Could COVID-19 potentially impact a Bevaris Alliance franchisee's ability to pay royalties?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
COVID-19 - In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. In addition, multiple jurisdictions in the U.S. have declared states of emergency. It is anticipated that these impacts will continue for some time. There has been no impact to the Company's operations to date. Future potential impacts to the Company include disruptions or restrictions on the employees ability to work, lack of demand for new franchisees or the franchisee's ability to pay the Company royalties. Changes to the operating environment may also be impacted. Operations include franchise application processing or other areas requiring contact with the franchisee. These changes may increase operating costs. Further impacts may include increased risk on franchisee performance. The future effects of these issues are unknown.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, the COVID-19 pandemic could potentially impact a franchisee's ability to pay royalties. The FDD acknowledges that the pandemic originated in December 2019 and was characterized as such by the World Health Organization on March 11, 2020. It also notes that multiple jurisdictions in the U.S. declared states of emergency and anticipates these impacts will continue for some time.
The FDD states that there has been no impact to the company's operations to date. However, it identifies potential future impacts, including disruptions or restrictions on employees' ability to work, a lack of demand for new franchisees, or a franchisee's ability to pay royalties to Bevaris Alliance. Changes to the operating environment may also be impacted, such as franchise application processing or other areas requiring contact with the franchisee, which may increase operating costs.
Furthermore, the FDD indicates that increased risk on franchisee performance is a possible consequence of the pandemic. The document concludes by stating that the future effects of these issues are unknown. This suggests that while Bevaris Alliance has not yet experienced direct negative impacts, prospective franchisees should be aware of the potential risks associated with the ongoing pandemic and its possible effects on their ability to generate revenue and meet their financial obligations to the franchisor.