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Francorp - The Franchising Leader in the Philippines

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A Primer on Franchise Advisory Councils

by Manuel V. Siggaoat, CFE

Managing Director, Francorp Philippines

A Franchisee Advisory Council (FAC) is a committee composed of franchisees who meet with franchisor representatives to discuss business issues that are relevant to the franchise. The council is a vehicle that facilitates communication between the franchisees and franchisor.

While not a requirement to operate a franchise business, a FAC can go a long way in helping the franchisor by providing an another means by which inputs and sentiments of franchisees can be made known to the franchisor, as well as serve as a sounding board for important decisions to be made by the franchisor.

The following are some of the most important questions asked regarding Franchise Advisory Councils:

Why establish a Franchise Advisory Council?

The purpose of the FAC is to provide an additional channel of communication between the franchisees and the franchisor about such issues as advertising, field support, operations and 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.

Why not just get franchisee inputs from everyone at a general meeting?

It is not practical to get all franchisees together in one location several times in a year. Especially for a large franchise network spread all over the country, it will be a scheduling and financial challenge to set a general meeting regularly. Besides, many franchisees will tend to discuss issues specific to their store instead of for a collective group.

Is a Franchise Advisory Council the same as a franchisee association?

A Franchise Advisory Council is not the same as a franchisee association. Franchisee associations are set up by franchisees and do not necessarily have a direct line of communication to the franchisor. Franchisee associations pick their own officers independently while members of a franchise advisory council are selected by the franchisor or strongly influence the selection process. Be that as it may, the franchisor should try to get a group of franchisees that the whole feels represents their concerns at the FAC. If the franchisees do not feel that the FAC members represent them, then the FAC loses its credibility.

Who should be members of the FAC?

Generally, the members should be composed of franchisees that are geographically representative of the entire group so that no region feels unrepresented. However, franchisors should avoid appointing only people that are highly supportive of the franchisor, and also appoint those who have been the most vocal complainants, so that the franchisor can address sensitive issues in a more controlled environment and eliminate a confrontation in front of the entire group of franchisees at a larger meeting.

 

 

How many members should a FAC have? What should be their qualifications?

The FAC should be large enough to get different quality opinions but small enough to avoid members from not being heard or not having enough voice time during sessions. In general, 5 to 9 members should suffice. Franchisee members should be those in good standing (those with current accounts and have no material violations of the franchise agreement).

Is the franchisor committed to following the advice or opinions of the FAC?

The FAC is an Advisory group. The franchisor is under no obligation to follow the recommendations of the FAC. It is important, however, that the franchisor shows genuine openness in considering ideas coming from the FAC. This could be of great help to the franchisor as franchisees are frontliners who are very close to the customers and therefore have a good feel of what customers want. Having an open-minded approach also gives franchisees the satisfaction that suggestions not implemented are nevertheless considered very throughly.

Who shoulders the expenses of the FAC?

The franchisor pays for all of the expenses of the Franchise Advisory Council. The FAC should meet about 2-4 times a year to discuss issues important to franchisees as well as items that the franchisor need feedback on. A franchisor may, for example, ask the council’s opinion on a marketing campaign to get feedback before implementing and to enroll the franchisees on the new campaign.

In conclusion, allow me to quote Francorp USA Founder and Chairman Don Boroian:

The Franchise Advisory Council, if done right, can be a total Win/Win situation in which the Franchisor is able to address and solve negative issues, franchisees are motivated to improve and work in conjunction with, as opposed to against, the franchisor. The Council can be a great PR tool, create a bond with the franchisees, create a healthy exchange of ideas, diffuse what could be a contentious and adversarial relationship between the Franchisor and the Franchisees and result in some great input from the franchisees”.

 

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