A Franchisee Advisory Council (FAC) is a group of established franchisees who meet with company executives to discuss business issues that are of relevance to the majority of the franchisees. It is a structured vehicle for constructive two-way communication between the franchisee and franchisor.
The FAC may operate under different names or formats, but is typically organized by the franchisor. A slight variation is a Franchisee Association. The Franchisee Association is formed by the franchisees and is independent of the franchisor. They may function similar to a FAC, but the franchisees set their own structure, policies and agenda. They typically are formed when there is a system wide crisis, major change or event and franchisees feel they are not being listened to. In some franchise systems there may even be a FAC and Franchisee Association both functioning at the same time.
The purpose of the FAC is to provide a formal channel of communication between the franchisees and franchisor about such issues as advertising, field support, operations and changing market trends. If provides a sounding board to the franchisor for the implementation of new programs before executing these programs 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 and be heard. Through the FAC, franchisees only provide advice and input and use the FAC to influence company decisions. Ultimately the final decision making authority remains with the franchisor executives.
In order for the FAC to be effective all participants, both franchisees and franchisor, are required to have an open-minded attitude, actively listen and have a respect for different perspectives. The agenda must be focused on the interests of the overall system. There needs to be focus on finding solutions, setting action plans and getting results. The FAC will establish policies, by-laws and have meeting agenda’s in place so as to keep the discussions on track and reinforce this culture. Without this focus the FAC can evolve into a session of complains and gripes with no clear resolutions.
How franchisee members are selected to participate in the FAC will vary from franchise to franchise. In some cases the franchisor will appoint franchisees, while in other systems there is an election process where franchisees vote as to who will participate on the FAC. The franchisor will typically set some requirements for involvement, such as the franchisee must be in good standing under the terms of the franchise agreement, meet performance standards and have been in the system a minimum of one or two years. Ideally the franchisees sitting on the FAC are positive, successful and respected by other franchisees. They have the ability to set aside their own personal agenda’s and look at what is best for the system as a whole. There is also a real commitment of time. Not all franchisees can take the time required away from their business to participate in the council.
The number of franchisees sitting on the FAC will vary from five to twenty or more members depending upon the overall size of the franchise system. There is usually an effort made to ensure that different geographical regions and different size operations are represented on the FAC. The term will vary from one to three years with a staggering of the council members so as to have a balance between experienced and new members sitting on the council at any one time. Franchisors will often limit how many terms a franchisee may sit on the FAC so as to give more franchisees the opportunity to participate.
The FAC will meet formally two to four times a year with informal phone calls and discussions between these meetings. They will meet at the franchisor head office, a resort or conference center. Sometimes the FAC meeting takes place around the annual convention. Travel, meeting room costs and other business expenses are often covered by the franchisor, although in some systems such costs are paid entirely by the franchisees through the payment of FAC dues. It is customary for the FAC participants not to be compensated financially for their time.
Most successful franchise systems today have an FAC. A typical issue for a new emerging franchisor is at what stage or size does the system need to be before an FAC is formed? There are no hard and fast rules, but the sooner an FAC is put in place the better. With a smaller system the FAC may be more informal but still plays an integral part in forming the direction and policies of the franchise organization.
The FAC is an essential part of a franchise system. It permits constructive two-way communication between the franchisor and franchisees. A positive culture of mutual respect and working together is fostered where the franchisor and franchisees seek to evolve the brand for the benefit of the common good and system as a whole. Successful franchisors recognize that the franchisees have a valuable contribution as they are working the business model on the front lines everyday. Through an effective FAC the franchisees feel empowered and have confidence that the franchisor is listening to their needs and perspectives.