Why Aren’t More Franchisees on Company Boards?

A blog post on the Nation’s Restaurant News site has raised a great question: “Franchisees spend a lot of time and energy, and their own money, investing in a brand. So why aren’t more of them on company boards?”

As NRN’s Jonathan Maze noted, franchisees’ interests are not always the same as franchisors:

“…franchisors make their money from franchisees’ top-line revenues because they take a percentage of those revenues as royalties. Franchisees prefer making a profit. And they prefer simpler operations. Those can go against what a brand might want.”

As we reported, this summer restaurant chain Famous Dave’s added California franchisee Anand Gala to its board. “As more brands move to an all-franchise model they have very little skin in the game,” Gala told NRN recently, explaining the importance of the franchisee perspective.

“’Previously, there were layers between myself and the board,’” Gala told NRN. ‘I didn’t get opportunities to speak directly to the board that sets strategies and approves strategies. To have that level of influence and involvement is game changing for the business.’”

Most major restaurant chains don’t have franchisees on their boards. McDonald’s doesn’t even have an independent franchisee association. In fact, a national survey found that only 23 percent of franchisees surveyed said their system had an independent franchisee association.

How would your system benefit from greater franchisee input? Share your story, here.

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Staff