The Government and rail bosses are in talks over emergency measures to keep the industry afloat during the coronavirus outbreak.
The sharp fall in passenger numbers as a result of the crisis means the entire franchise system looks vulnerable to collapse according to one expert.
Rail expert Christian Wolmar Tweeted: 'On rail franchising, I suspect that all franchises will be suspended within a week or so and will effectively become management contracts with revenue risk taken by the government as pass. numbers will plummet even further.'
Franchise agreements vary around the country and are based on factors such as the number of trains, the price of tickets and the amount companies pay the government, which all depend on assumptions about passenger numbers.
Latest figures suggest passenger numbers could be down by up to 20% on certain lines, while the TOCs often operate on revenue margins of around 3% to 4%.
Speaking to Transport Network, Mr Wolmar said: 'A 20% drop in passenger numbers puts the TOCs immediately in the red. I doubt there is a single franchise in profit right now.
'I expect the companies would continue running them, but the government will take the revenue and cost risk. It will be the end of franchising in one swoop. I don't see any other way out.'
A spokeswoman for the Department for Transport said: 'We recognise how difficult the current situation is for the transport sector and, across government, we are engaging with the sector's leadership to support workers, businesses and passengers.'
Drastic measures are likely to be needed for TOCs to avoid a collapse of the system if there is a prolonged outbreak, which now looks likely. There is speculation transport secretary Grant Shapps could deliver emergency legislation to ensure the transport sector functions.
Train operators are understood to be in talks with the government to renegotiate the contracts, with the aim of ensuring essential travel can continue, even though broader passenger numbers have fallen.
Options being discussed include a reduction in the number of train services and flexibility over the payments that train companies make to government.
A spokesperson for the Rail Delivery Group, said: 'Our primary focus during the coronavirus outbreak is to keep our passengers and our people safe, and the country moving. While the government is not advising people to avoid public transport, unless they are showing symptoms of coronavirus, and rail companies are enhancing their cleaning on trains and at stations, we are seeing fewer people choosing to travel.
'Train companies are regularly in discussions with the government about a range of things that affect the railway.'
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