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I recall a time as a franchise executive when the common dictum was don’t encourage, organize or support a franchisee association unless circumstances warrant it. I can’t speak for all franchisors, however, in those days there was a general feeling that unless there are problems with the franchisees, then leave well enough alone.
Some franchisors believed that if there was a franchise advisory council, then there will be an organized group that could thwart franchisor initiatives and possibly interfere with the operation of the franchise system. A good number of franchisors fostered and encouraged franchisee organizations or advisory councils.
A common approach used among franchisors was to establish franchise advertising committees that included franchisee representatives that would participate in the administration and application of advertising funds. Some of these groups grew quite large and were not without their problems. For example, a lawsuit brought by KFC franchisees that involved the forty year old KFC Advertising Cooperative, over the issue of control, resulted in a ruling favorable to the franchisees, this year. Nevertheless, there are countless franchisee associations and committees that function rather smoothly.
Considering the amount of organized franchisee activity that has taken place recently; how should franchisors deal with the issue of franchisee associations within the confines of their own company? What are the advantages and disadvantages of a franchisee association?
I take the position that a franchisor should encourage a franchisee association once the system reaches a minimum size of 50-100 franchisees. To resist or discourage the formation of an association because there is a fear that conflicts and major issues will arise, belies good business sense. If the franchise program is flawed and franchisees are unhappy, then resisting an association is ignoring the obvious. In fact, I have witnessed problematic franchisors work through some difficult problems, because there was a franchisee association that the franchisor could work with.
A good starting point for emerging franchisors is to form an advertising or marketing committee that includes franchisee representatives. This can enable both parties to establish a working relationship and build mutual trust. It can also provide a forum for the franchisor to obtain feedback from the franchisees from time to time.
Franchisors shouldn’t fear the formation of a franchisee association. If they do, then they must have far greater problems to deal with. In most cases it’s inevitable that franchisees will speak among themselves and share both the good and the bad. It’s far more effective for franchisors to recognize this fact, and strive to have a productive relationship with their franchisees.
About the Author: Ed Teixeira has over 35 years of franchise industry experience as a franchise executive and franchisee. He has served as a franchise executive in the c-store, manufacturing and home healthcare industries and has licensed franchises in Asia, Europe and South America. Ed operates FranchiseKnowHow which provides information and advice to prospective and existing franchisees and franchisors. He publishes newsletters for the franchise community.