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Bricks to Clicks: The Post-Pandemic E-commerce Reckoning

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Turn and face the strange.1

E-commerce was already a rising tide in franchising before the COVID-19 pandemic slammed into our shores and upended our lives.2 Naturally, no regulator, adjudicator, or practitioner could have predicted how lockdowns and social distancing would accelerate and change the use of e-commerce in various franchise models. Even as the corona-waves (we hope) recede, questions will remain regarding how consumer attitudes and expectations will adjust in the post-pandemic world. For example, restaurant franchisees with and without drive-thrus now increasingly rely on mobile apps for customers to order and make contactless payments for food, which is often delivered by third-party aggregators like DoorDash, Grubhub, and Uber Eats. Indeed, from April to November 2020, consumer delivery spending averaged more than 140 percent year-over-year growth.3 "Ghost kitchens" that bundle or prepare multiple types of foods from a shared kitchen and "virtual brands" of established casual restaurants have proliferated to serve hungry online customers.4 Will these customers return to in-person dining as the pandemic wanes?5 Other businesses also face similar hurdles. Unable to host as many customers inside franchised facilities, fitness systems now increasingly offer online classes to keep their members engaged and healthy.6 While seventy-five percent of consumers surveyed said they will eventually return to pre-pandemic routines and actual gyms, many indicated they will continue to spend part of their workouts sweating in front of their screen.7 Convenience store franchisees are being asked to fulfill online orders from homebound local customers now used to having all sorts of products delivered to their front door.8 Will customers expect that kind of "convenience" going forward, and, if so, will franchisor control of retail pricing and the cost of goods sold through the supply chain result in franchisees paying fees on what amounts to phantom income?

While any modern business-franchises included-requires an e-commerce...