By Frank Zaid
Question (Q): Why should franchisors establish advisory boards, and what are the benefits?
I do not believe there is another industry segment like franchising in which competitors are so open to assisting others. New or emerging franchisors readily learn from established ones, get experienced advice, and avoid mistakes. But these franchisors cannot always rely on the generosity or availability of others.
There are many books and publications that discuss how to build a franchise system or reveal success stories in franchising. But these publications are usually focused on a particular industry segment, franchise system, or tell the story of an entrepreneur who built a famous business unit. Every franchisor will tell you their company is different and unique—which is true.
So how can franchisors obtain experienced and objective advice on developing and operating their systems when they have only been involved in their own business model? Can a quick-service food franchisor learn from someone who has experience with a home service franchise, or can a fitness franchisor seek guidance from someone in the restaurant business? The answer in both cases is ‘absolutely.’
My experience and advice is straightforward: form a franchisor advisory board with trusted members who can draw on their own experience, knowledge, and judgment to assist the franchisor in considering different growth strategies, resolve challenges, and develop performance metrics. The board should include individuals with varying and successful backgrounds and exposures in franchising or other business disciplines: financial, legal, operational, technology, marketing, or management, to name a few.
Q: How can a franchisor locate potential members of the advisory board?
Personal contact is essential.
Prospective candidates can be located through other franchisor recommendations, business associations, social media platforms, or franchise industry publications. The key qualification for a potential advisory board member is he/she must understand the business model and be objective, flexible, and creative, with some experience in franchising. The council may be structured as a legal board of directors or a board of advisors. Since many board members wish to avoid the legal obligations and potential liability of formal board members, the growing practice is for advisory boards to be structured as a non-formal setup. In the case of public companies which are required by law to have a formal board of directors, the role of an advisory board can be subsumed within a formal board of directors, or an advisory board can be formed independent of the activities and legal responsibilities of the formal board of directors.
Q: When is the ideal time for an advisory board to be formed?
The earlier a board is formed, the better.
The more advice a franchisor receives, the more likely he/she is to avoid mistakes and make positive informed decisions. Less time will be spent in resolving potential disputes with franchisees, omissions in the structuring of the franchise system, incomplete supplier arrangements, and poor marketing and advertising programs.