What every Franchisor should know about Franchisee Advisory Councils and Franchisee Associations – Part 2

B. What roles do Advisory Councils and Franchisee Associations fulfill?

Both Advisory Councils and Franchisee Association share a common goal: fostering constructive two-way communications between a franchisor and the franchisees of its system by having a select group of franchisees discuss on a regular basis matters of mutual interest with the franchisor. The benefits of these councils and associations are numerous and include:

1. Acting as a vehicle for collective bargaining and effective use of leverage.

2. Encouraging the protection of franchisee rights under franchise agreements.

3. Serving as a forum to advocate common issues and provide independent research and analysis. Independent scrutiny makes for better decision making, as franchisor’s proposals are proofed and/or endorsed by the council or association. This can be particularly helpful in considering changes to standard form franchise agreements.

4. Improving communication with franchisees on a variety of issues. For example, franchisees need to receive timely information about new developments relating to the brand, the franchise system, and the franchisor’s policies and procedures.

5. Developing institutional memory within a system. Associations can be repositories of knowledge which can promote the evolution of the brand, marketing and merchandising techniques, and best practices.
6. More often in the case of Franchisee Associations, providing financial support for individual franchisees engaged in litigation with the franchisor or for franchisees acting in a representative capacity on behalf of the system’s franchisees.

7. Resolving franchisee dissatisfaction to avoid the inevitable costs of litigation.

8. Maintaining morale and promoting franchise group identity.

Conclusions

Franchisors who wait until their franchisees initiate such steps to form representative franchisee entities risk an unpleasant wakeup call when confronted for the first time by dissatisfied franchisee representatives. In the right environment, franchise associations and advisory councils can be an effective means of advancing the shared interests of both franchisor and franchisee. Such organizations can enhance the leadership role of the franchisor and promote the overall vitality of a franchise system.