WHAT ARE YOU DOING TO HELP YOUR FRANCHISEES THROUGH THIS? Starting March 9, our entire team shifted focus to Covid-19. We put together a task force that continues to meet daily, and we focused on strong leadership, communication, guidance, and support. Our goal was to be the calm in this storm for the people we serve. We started virtual meetings and daily communications with our franchisees to quickly learn best practices and share guidance. We provided resources on CDC cleanliness standards, supporting stylists, and managing cash flow, including guidance and scripts for talking with landlords and other vendors about payment abatement and deferral. We also worked with the banks who lend to our franchisees to facilitate deferral options to help them retain cash. We also put a deferral program in place for March royalties and ad fees, and we’ll collect no royalties or ad fees for April and beyond until owners are back in business. We continue to assess and meet the needs as the crisis evolves.
CHRISTINA RUSSELL CEO Sola Salon Studios Segment: Health & fitness Units: 505 Locations: U.S., Canada, Brazil
HOW HAS COVID-19 AFFECTED YOUR BRAND? This pandemic has had an impact on every company, and ours is no exception. Our goal was to provide calm leadership in the face of this storm across 505 locations, 150 franchise owners and their teams, and the 15,000 independent beauty professionals who make Sola their home. We saw impacts starting March 9 when the media began reporting on the first fatalities in Seattle. By the end of March, 501 of our locations had closed. When news of the outbreak hit, our first focus was on safety. We immediately implemented enhanced cleaning and protection measures based on CDC guidance. Our goal was to ensure safety so we could stay open for our stylists. As independent beauty professionals, this is their sole livelihood, so this decision was critical to their financial survival. As the virus spread nationwide, we understood that closure was imminent, and we prepared to do our part to flatten the curve. When the closure mandates rolled in, we were able to keep step with the needs and systematically shut down. The biggest anxieties have been financial. Our business is founded on putting our stylists first, and our franchisees made it clear from the beginning that they would not charge rent during the closure period. That’s a tough decision because our franchisees rely on that rent for their income, and they still owe rent to their landlords and have many other expenses beyond that. We have the added challenge that salon suites as a category is excluded from the SBA Franchise Directory, which makes it unlikely that our franchisees will qualify for any support under the CARES Act. Even if we did have PPP support, our franchisees are facing a huge rent debt at the back end. This is true for all location-based businesses. Business interruption insurance is declining claims, and landlords are expecting these business tenants to pay back the rent from this zero-revenue time frame. Franchisees often have personal guarantees on these leases, and they will be saddled with tens of thousands of dollars in debt, which scales up quickly for larger multi-unit owners. This has a significant impact on every small business, Sola included. At the corporate level, we’re working to help organizations like the IFA influence policymakers to solve these issues. The CARES Act is a good start, but more needs to be done. We’ll do everything we can to promote a positive outcome.
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FRANCHISEUpdate
ISSUE 2, 2020
We’re using this quarantine time to help franchisees deepen their connection with their stylists. We’re working together to provide support and community during this time of isolation, and our social media engagement has never been higher. We set up a Covid-19 Resource Center to help both Sola and non-Sola stylists navigate governmental financial support and grant programs. We’ve also put out webinars, blogs, and other content to keep them informed and inspired. Through our beauty industry partners, we’ve brought in big names in the beauty sector to host virtual education events to get everyone ready to come back. More recently, our focus has shifted toward reopening strong and working with the IFA to solve the shortfalls in the government assistance. We continue to post daily updates and host webinars at least weekly to keep everyone connected with the latest developments. Our goal is to uplift our franchisees during this time and for them to know they are supported. We’re confident that Sola franchisees are well-positioned to weather the storm, and we expect they’ll open their doors at full capacity when mandates are lifted. HOW ARE YOU SUPPORTING YOUR CORPORATE EMPLOYEES? We have been fortunate to retain our entire staff, and they have been critical to the support we’re providing for our franchisees. Our home team is an important part of our Sola community, and they’ve been heavily engaged in tackling the issues presented in these unprecedented times. Their safety has been a priority as well. In keeping with social distancing guidelines, we shut down our home office on March 17, and our corporate employees have been working from home. At the time of this writing in mid-April, we anticipate this will continue through at least April 30, when the stay-at-home order is expected to be lifted here in Denver. [Editor: It was lifted May 9, with restrictions.] We connect with our team daily through Slack and handle most of our calls over video chat on either Slack or Zoom. It’s worked well, but everyone is eager for real human connection. HOW ARE YOUR FRANCHISEES SUPPORTING THEIR EMPLOYEES? Most of our franchisees have retained their teams as well. The teams are working from home and engaging with stylists on an almost daily basis to keep them connected. Where they are
