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Franchise Advisory Boards and Councils: Mapping Your Relationship

Business guru Peter Drucker suggested in 1974 that most corporate and nonprofit boards function poorly. Keeping Drucker’s opinion in mind, how is your franchise association’s board or franchise advisory council functioning?  In an 18-month in-depth study of these entities, results suggest that there is little formal assessment of the board or council’s roles, activities or–and perhaps most importantly–the relationship dynamics between the franchisors and franchisees who share seats at these boardroom tables. One franchisee interviewed for the study on board dynamics commented, “The issue with franchise boards is mistrust. We spend a lot of time and money going nowhere. We ultimately get somewhere, but it takes too long.”  Does this lament sound familiar?  More importantly, how can we begin to change the tune to that song?

In providing his recommendations for how to effectively manage boards, Drucker suggested that boards periodically assess their own performances. Since a good deal of time and money are dedicated to franchise advisory boards and councils, perhaps we should take Drucker’s advice. A good place to begin would be to assess the relationship dynamics operating between the franchisor and franchisee members of these boards. The goal of this article is to introduce the Zee-Zor Stakeholder Map that identifies four types of franchisee-franchisor relationships that operate on boards and councils.

The Zee-Zor Stakeholder Map was created as the result of interviews with 45 franchisee and franchisor members of 25 different franchise advisory boards and councils. In addition, over eight months of observation occurred with three different boards, whereby the researcher had access to meetings, conference calls and electronic communication exchanges. These three entities included one franchise association board and two franchise advisory councils.

The results of the study confirmed that members typically identify four roles for franchise boards and councils. These include:

Safeguarding assets or what could be termed a monitoring role;

Adding value by improving decisions in a partnership role;

Representing others interests, which is characterized as a political role; and

Presenting a united front to external constituencies or being in a supporters’ club.

The primary board roles are reflected on the points in the grid shown. Depending on a number of elements, including how board members prioritize the roles of the board, it’s possible to determine the type of relationship that exists between franchisees and franchisors. The four types of relationships are allies, agents, activists or antagonists.

How to Read the Map

Beginning on the far-left horizontal axis is the monitoring role, which is evident when board members describe the primary function of the board is to watch the other side. Franchise boards focused on monitoring would be characterized by mistrust between the parties. On the opposite end of the horizontal axis is the supporters’ club role, where boards serve as legitimizers to convince external audiences that the group is accomplishing key objectives to help the long-term survival of the franchise.

The vertical axis is represented on the bottom by the political role. Under this lens the acknowledgement is made that franchisee stakeholders have different interests than the franchisor, resulting in win-lose negotiations between the two parties. On the opposite end of the vertical axis is the partnership role. In this mode, the franchisor and franchisee board members operate as partners and hold substantive dialogue and debate prior to making decisions.

In addition to how board members prioritize their roles, it’s also important to know why boards were initially formed, the governance processes used, decision-making norms in practice and evident leadership styles to categorize the relationship into one of the four quadrants on the Zee-Zor Stakeholder Map. While no board will perfectly match the criteria on every condition, based on the research findings, boards will have more in common with one stakeholder classification than another.

As you read the general descriptions of each relationship below, where would you place your board or council on the Zee-Zor Stakeholder Map?

Antagonists

Boards that operate between the political and monitoring roles are characterized as having an antagonistic stakeholder relationship. Board dynamics are fraught with dissension and distrust between franchisees and the franchisor. Each side uses various power bases to exert influence, and rather than trying to achieve a common goal, each side simply wants to dominate or control decision-making. The most extreme example of antagonistic board relationships might end in a courtroom with a judge ruling on disputed issues.

Agents

Boards that behave politically, but retain a supporters’ club mindset would be considered as agent stakeholders. Board members can become indoctrinated into the trappings of being part of the board and the advantages that are associated with that position. Boards may be little more than rubber stamps in this context. In an agent–stakeholder relationship, power is most often concentrated with the franchisor. Franchisors operating in an agent stakeholder relationship may be relying on the presence of the board to attract help with new franchisees by demonstrating the corporation’s commitment to listening to franchisee voices. Franchisors also rely on the board to help legitimize decisions within the broader franchisee community.

Activists

In the upper left quadrant are activist stakeholders. These boards want to be intensely involved in decision-making on key issues. Because of prior experiences, franchisees and franchisors’ recognize that while they may share the same goal, their strategies for achieving these goals may differ. Franchisors acting in an activist stakeholder frame seek franchisee input and participation and view franchisee input as valuable. They rely on the board to help safeguard the brand by ensuring attention is focused on issues of importance to the collective system versus becoming mired in grievances from a small number of franchisees. Franchisors also believe that franchisee board members will serve as operational role models for the rest of the system.

Allies

Moving above the horizontal axis, boards in the participatory model with a supporters’ club lens can be characterized as allies. Stakeholder boards functioning as allies have two-way discussions, and both franchisees and franchisors bring insight and advice to meetings. The franchisees’ attitudes are one of trust toward the franchisor. The franchisor focuses on the board as a consultant that serves as a sounding board and there is little to no use of formal voting procedures.

Long-standing boards will tend to develop a dominant relationship style that lasts over a period of time. When an environmental jolt occurs, such as a new franchisor comes aboard, key leaders depart from the board or some upheaval occurs that threatens the firm, the franchise board’s relationship may shift from one quadrant to another. Knowing where your board’s relationship is on the map can help the group decide what steps to take to remain in place or provide evidence that there is a need for an intervention to change the relationship dynamics. Although it has been close to 40 years since Peter Drucker argued for annual board evaluations, little has been done to provide boards the tools needed to conduct these assessments. The Zee-Zor Stakeholder Map is now available to help your group assess your board’s relationship dynamics. ⎯

Denise M. Cumberland, Ph.D., is assistant professor and director, Master of Business Communication Program of Spalding University in Louisville, Ky. For further information on the specific criteria you can use to assess your board or councils relationship, contact Dr. Cumberland at dcumberland@spalding.edu.

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