What is a franchise advisory council?

Most reputable systems have a franchise advisory council (FAC), which is a committee of franchisees who provide input to the franchisor on ways to improve the system.

The name given to this committee may vary from one brand to the next, but the underlying principle of a panel of franchisees who advise the franchisor on system improvements remains the same, irrespective of title.

A good FAC will have a written charter by which it operates. This will establish how the FAC is formed, nomination, selection and election processes, details of meeting frequency, nature of meetings, acceptable (and unacceptable) discussion items for meetings, and so forth. The charter will generally outline how the FAC interacts with the franchisor’s personnel, and how it reports back to its stakeholders (ie. the franchisees).

A good FAC will actively canvass the franchisees for issues to be presented to the franchisor, but only issues that are relevant to the system as a whole, and not the unique circumstances or regionally-specific issues of individuals.

A good FAC will be transparent and report to its constituents by keeping them informed of meeting dates, agenda items, and minutes of meetings.

A good FAC will seek positive action to improve the system, while at the same time upholding the system’s vision and values, and encouraging all franchisees to continue to meet or exceed customer expectations.

However, good FAC’s don’t come together by themselves, or without some commitment from franchisors. Good FAC’s don’t work in the long-term if franchisors fail to acknowledge that FAC’s can and do add value to a network and provide useful suggestions for the benefit of all stakeholders in the franchise relationship.

The following are 16 commonly-asked questions about Franchise Advisory Councils:

1. What is the purpose of a Franchise Advisory Council (FAC)?

An FAC acts as an interface between franchisee and franchisor outside the normal relationship between the franchisee and the franchisor’s field support personnel. An FAC provides a forum for franchisee voices to be collectively heard at franchisor senior management level.

2. How big should a franchise be before introducing an FAC?

This is a difficult question for growing franchisors, who are usually aware of the need for and benefits of establishing an FAC, but don’t get around to doing so because their time and energy is consumed by the demands of a growing business.

Franchise networks should consider establishing an FAC once they have about 20 franchisees in the group.

3. Who pays for what?

Franchisors should pay for the basic costs of servicing the Franchise Advisory Council, such as travel costs of participants for face-to-face meetings, teleconference costs, meeting and catering expenses, secretarial support costs and so on. Franchisee FAC representatives are generally not rewarded for their time other than to be reimbursed for the reasonable costs of attending meetings.

4. How often should an FAC meet?

The frequency of meetings should be determined in the foundation charter of the FAC, but it is generally recommended that meetings should be held around four times per year, with one of these meetings scheduled to be held alongside a system’s annual conference. The other three meetings a year may be held face-to-face by bringing the FAC representatives together (which can be expensive and time-consuming for a franchisor to organise), or via teleconferences or videoconferences over the internet.

5. What should be considered in an FAC meeting?

Just about anything that could have a positive impact on the system and the businesses of all its franchisees might be considered for discussion in an FAC meeting. All discussion items should, however be arranged under broad categories to allow for structured discussion and consideration. For example, broad agenda headings might include: Current marketing activity; Proposed future marketing activity; Product/Service issues; Supply chain issues; Operational issues, and so forth.

FAC members must always be mindful that they are representing the interests of all franchisees, and therefore should leave any personal issues or grievances about the operation of their own businesses aside, unless it can be part of a constructive discussion resulting in recommendations for positive change beneficial to all stakeholders (ie. franchisee, franchisor and customers).

6. What is the role of the franchisor?

Depending on the FAC charter, the franchisor or senior management may sit on the FAC as voting members, or participate only as observers. The FAC is intended to provide a conduit from the franchisee “coalface” to senior management of the franchisor, not necessarily bypassing the franchisor’s existing support structures, but fast-tracking information to the top.

The franchisor’s role is to support and resource the FAC, to listen attentively, and to respond as quickly and thoroughly as possible to reasonable FAC requests.

The franchisor should be prepared to acknowledge that good – and even great – ideas can come from anywhere, and that an FAC could provide insights and recommendations that may form the basis of future sustainable competitive advantages for the organisation.

7. Does the FAC replace regional franchisee meetings and workshops?

FAC’s should not replace regional franchisee meetings and workshops as these are usually conducted by the franchisor to address current and topical operational issues, as well as provide training and professional development opportunities for franchisees.

8. Why should an FAC be important to a potential franchisee?

The presence of a well-run Franchise Advisory Council is an indicator of the quality of the franchise system and a reflection of the importance the franchisor places on a mutually successful business partnership with the franchisees.

9. If a system does not have an FAC, what does this mean for the franchisor’s attitude toward their franchisees, and for the franchisor’s commitment to ongoing business improvement?

The lack of an FAC may indicate a lack of willingness to engage with and learn from franchisees, a lack of understanding of franchising best practise, or both.

10. How many people should be on an FAC?

This will depend on the size of the franchise. An ideal size is around half a dozen. As the system grows, there might be scope to establish FAC’s on a state or regional basis, with representatives from these elected to a national FAC.

11. Do FAC’s have executive or decision-making powers?

Not normally, as the role of an FAC is to advise the franchisor, however in some systems the FAC may have some authority to make decisions, often in relation to marketing campaigns and planning. In some cases, an entirely separate committee of franchisees might be formed along similar lines to an FAC specifically to consider marketing initiatives for the group.

12. How are franchisees appointed to an FAC?

This will be determined by the FAC’s charter. Most charters commonly provide for a process of nomination, and then election by franchisees. Nominations for FAC positions may be based on geographic region, length of time as a franchisee, size of franchisee’s business or some other characteristic that can bring a range of perspectives representative of the system as a whole to the FAC. Elections should be held every 12 to 24 months.

13. Why should a franchisee become involved in an FAC?

Franchisees who become involved with their system’s FAC are able to help shape system policy and improve the operation of the business as a whole. Being voted onto an FAC is an honour bestowed on a franchisee by their peers, who in return expect reasoned and impartial representation on system issues. In many systems the FAC nominations are keenly contested, and FAC representatives are often outstanding franchisees in their own right who run highly successful businesses.

14. What things can’t an FAC do?

Franchise Advisory Councils exist to improve a franchise group as a whole. FAC’s are not and should not be used as platforms for franchisees to pursue individual and unique agendas unless there is some positive and constructive outcome of value to the entire group.

Depending on its charter, an FAC will generally not have the capacity to require action of the franchisor other than to listen to its recommendations.

15. What if a franchisor ignores its FAC’s recommendations?

An FAC is a powerful way of soliciting positive and constructive suggestions for improvement from a franchise network. Franchisors are usually under no obligation to accept these recommendations, but find that many recommendations have merit and will act accordingly.

However, if all an FAC’s recommendations are disregarded, there may be an issue with the nature of the recommendations being made, or a lack of will on the franchisor’s behalf to introduce positive change to the system. If the latter is the case, the FAC may eventually disband through lack of organisational support and a perceived lack of relevance.

16. How long should a franchisee stay on an FAC?

The FAC’s charter should establish the maximum time a person can serve on a Franchise Advisory Council. Charters should allow for renewal, and set a maximum number of terms a person can be elected to encourage new candidates to nominate. Once a person has sold their business or left the franchise, they cease to be an FAC member.

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Jason Gehrke is a director of the Franchise Advisory Centre and has been involved in franchising for 18 years at franchisee, franchisor and advisor level. He provides consulting services to both franchisors and franchisees, and conducts franchise education programs throughout Australia. He has been awarded for his franchise achievements, and publishes Franchise News & Events, Australia’s only fortnightly electronic news bulletin on franchising issues.