Creating a friendly franchisee council is a step that almost every successful franchisor should take. Enlisting the participation and assistance of successful and supportive franchisees is a logical way to empower dealers. It creates a valuable resource for discussing and solving the problems that face your business. It also provides an avenue for comments and suggestions from your franchisees at large.

Another great benefit of forming and supporting a friendly franchisee council is that it is likely to prevent the formation of an unfriendly franchisee organization independent of the company’s influence.

Make Sure Your Council is Legally Independent
Franchisors must be careful to provide the franchisee council with support and assistance without becoming liable for its actions. We help clients establish franchisee councils that are legally independent of the company so that the council can act without creating liability for the franchisor.

Give Your Council the Right Tools
The tools that a council requires include legal charter documents, such as a certificate of incorporation and by-laws. The method of selecting members of the council needs to be spelled out. The by-laws will typically define the actions the council can take and the methods by which it must reach its decision. Other tools that franchisors should provide include a program under which the council and its designees serve as mentors to franchisees in need.

Councils Can Help Mediate
Another role that franchisee councils or their members often play is that of mediator in disputes between the company and franchisees. Mandatory internal mediation of disputes is becoming a more common feature of franchise systems. Your franchisee council can play an important role in legitimizing your internal mediation system by undertaking an active role in mediation. You must, of course, take care in structuring your mediation program.

In other systems the franchisee council becomes the moving force behind cooperative advertising and group or cooperative purchasing or manufacturing operations. Legal duties and rights have to be carefully allocated if franchisees are to form these sorts of co-ops.

At the Franchise Law Source, we help franchisors document, establish and implement the tools that a franchisee council needs to play an effective role. Contact us for consultation regarding the design and implementation of an effective franchisee council.

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