You can be on Entrepreneur’s cover!

Franchise Advisory Boards: The Advantages Why their existence bodes well for a franchise system

By Jeff Elgin

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

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.

Jeff Elgin has almost 20 years of experience franchising, both as a franchisee and a senior franchise company executive. He's currently the CEO of FranChoice Inc., a company that provides free consulting to consumers looking for a franchise that best meets their needs.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Growing a Business

To Achieve Sustainable Success, You Need to Stop Focusing on Disruption. Here's Why — and What You Must Focus on Instead.

Instead of zeroing in solely on disruptive innovation, embrace a pragmatic approach to innovation, recognizing and leveraging the potential within ongoing industry shifts.

Business News

Mark Zuckerberg Says This CEO Is the 'Taylor Swift' of Tech

Meta's CEO posed with Nvidia CEO Jensen Huang on Instagram Wednesday.

Real Estate

3 Emerging Trends Shaping the Future of Real Estate

These three innovations are reshaping the real estate industry — discover tips for effectively covering these trends.

Leadership

What We Have to Gain By Talking About Grief and Loss At Work

I lost my husband to cancer during Covid — here's how it changed how I lead at work.

Side Hustle

This Mom Started a Side Hustle After a 'Shocking' Realization in the Toy Aisle. Her Product Was in Macy's Within the Year — Seeing Nearly $350,000 in Sales.

Elenor Mak, now founder of Jilly Bing, didn't plan to start a business — but the search for a doll that looked like her daughter inspired her to do just that.

Fundraising

Avoid These 9 Pitch Deck Mistakes When Asking Others For Money

Crafting an efficient pitch deck requires serious effort, but at least it's not wandering in the dark since certain rules are shaped by decades of relationships between startups and investors.