Franchise Advisory Boards: The Advantages

URL: http://www.entrepreneur.com/article/44922

Q: Some of the franchises I'm looking into have franchisee advisory boards, and some don't. Is the existence of such a group a good test to use in finding a high-quality franchise system?

A: It certainly is! Though there are some franchise systems that do not have any such format for soliciting franchisee feedback, they are pretty rare. You should take care to find out why any company does not want to have such a system.

An advisory board is typically composed of a number of existing franchisees and is designed to provide the franchisor with input from their perspective. This is especially valuable for the franchisor since this perspective is usually the one closest to both the customer and the cash register.

Most of the franchisees on an advisory board are at least somewhat experienced, and it's important that the board represents all types of franchisees in the system. There should be multiple-unit operators as well as single-store franchisees. Both large and small markets should be represented. This diversity gives the franchisor input across a wide spectrum of experience, and that's a big part of creating the value of such a group.

Some advisory boards are limited in scope to specific issues like marketing. Others can and do address any issue of concern or interest to either the franchisees or franchisor. You should make sure to talk to some of the franchisees who are members of the advisory board-they are probably leaders in the franchisee community and can give you a good idea of the state of the franchise from their perspective.

There are a number of different variables related to franchise advisory boards that impact the scope and effectiveness of their activities. You should make sure you know the answers to the following questions as part of your investigation of any franchise system.

• Was the advisory board set up at the instigation of the company or the franchisees? The key here is that no group of happy franchisees ever decided that they needed to band together in a group to influence the company. If the board was set up at the instigation of the franchisees, then at some point there was an issue that they felt was not being properly addressed. You need to find out what it was, how it was dealt with and how things are running now.
• Are the franchisees on the board elected by their fellow franchisees, or are they appointed by the company? The value of an advisory board to a franchisee is greatly diminished if it is solely a rubber-stamp body that doesn't represent the perspective of the franchisees. You need to make sure that the franchisee representatives are independent and selected by their fellow franchisees.
• Is the scope of issues addressed by the board limited? Sometimes the franchise system will have multiple advisory boards to cover different topics in different formats. You need to find out if there are any "taboo" subjects for advisory boards and what they might be. For example, many franchise systems will not discuss or compromise on subjects like ownership of the brand or ongoing royalty fees.

After you visit with some of the franchisees who currently participate in this process and get the answers to the questions related above, you'll have a good feeling for the attitude of the franchise system. You'll know whether you are looking at a company that uses a "team" approach, and that is a hallmark of any strong franchise system.