff. Today’s announcement is the result of that – it’s even more impressive that this delayed implementation is exclusive to franchises!
Following this morning’s decision, FASB will begin the process of taking public comment on an alternative accounting standard for private sector businesses (an “expedient”) that will allow us to make the case that certain pre-opening costs are earned immediately and should be recognized as such. IFA will keep you abreast of developments as we prepare our public comments.
We appreciate FASB’s efforts to provide relief to the franchising sector during this unprecedented time and thank them for their unanimous decision. Understanding that many franchise brands have spent considerable time and resources on filings to date, we encourage you to discuss with your legal and auditing firms whether any amendments may be made to year-end audited financial statements.
In the meantime, please don’t hesitate to reach out to Suzanne Beall with any questions. We hope this bit of good news provides you with a little hope in the midst of the crisis.
Thank You,
Robert Cresanti, CFE
President & CEO
International Franchise Association
Look for trends in your sales—for example, busy days and hours versus slower times and days. For instance, if Tuesday afternoons are consistently slow, then consider cutting back on your hourly staff for that period…
In good times and not so good times, operating a profitable restaurant can be a daunting task. The high cost of rent, labor, and raw ingredients, often overlooked by guests seeking a fine dining experience at fast-food prices can make value perception and profitability difficult. Nonetheless, there are a few things every operator should be aware of, especially during tough economic times. Below I have listed six tips that when put into everyday practice, not only help save money and increase sales when times are lean but serve to maximize profits in better economic times.
Be Mindful Of Your Payroll
Payroll is the one thing in your operation that you have total control over. You determine it, and no one or anything else has a hand in the result. Knowing how to manage payroll is an essential element to success in the restaurant business.
Controlling labor during a slow business period can be tricky. If your businesses’ survival is dependent upon the need to terminate personnel, then managing the schedule of your hourly employees as well as your key people in a compassionate way must be your top priority. You’ll need to delicately balance the limiting of hours among your best employees. Whenever possible, spread the cutbacks out amongst as many team members as possible. That way you can lessen the impact to any one team member.
Be mindful that if you schedule less labor than you need, your restaurant may end up giving poor guest service. That will negatively impact the guest experience as well as your Social Media reviews. On the other hand, if you over-schedule your labor as a percentage of sales, then you’ll be out of line with acceptable budgets and typically lose money.
Look for trends in your sales—for example, busy days and hours versus slower times and days. For instance, if Tuesday afternoons are consistently slow, then consider cutting back on your hourly staff for that period. If you employ a salaried manager, have that person substitute in a station position. Labor is the most critical line item on your P&L. Oversee it, adjust it each day based on projected sales. Remember, unlike food inventory, which allows you to store it (in many cases) for another day, labor, once spent, is gone forever.
Engineer Your Menu To Reflect Current Goals
Sometimes bigger isn’t better. A smaller, more focused menu is often more profitable than the “be everything to everyone approach.” During a recession or slow season, use your menu to attract new customers as well as enticing your regular customers to visit more often. Adjust your menu by offering items that have more appeal in a budget-conscious climate. Understanding what guests want, what they can afford, and what you wish to sell them is a critical piece to menu engineering.
Also, position your lower food cost items in a prominent spot on your menu. That way, you can offer your guests lower-cost menu items and still make a profit.
And although it goes without saying, don’t forget to conduct a weekly inventory. Monitoring your food cost will help you manage cash flow most efficiently and accurately.
Stay In Front Of Your Customers
The saying “out of sight, out of mind” is never is more accurate than in a recession or slow period. You may not want to run your full Radio/TV or Print campaign. However, now is not the time to cut advertising to zero. Instead, increase your paid social media and your paid Google ads. Post photographs of guests in your restaurant, delicious-looking food items, and creative, fun graphics to entice and remind your guests how much they enjoy your restaurant and what you have to offer.
In addition, utilize the database you’ve collected of customer’s email addresses and mobile telephone numbers. You can use this data to send your customers special offers via email blasts and text messaging. Be proactive!
Promote Value, Not Price
During a recession or other tough times, offer your guests real value, not discounts. It is my opinion that you should never attach the price of the menu item to the item itself, for example, selling a hamburger for $1.00. Discounting your products creates a considerable problem for future sales of those items when you move them back to full price. Lowering the price of a menu item creates a product/price value perception, which may negatively impact the customer’s perception of value at a later date. Guests will connect the cost of the menu item to its overall value, now and in the future. Cutting prices for the sake of attracting customers or keeping up with a competitor is never the answer.
Instead, create reasons and additional “occasions to use” your restaurant in your guest’s mind. Then the guest will associate a discounted price with a particular promotion or event. For example, ladies’ night, or seniors day, or it could be the anniversary of the restaurant, and you’re rolling back prices, or National “whatever” Day. Whichever the case, offer real value by promoting events and Limited Time Offers (LTO’s) as a reason to create the “frequency of visit.” This method is also useful for attracting new guests or guests that haven’t visited your restaurant in a while.
Paying Attention To The Details Saves Money
Pennies add up! Keep a watchful eye on expenses. Monitor electricity and water usage, napkins, paper towels, cleaning supplies, and other items that often go unnoticed until you see the cost on your P&L. Be mindful and control those costs each day. Make your staff aware of things like shutting off lights, turning off water faucets, and how many paper towels they may be used to clean a counter. Get your team members “woke” to the idea and actual cost of everything in the restaurant.
One Final Note
Good times follow bad times, and bad times follow good times. Nothing is forever, so learn how to manage a restaurant through a rough patch you’ll be in a better position to maximize your profits when times are good.
Legal Issues and COVID29 – Excerpt – Other potential avenues also turn on the exact language of the lease. If the tenant’s obligation to pay rent is conditioned on the landlord’s ability to deliver to the tenant continued access to the premises, it would reasonable to conclude that rent can be excused while the premises cannot be accessed.
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Today’s post is written by New York attorneys Michael Einbinder and Richard Bayer of the law firm Einbinder & Dunn. They have years of experience handling a variety of legal work for businesses large and small. The post today reflects their thoughts and advice regarding how small businesses can deal with the current COVID 19 issue.
Whether you’re running the small independent business or are an independent contractor or if you are a franchisor or a franchisee, you will find the information contained in this post helpful. Of course, if you need greater detail or have questions, the contact information for Einbinder & Dunn is located at the bottom of the post.
We wish everyone to stay safe and look to the future as we move past this trying and critical time in our history.
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A Message About COVID-19 By Michael Einbinder and Richard Bayer-
Photo by Clay Banks on Unsplash
Recently, we have received numerous inquiries from clients, including those in the retail and hospitality industries, concerned about the impact that Covid-19 will have on their businesses. Although the landscape appears to be ever-changing, we wanted to send this email to offer you general guidance and practical considerations as well as to highlight important legislature to keep in mind. As a firm, we are deeply committed to assisting our clients through these trying times and we will hold that commitment steadfast while new developments unfurl.
More and more states, counties and other municipalities are issuing “shelter-at-home,” work from home mandates and other restrictions on gathering in groups larger than 10, 20 or 50. The impact of such mandates has been felt across the board and has been especially painful for restaurants, bars, nightclubs, gyms, movie theaters, retail businesses, barber shops, health and beauty salons and countless other consumer facing businesses.
Real Estate Lease and Other Contracts
It is not surprising that in this current climate, many businesses are seeking help to understand their lease obligations. Can they close their store, restaurant, or business? Can they stop paying rent? The short answer is likely yes, but not in every instance. Your lease may contain clauses that may allow you to close your business and/or stop paying rent. Additionally, applicable case law may also support your ability to close your business and/or stop paying rent.
You are likely seeing the terms force majeure and “Acts of God” appear frequently in articles, newsletters and other publications as more and more businesses are looking for ways to freeze performance under a contract or perhaps, terminate the contract altogether. A force majeure clause, which typically includes a reference to “Acts of God,” is one that permits a party to a contract to be relieved from performing under that contract during a time when, due to some event outside of its reasonable control, the party’s ability to perform is impeded, hindered or prevented. Generally speaking, there is a high bar for the invocation of a force majeure clause and whether or not it will apply will depend on the exact language of the contract and the law of the jurisdiction set forth in the contract. In the context of a commercial lease, if the lease contains a force majeure clause that specifically relieves performance in the event of a pandemic or similar event, a tenant may be permitted to close and stop paying rent. However, force majeure clauses can often be a frustrating dead end because: (i) courts apply it very strictly; (ii) leases frequently apply it to limited circumstances such as delays in construction and few if any reference pandemics; and (iii) many leases specifically do not permit force majeure to forgive payment of rent.
However, in some jurisdictions case law may provide a stronger argument (than a contract) for relief from a contract, including possibly permitting a tenant to close its business and/or stop paying rent. Two such doctrines found in case law are the: (i) discharge by supervening impracticability; and (ii) prevention by governmental regulation or order. As to the former, a supervening event (such as a pandemic) may allow a tenant to close and/or stop paying rent if an event occurs, the non-occurrence of which was a basic assumption upon which both parties made the contract. The event must have been unforeseeable. The standard is high. It is not enough that the business has been made difficult or unprofitable, it must have been rendered impracticable, which means incapable of being performed. In the context of a lease, if customers are legally restricted from visiting a business location due to unforeseen circumstances (a pandemic lockdown), a court may find that to be sufficient under the supervening impracticability doctrine to permit the tenant to close and/or stop paying rent.
Prevention by governmental order is self-explanatory and much easier to prove. As in the case of the recent order by the Governor of New York, if a business is simply prohibited from operating due to unforeseeable circumstances, which prevents it from operating according to the terms of a contract (in a lease situation, the business is prohibited from operating in the premises), then the party may be excused from performance (in the case of a tenant, remain open or pay rent). The businesses that were targeted in the original Governor’s Orders in New York, such as gyms and movie theaters, certainly can argue they fall into this category. There is a gray area if businesses, such as restaurants, are able to partially operate through takeout and delivery. Whether their level of operation is enough to make their businesses legally “operable” will probably have to be tested in court.
Other potential avenues also turn on the exact language of the lease. If the tenant’s obligation to pay rent is conditioned on the landlord’s ability to deliver to the tenant continued access to the premises, it would reasonable to conclude that rent can be excused while the premises cannot be accessed.
Assuming for a moment that applicable law does not permit the tenant to close its business and/or stop paying rent, many businesses will make the practical decision to do just that. What repercussions may follow from that will likely be specified in the lease and subject to state/county/local municipality mandates. Many jurisdictions have already announced moratoriums on commercial evictions.
Many of the legal principles that offer an avenue for tenants to close and/or stop paying rent under a lease may also be applied to other contracts, including force majeure, doctrine of supervening impracticability, prevention by government regulation as well as others including frustration of purpose). Again, whether performance can ultimately be excused will depend on the exact language of the agreement and the applicable jurisdictional law.
We are urging clients to review their leases and contracts for the types of clauses that we highlighted above. We can help if you like with the review and the development of a plan of action for the future. With a proactive approach and open dialogue with the other party (whether your landlord, supplier or other contracting party), you may be able to develop a plan of action that gives you relief now and provides for the continuation of your business after things normalize.
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Businesses with insufficient cash reserves or access to capital will likely struggle during this time and for many, unfortunately, this outbreak will result in their permanent closure. For companies suffering from or expecting to suffer from a cash shortage, obtaining a credit line or increasing one is critical. We strongly recommend that such businesses immediately contact their existing banking partners to see what opportunities for financing are available. If your current banking partners are unable to assist, please let us know. We have cultivated strong relationships with contacts in the banking and financing industries and may be able to make an introduction.
The U.S. Small Business Administration has implemented a disaster loan assistance program under which, small businesses that have suffered economic injury as a result of Covid-19 may qualify for low-interest federal loans. Loans of up to $2,000,000 may be offered for use to pay debts, payroll, or other bills that cannot be paid due to the impact of Covid-19. Here is a link to the SBA’s website: https://disasterloan.sba.gov/ela/ Other relief may become available and businesses should continue to search for grants and programs that may provide additional funding.
In addition to increasing your access to capital, you should be acutely aware of voluntary assistance initiatives being offered by your existing business partners. Numerous credit card companies are encouraging customers who are experiencing financial hardship due to Covid-19 to reach out and discuss available options, which may include fee waivers, temporary interest rate reductions, waived penalties for missed payments Con Edison, a provider of electricity and gas in New York, is offering to extend payment deadlines to customers without penalty, provided that customers apply for that assistance. Throughout the country, other business partners will be offering similar assistance initiatives.
Insurance
We are advising all clients to review their insurance policies carefully and especially, their business interruption coverage. Business interruption insurance is generally intended to cover losses from a direct interruption to a business. It typically covers lost revenue, and fixed expenses, such as rent and utilities. Some companies may have additional coverage in the form of a contingent business interruption policy which is intended to cover losses resulting from indirect disruptions, such as supply chain issues. Because many insurers excluded viral or bacterial outbreaks from standard business interruption policies as a result of the SARS outbreak, whether your policies will cover losses resulting from Covid-19 business interruption will turn on the exact language of the coverage.
These are extremely difficult times and businesses are forced to consider making equally difficult decisions regarding their employees. The White House has requested that states delay reporting lay off figures out of a fear that the skyrocketing numbers will set off another wave of panic in the stock market. Without a doubt, the number of layoffs will be staggering. Union Square Hospitality Group has already announced layoffs of 80% of its work force. Hotel and hospitality heavyweights such as Hilton, Marriott and MGM have furloughed tens of thousands of employees.
While not garnering the same media attention, small businesses will have to make the same decision. Principals will need to determine whether the business continue to pay staff their full wage during this outbreak or will it be forced to lay off employees, or short of that, furlough salaries until things recover.
Federal and state governments are keenly aware of this issue and are seeking to implement relief packages. Phase I included the Families First Coronavirus Emergency Response Act, which was signed into law on March 18th. The Act extends sick leave to workers diagnosed with or in quarantine due to Covid-19. A tax credit is made available to employers in an amount equal to 100% of the qualified sick leave wages paid by the employer. New York State has announced that employers are required to provide job protection and paid sick leave for individuals who have been quarantined as a result of Covid-19. New York City has enacted an Employee Retention Grant Program that offers assistance to New York City businesses with one to four employees that demonstrate at least a 25% decrease in revenue as a result of Covid-19. Other states and local municipalities may have similarly enacted assistance packages.
Further financial relief will required. As of today, potential recovery plans would give $1,200 to many Americans. Ongoing assistance will undoubtedly be necessary. New York has waived its seven-day waiting period to register for unemployment insurance and reports indicate that over 21,000 calls were made in a single day compared to approximately 2,000 the week before.
Government Support
In addition to the initiatives indicated above, the Federal government has extended the tax filing deadline until July 15, 2020. Tax payers will now have until July 15, 2020 to file and make tax payments that would have otherwise been due on April 15, 2020. If you are expecting a refund, you may want to file your Federal tax return as soon as possible. It is unclear when refunds will be issued, but those funds, if issued, would be helpful during this outbreak. New York State, at the moment, is silent on this issue, but we expect further guidance. We recommend that you keep abreast of state updates.
===================================== About Einbinder & Dunn
Our story begins in 1990, when Michael Einbinder and Terrence Dunn became partners. We shared a vision to offer clients real value—by providing personalized, yet cost-effective legal services. We also employ a team of professional, highly dedicated associate attorneys and two paralegals, in addition to other support staff, all of whom share the partner’s vision of a sophisticated yet personalized practice. Based in Midtown Manhattan, with offices in White Plains and Millburn, New Jersey, Einbinder & Dunn serves mid-size and larger companies as well as small businesses and entrepreneurs.
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DISCLAIMER
This post is not intended to constitute legal advice, which would require a full review of your agreements and further clarity on the government response, which is in constant flux. All information, content and links in this email are provided for general information purposes only. Information below may not constitute the most up-to-date legal or other information, as the same is continuously changing. This email contains links to other third-party websites. Such links are only for the convenience of the reader. We do not recommend or endorse the contents of the third-party sites. Readers should contact an attorney to obtain advice with respect to any particular legal matter. No reader should act or refrain from acting on the basis of this email without first seeking legal advice from counsel in the relevant jurisdiction. Only an attorney can provide assurances that the information contained herein, and your interpretation of it, is applicable or appropriate to your particular situation.
If you’re considering entering the world of “Self Employment” one of the best way to reduce risk is to purchase a franchise. A franchise affords you the opportunity to join a company with a proven business model and a track record of success. It’s better than “going it alone” …When you consider the number of “moving parts” connected with starting your own business, franchising makes all the sense in the world. You’ll get a business system along with the guidance and experience of the franchisor. Here are just three brands in our portfolio that are featured as our Top Picks this week.
GET THE UPDATED SKINNY ON THIS FRANCHISE OPPORTUNITY
SKINNYPIZZA * New Territories available
* Smaller retail footprint
* Lower cost of entry
* Great co-band opportunities
America has a real passion for pizza. Since the first pizzeria opened here in New York City in 1903, pizza has grown to the most popular food in America. An incredible 93% OF AMERICANS gladly admit they eat pizza at least once a month.
Our passion for pizza is staggering. The National Restaurant Association (NRA) indicates that pizza sales represent almost $38 BILLION IN AMERICA — over $100 BILLION worldwide. Where is our love for pizza heading? The trending is actually very clear.
The research firm Technomic® in their most recent “Pizza Consumer Trend Report” found that 41% OF AMERICANS say they would be happy to pay for healthier ingredients including ORGANIC TOPPINGS AND CRUSTS, as well as all-natural LOCALLY SOURCED ingredients.
What makes it SKINNYPIZZA®? We have spent years creating a thin pizza crust that has great taste and complements any topping. At the same time, we have carefully crafted our entire menu for those that are health- and environmentally conscious, as well as those that simply love great tasting pizza, salads and soups.
Our PIZZA CRUST is made with NO PRESERVATIVES or ADDITIVES. That alone is something that is incredibly rare, actually reserved to the top 1% of pizzerias. Our PIZZA SAUCE is made with 100% USDA CERTIFIED ORGANIC tomatoes.
But the SKINNYPIZZA® concept does not end there. Along with the best tasting pizza you will ever eat, we have carefully developed our menu to complement our healthy approach to great Italian fast-casual dining.
High-Quality Bubble Tea Concept – Magic Cup Cafe to Franchise Five New Locations
PRESS RELEASE – MAGIC CUP FRANCHISING
Dallas Magic Cup Cafe, a bubble tea, smoothie, and coffee cafe concept will be franchising five cafes to select franchise partners in Houston and Dallas within the next few years.
The Magic Cup team, led by owner My Lynn Nguyen, is working with industry expert Gary Occhiogrosso, founder of Franchise Growth Solutions, to expand the turnkey Magic Cup Cafe business model. Mr. Occhiogrosso was instrumental in the successful launches of nationally recognized brands such as Ranch *1, Desert Moon Fresh Mexican Grille, and brands found under the multi-brand franchisor, TRUFOODS, LLC.
A Complete Franchise Program
Ms. Nguyen stated, “We are excited to be offering the Magic Cup opportunity to passionate entrepreneurs in the Dallas and Houston Markets. We spent the last several years perfecting our menu, systems, and marketing. We truly feel confident that we are ready to put our franchise partners in the best position to achieve success.”
As part of the program developed with Occhiogrosso and operational consultants, franchise partners will receive a total of four weeks of one-on-one training both at Magic Cup headquarters and at the partner’s cafe. Then, they will receive continual corporate support inclusive of streamlined business development, ongoing product development, and multimedia marketing as their location grows.
