Print PageFranchise Tutorial 10: Intro to Franchisee Advisory Councils
A Franchisee Advisory Council (FAC) is a group of established franchisees who meet with company executives to discuss business issues that are of relevance to the majority of the franchisees. It is a structured vehicle for constructive two-way communication between the franchisee and franchisor.The FAC may operate under different names or formats but is typically organized by the franchisor. A slight variation is a Franchisee Association. The Franchisee Association is formed by the franchisees and is independent of the franchisor and may function similar to an FAC, but the franchisees set their own structure, policies and agenda. They typically are formed when there is a system wide crisis, major change or event. In some franchise systems there may even be an FAC and Franchisee Association both functioning at the same time.
The purpose of the FAC is to provide a formal channel of communication between the franchisees and franchisor about such issues as advertising, field support, operations and changing market trends. It serves as a sounding board to the franchisor for the implementation of new programs before these programs go system-wide. The franchisor will solicit suggestions and ideas for improvements to the franchise system. It provides a forum for franchisees to voice their mutual issues and concerns. Through the FAC, franchisees can provide advice and input to influence company decisions. Ultimately the final decision making authority remains with the franchisor executives.
For the FAC to be effective, both franchisees and franchisor are required to have an open-minded attitude, actively listen and have a respect for different perspectives. The agenda must be focused on the interests of the overall system and there must be a focus on finding solutions, setting action plans and getting results. The FAC will establish policies, by-laws and have meeting agendas in place to keep discussions on track. Without this focus the FAC can easily go off track and evolve into a session of complaints with no clear resolutions.
How franchisees are selected to participate in the FAC will vary between franchises. In some cases the franchisor will appoint franchisees, while in other systems there is an election process where franchisees vote as to who will participate on the FAC. The franchisor will typically set some requirements for involvement, such as the franchisee must be in good standing under the terms of the franchise agreement, meet performance standards and have been in the system a minimum of one or two years. Ideally the franchisees sitting on the FAC are positive, successful and respected by other franchisees. They have the ability to set aside their own personal agendas and look at what is best for the system as a whole. There is also a real commitment of time. Not all franchisees can take the time required away from their business to participate in the council.
The number of franchisees sitting on the FAC will vary from five to 20 or more members depending upon the overall size of the franchise system. There is usually an effort made to ensure that different geographical regions and size of operations are represented on the FAC. The term will vary from one to three years with a staggering of the council members so as to have a balance between experienced and new members sitting on the council at any one time. Franchisors will often limit how many terms a franchisee may sit on the FAC to give more franchisees the opportunity to participate.
The FAC will meet formally two to four times a year with informal phone calls and discussions between these meetings. They will meet at the franchisor head office, a resort or conference centre. Sometimes the FAC meeting takes place around the annual convention. Travel, meeting room costs and other business expenses are often covered by the franchisor, although in some systems such costs are paid entirely by the franchisees through the payment of FAC dues. It is customary that FAC participants are not to be financially compensated for their time.
Most successful franchise systems today have an FAC. There are no hard and fast rules as to when an FAC should be formed, but the sooner an FAC is put in place the better. With a smaller system the FAC may be more informal but it plays an integral part in forming the direction and policies of the franchise organization.
The FAC can be an important part of a franchise system. It permits constructive two-way communication between the franchisor and franchisees. A positive culture of mutual respect and working together is fostered when the franchisor and franchisees seek to evolve the brand for the benefit of the common good and system as a whole. Successful franchisors recognize that the franchisees have a valuable contribution as they are working the business model on the front lines everyday. Through an effective FAC, franchisees feel empowered and have confidence that the franchisor is listening to their needs and perspectives.
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Posted Date: January 2011