Franchise Advisory Councils

Updated: Sep 23, 2020

When you buy a franchise you have certain expectations. Things like marketing, product support, branding, and business support. The intent is that you are joining a brand that is established or has at least tested the business and then developed it into a turn key operation.

You enter into a contractual agreement that establishes the basis of your relationship with the franchisor. In most cases the franchise agreement is slanted in favour of the brand owner to ensure that they have the ultimate control over the image and reputation of the company. This makes a lot of sense because each franchise owner is expecting that the franchisor manage the brand effectively to ensure growth and ultimately the profitability of each franchise. That means that the franchisor needs to act quickly and decisively when a franchise is not compliant with the fundamental requirements established in the operation of a location.

While the franchisor is often the enforcer of the rules, a good franchisor works hard to create a strong relationship with their franchises. The stronger the relationship the easier it is to get the necessary buy in from franchisees on the direction a brand takes. This strong relationship theoretically also enables the franchise owner to actively participate in the success of the company. It is however generally an informal arrangement where there is no established consultancy between the franchisor and franchisee.

Some franchise organization will conduct surveys with their franchisees, and have service representatives that visit locations, and provide anecdotal feedback to head quarters on the performance observed. For the most part, these service reps are actually there to function more as an auditor of the franchise thinly disguised as relationship building. The surveys are most often seen as just a place for people to complain, and as a result fewer and fewer companies even offer this as a resource to their franchisees. (I myself worked at one organization where franchise surveys were not done because they were too 'negative').

The reality for any organization is that a franchise is on the ground, doing the business, and has a much better grasp of the day to day challenges, and successes, the brand faces. Giving them a voice and really hearing what they have to say, as well as taking their input seriously, can have a huge impact on the success of the brand. Not doing it can also result in conflict that becomes incredibly damaging to the company as a whole. There are countless examples of companies that fail to really listen to their franchisees; for example, the Tim Horton's franchise operation. There were a number of franchisees that felt they were not being heard and so formed their own group akin to a union. These groups are often labelled as being rebellious, or troublemakers - the result for Tim Horton's was a very public "war" that resulted in the brand suffering immense damage to its reputation.

Pretty much every franchised company offers training, and to try to better engage with their franchisee's do have some great recognition programs that award franchisees for good performance and their contribution. These programs use guidelines that are established by the franchisor and they can go a long way to create positivity about the company.

Some brands even go so far as to offer additional recognition through a system where the top performing locations are invited to attend special events. Often called President's Club, Chairman's Circle, or something along those lines, these franchisees are invited to participate in meetings and events where the franchisor will take a deeper dive into the business.

The issue with all of those is that they are not really designed to be a consultation with the franchisees on the direction the brand is heading. They are more informational and used to get the top offices to buy into the direction that is being taken. Also, the events for top performers can alienate those franchisees that are struggling to find success, or may even be seen as punishment for locations that are in an area that simply does not have the capacity to achieve such lofty results. The intent of the events are commendable in the desire to better engage with the network, but do they really provide a solid forum for franchise owners as they profess? The consensus is generally no, they do not.

Enter the Franchise Advisory Council (FAC). Organizations that have established these find that while it can sometime be contentious the results far outweigh the potential for conflict. New franchise organizations that establish these councils from day one tend to demonstrate higher franchise retention and see greater brand unity, as well as better location performance and growth.

These FAC's do not have the power to override the franchise agreements, but rather are used to give the franchise owners a voice to provide valuable insights, recommendations, and even help establish norms for the organization. Some franchise experts argue that FAC's reduce the ability of the franchisor to push through innovation, or needed change to the brand. While that may be true in some rare cases, it ultimately depends on how the franchisor engages with the FAC. If the focus is to build the company so that all ships can rise with the tide the opportunity to succeed becomes vast. Having the FAC impart their knowledge and participate in decision making will usually result in innovation being better received by the network as a whole. It is no longer just head office pushing something through, it is something that everyone is a part of.

It is not impossible for an existing organization to establish an FAC, but it can be much more challenging. Any existing brand that wants to launch a forum like an FAC has to be prepared for a rough journey at the beginning. That will mean taking their lumps and being ready to truly listen and change the top down attitude that is typically in place. It takes time for the franchisor and franchisees to find their footing and there will be opposing views on a large number of topics. So long as the FAC is not cobbled with restrictions, ignored or given meaningless platitudes, the long term benefits can far outweigh any initial challenges.

When you purchase a franchise you are not just buying a business, you are investing in, and become a face of, the brand. If you are investing your money, time, and energy in a brand, is it not reasonable to have some expectation that you also have a voice that is heard and has weight?

Franchisees are entrepreneurs, they have business acumen and given the opportunity can contribute to the success of the organization as a whole. While you will always focus on your location first and foremost, your experiences are going to be mirrored by your fellow owners. The contributions you make as a group can elevate the experience of all, and perhaps most importantly provide strength and unity in the eyes of the consumer.

A strong franchise organization, with a unified vision, will always outperform one that is mired in internal conflict.

If you are looking at a franchise as a business opportunity, make sure that you find out if they have an established Franchise Advisory Council. Make sure that your voice will be heard, and that the franchisor takes it seriously. The FAC should be representative of locations of all sizes and from all regions in which the company operates.

Having this resource might make the difference between your success and failure.

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