TOOLS FOR SUPPORTING A HELPFUL FRANCHISEE COUNCIL
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.
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.
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.
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
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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