Local franchise’s cut out of state relief programs

Date: 2/1/2021

WESTERN MASS. – While grants for small businesses and nonprofits are being issued from the state to aid in recouping revenue lost due to the coronavirus pandemic, local franchise owners are feeling cut out of relief programs.

Owners of franchised businesses do not qualify for Gov. Charlie Baker’s latest $668 million small business recovery program, which was announced in late December 2020. Restaurants, food trucks, gyms and fitness centers are businesses that qualified for relief from this program. With that said, the fine print, Matt Murphy of the State House News Service explained, indicates that franchised businesses do not qualify for the program.

It is often thought that franchised businesses are supported by a larger corporation, and therefore do not need the type of relief and support that the state is offering to small business owners, however this is not always the case. Approximately 41 Massachusetts lawmakers penned a letter to Baker to amend the eligibility criteria for the small business recovery program to, “make relief funding available to franchisees who still pay taxes, rent and employ residents of Massachusetts, regardless of their affiliation with a larger chain,” Murphy wrote.

The letter explained that franchisees face “the same economic hardship and loss of revenue as any nonfranchised small business.”

“Overwhelmingly, franchises are held by independent owner-operators who live and work in their local communities,” the letter to Baker and Economic Development Secretary Mike Kennealy reads.

The Baker administration told the State House News Service in response to the letter that, “Given the limitations on available resources at the state level, eligibility criteria were developed to ensure resources through MGCC could be focused on Massachusetts-based businesses that are among the sectors most impacted by the pandemic and that have no connection to a corporate network that could be an advocate for individual franchisees.”

Elements Massage franchise owner Ron Levin told the State House News Service that the administration’s statement was “as clear as mud.”

Elements Massage is a franchise that has 27 locations in Massachusetts and operates massage studios in 33 states as well as British Columbia. Levin owns an Elements Massage franchise in Burlington, and serves as an investor at locations in Andover and East Longmeadow.

The State House News Service explained, “Levin said his Burlington studio employs about 20 full- and part-time staff, and 90 percent of the staff at the three locations he is involved with are women.    

“Levin said his studios were forced to close between March and June for COVID, and business has been down 20 percent to 30 percent since reopening with some clients choosing not to return yet due to the ongoing pandemic.

“We are operating at break-even or cash flow negative due to depressed demand,” Levin said.

Mike Hurwitz, who owns the Uno Pizzeria and Grill at the Holyoke Mall, said his business has received “very little local aid.” He said, “We participated in the first round of PPP, that helped us get through the summer. However, with the fall and winter, we’ve been unable to maintain revenue to cover expenses.”

He said he furloughed staff last spring when the shutdowns first took place, but had since asked staff back. Additionally he said the restaurant’s hours of operations had been scaled back. Recently, Hurwitz said the hours were decreased due to Governor Charlie Baker’s statewide mandate limiting the hours of operation of certain businesses. However, he added that it was also “just because of demand.”

“People are just not going out the way they used to. I’m very concerned that people’s spending and leisure habits are going to change in general over the next couple of years,” he said.

Hurwitz expressed his frustration that franchises were being left out of aid packages as they served the local community. “I was born and raised in Western Mass., we’ve been at the Holyoke Mall for 30 years, we employ local people,” he said. “Why should we be penalized because we have the name Uno’s attached?”

He added that it was “far more difficult for us because we have to pay money to the franchiser” and it had “been very difficult.”

However, he emphasized that despite the difficulties they had faced they were “following all guidance to keep a safe and secure environment for guests and employees.” He said, “At some point people will just have to decide if they feel comfortable enough to go out again to restaurants or public places.”