::this post ID is 13867::::in categories of ..Legal Corner..::

Creating successful franchise advisory councils

Businesswoman presenting to colleagues at a meetingA franchise advisory council (FAC) can play a useful role as a communication outlet between a franchisor and its franchisees if organized and run properly.

Franchisees can form associations that exist independently of the franchisor or create FACs franchisors can establish, fund and support. Franchisors have used FACs as a way of communicating to franchisees about important developments, such as system-wide changes or new products and services. The groups might meet quarterly or semi-annually.

With FACs, franchisors retain oversight on activities and hold decision-making authority. They will usually prepare the council’s governing documents and establish methods for member selection, which require certain conditions. Nearly all councils select members through elections rather than appointments.

Discussion topics vary, but could include how goods and services are provided within the franchise system, equipment selection and financing and approaches to advertising, promotion and marketing. John Yiokaris, a lawyer at Sotos LLP, says successful FACs are chaired by someone who keeps discussions focused and relevant and is able to encourage dialogue between members. He says conflict can occur if meetings are not properly structured.

The franchisor’s senior management team must be involved with the council and listen to the franchisees’ concerns. Mature, commercially minded franchisees who respect the rights and responsibilities of the franchisor and are motivated to enhance the franchise system as whole should be involved. Yiokaris says personal agendas do not contribute to smooth operations. A common goal for both sides of the FAC should be fostering constructive, two-way communication.

Yiokaris also encourages franchisors to consult professional advisors prior to implementing a FAC.

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