By John Matthews, founder and president of Gray Cat Enterprises Inc.
Establishing a Franchise Advisory Council (FAC) as a formal communications system to ensure franchisees input with regard to store marketing & operations is a natural stepping-stone for a growing franchise operation.
FAC representatives are an indispensable part of the communication system in that they help represent the entire franchise system. The FAC is charged with garnering input, questions and suggestions from franchisees in their area and communicating this to the corporation in formal meetings. In the council meetings, representatives will share these ideas and questions with other representatives and members of the staff. It is crucial to note though that the FAC doesn’t replace one-to-one communication between franchisees and the company staff. Rather, its intent is to augment, encourage and enhance communication on all levels by providing an opportunity for direct franchisee input.
Below outlines the pros and cons as well as the process for establishing a FAC for your franchised organization. On balance, the advantages outweigh the disadvantages for most franchise systems and FAC’s are critical to evolving a relationship between the company and its franchisees.
Key Advantages: This council establishes lines of communication between the franchise community and the franchisor. It provides input from franchisees with regard to systems, procedures, products and services as well as how the franchise system operates. This two-way communication establishes an ongoing dialogue between franchisee representatives (the FAC) and the parent company. The FAC is the sounding board for new concepts and ideas that allow the franchisor to judge the effectiveness of the program in advance of a system wide rollout. The franchisor seeks to gain acceptance from the FAC and garner their endorsement before launching the initiative to the entire system. All in all, a well-run FAC can establish a more harmonious communications process between the franchisor and its franchisees.
Key Disadvantages: ”Management by Committee” is one of the key dangers in establishing a FAC. A poorly managed FAC may cause the company to lose control of the overall direction of the franchise and become disjointed in its focus by acquiescing to special interest groups as opposed to the broader base. In addition, the overall selection and makeup of the FAC representatives will have significant impact on its effectiveness. Since the process for selecting the FAC is generally through a democratic voting process, electing disgruntled franchisees to the council will have a vastly different impact on the FAC then if the council were made up of satisfied franchisees. Lastly, key antitrust laws are important to abide too with regard to decisions by the FAC and both the company and the FAC need to be aware of these in advance of its decisions.
FAC Member Duties: FAC members are representatives of the overall franchisee community and are expected to seek and communicate the views of their constituents (as opposed to simply their own). While they may have opinions regarding the programs discussed with the company, it is rare that they can veto a program presented by the franchisor. To that end, it is in the best interest of the franchisor, to actively seek the endorsement of the FAC on all rollout decisions and garner their endorsement. FAC members are expected to cover such topics as operations, advertising, goods and services, equipment, communications and corporate policy.
FAC Nomination Process: Typically, the nomination process of electing FAC members is as follows:
- Each store generally submits one nominating ballot listing as many as three candidates. This may include nominating themselves.
- Eligibility of franchisees should be limited only to those in good standing with the company.
- Where both spouses are on the franchise agreement, either spouse would be eligible for nomination.
- The nominees must have been operating their store prior to a specific date determined by the franchisor.
- The most frequently nominated candidates should be notified and asked if they accept the nomination.
- The candidates that accept nomination may then be listed on the election ballots.
FAC Member Attributes: FAC representatives need to be good listeners in order to gather ideas and input from other franchisees. They must be able to combine those ideas, along with their own experiences, into constructive suggestions for improving in a competitive marketplace. Obviously, they must also maintain their good standing with the franchisor throughout their tenure.
Frequency of Meetings: The Franchise Advisory Council should meet approximately every quarter in person with ongoing communication throughout the year. In addition, the franchisor typically will schedule a social event or outing each year. Pre-agenda items need to be communicated in advance in order for FAC members, to effectively seek field input.
In summary, a well-managed FAC can yield a tremendous opportunity for the franchisor and franchisees to work as one. This process of two-way communication helps to foster excellent franchise relations and provides the franchisor “with another set of eyes” for new product development, effective marketing and field support. While the FAC may provide an effective sounding board for the company, it is a critical that the franchisor continues to communicate with franchisees on an individual level. This ongoing individual communication combined with the involvement of the FAC provides a cohesive communication relationship with all parties.
John Matthews is the founder and president of Gray Cat Enterprises Inc., a strategic planning and marketing services firm that specializes in helping businesses grow in the restaurant, convenience and general retail industries. With more than 20 years of senior-level experience in retail and a speaker at retail-group events throughout the U.S., Matthews has recently written two step-by-step manuals, Local Store Marketing Manual for Retailers and Grand Opening Manual for Retailers, which are available at www.graycatenterprises.com.