June 2010 Archives

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Franchisee Associations have grown in numbers steadily over the last twenty years.

Some succeed; many fail. Why?

Here are the five (5) common failures and five (5) solutions, plus one bonus solution, to make make your Franchisee Association succeed.

These are solutions that have worked in the past, and will continue to work for you.

1. IF YOU BUILD IT THEY WILL COME

Problem: Quite often a small group of dedicated leaders in a Franchise system look out among their peers that have successfully formed and maintained a successful Association and think that 'if they can do it, so can we'.

However if the majority of franchisees in the system are happy and indifferent to a formal Association, getting them interested in joining is no small task and can be a very time consuming and difficult selling job.

With no response to the vision of the leaders, they lose financial base and the authority that they otherwise would have in dealing with the Franchisor.

Solution: What to do? Make sure that you have a clear indication that enough Franchisees will join your cause before forming.

Perhaps you charge an initial, minimal fee to allow the leaders to research and make preliminary decisions about forming.

Pre-forming contributions are the most reliable way of knowing whether or not your group has legs.

2. FRANCHISE ADVISORY BOARDS OR COMMITTES (FAC)

Problem: This is a tactic often used by Franchisors to diffuse the forming of an Association. If the members of these committees are hand picked by the Franchisor, very little change will occur within the system. If they are elected by their peers, you are actually off to a good start in forming and Independent Association as an offshoot of the FAC.

The difficulty in making the transition from FAC to Independent FA is that FAC members are usually offered free travel, stay at fine hotels, eat at exclusive restaurants including fine wines and expect that life style to continue.

As you transition to an Independent FA, those amenities will go away quickly as you will now be using the monies supplied to you by individual Franchisees who are not interested in your pleasures, but what you accomplish on their behalf.

Solution: FAC's and Independent FA's can coexist as long as there are strong ties between them and the FAC is another arm of the Independent FA speaking as one voice to the Franchisor.

3. COUNTRY CLUB/FAMILY REUNIONS

Problem: These Franchisee Associations often want to use their Board and Member meetings as a way to get away from it all. It's like a vacation from the daily grind.

These Associations can exist for a long time as long as everything within the system and with the franchisor is copasetic. They run the risk of being ill prepared for significant management changes or complete ownership changes.

Solution: Make sure that your Association has a viable business plan, and it is likely that this means your Association will have a for profit status. There is little or no value in incorporating as a non-profit and then paying taxes anyways.

4. IT'S A BIG WORLD OUT THERE

Problem: It is commonly misunderstood by Independent FA's that all they need to do or want do is focus on their own microcosm or brand.

They don't think about legislation, trends, best practices and other opportunities that they may encounter by joining umbrella Associations, attending outside programs and seminars.

They will create a cocoon of sorts and over time find that the way things always worked don't work anymore.

With the lack of a network outside, they again are ill prepared for significant changes in how Associations need to be funded, how to service their members and how to continue to research cutting edge products and services that continually change the landscape of small businesses.

They may not fail, but they will begin to reduce services to their Members in order to 'cut costs'. That can begin a very dangerous cycle which could lead to their demise.

Solution: Look outside your immediate circle of comfort for other solutions. Look at joining trade associations in your industry, and look for people who have solved your problem in other franchise systems. Those franchise operators that you are competing with also have the same small business problems that you do.

5. THREE AND OUT

Problem: Forming Associations should have at least a three year plan for survival. Most failed Franchisee Associations will likely fail within the first three years. This is often caused by 'formation under crises'.

Although a good crisis is a great way to galvanize members, once the crisis has passed, interest by the Membership begins to wane quickly.

Either Association Leadership provided a positive outcome and everyone is happy and goes along their merry way or Leadership fails to deliver on the expectations of the Members causing resentment and malaise.

Solution: Before you start-up create a three year business plan, with two conventions being planned, the creation of a communications plan, and what member benefits are going to be in place.

BONUS SOLUTION: IT'S A BUSINESS AND DON'T EVER FORGET IT!

It is not unusual to approach a group of Franchisee Leaders of a Franchisee Association and ask; "Are you thinking of your Association as a business?" Once asked, the answer is often followed by first a glazing of the eyes and then a profound 'no'.

This is the essential element that distinguishes successful Franchisee Associations from failures. From day one, they look at their Association as a business that they would manage in the same way that they would manage any other business.

They budget, they review, they react to changes in the business, and they review the business frequently and ask "are we on track with our business goals"?

They are not afraid to look outside and be open to new ideas from other businesses like theirs (Other FA's).

They innovate and they accept the fact that they don't have the formula completely locked down. They realize that things change rapidly and try to stay ahead of the curve in order to remain successful.

Your Franchisee Associations have several goals that must be achieved in order to be successful:

Have a relationship with your franchisor.

Satisfy the needs of you Members through benefits and services. Advocate on their behalves.

Stay on top of changes, best practices and innovation by going outside your microcosm.

Above all; never forget that you are a business. If you succeed your brand will be better for it. If you fail, it is an exercise in futility and the opportunity to have an impact on your brand will have slipped away. Re-forming after failure is difficult if not impossible. 

Stay focused.