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A competent board of directors or advisory board can be an invaluable resource for a franchisor. In the case of small or medium sized franchises, having advisors from outside the franchise offers the opportunity to receive advice that is objective and based on experience.
Some business owners prefer to have an advisory board rather than a formal board of directors (which has more power than an advisory board. Since a board of directors is a legal body, franchisors should understand the differences between the two types of boards and consult their attorney before choosing which one to use.
Profile Board Candidates:
- Target areas in your franchise where you need strengthening, such as franchise operations, finance, marketing etc.
- Consider a broad range of candidates, including attorneys, CPAs, fellow executives and educators. Include people with franchising experience and from your business sector. In other words, people with experience and skills that are different from yours.
- Avoid friends and family members on a Board especially if they lack the credentials. They may be unwilling or uncomfortable providing honest feedback and advice.
- Decide how often the Board will meet. Most Boards meet on a quarterly basis. The frequency of meetings could be a factor when candidates decide whether or not to join a Board.
- Membership terms for a Board of Directors typically run from one to three years with staggered terms.
- Expect to pay your Board members a modest fee per meeting, depending on the size of the franchisor. Advisory Board members without legal responsibilities should receive less. Some members may be willing to serve without receiving a fee since there is a degree of prestige when serving on a Board.
Be objective and honest when identifying the type of candidates you would like to have as a resource. Consider them as business advisors who can help develop strategies, analyze and critique performance and be a valuable resource and sounding board for the franchise operation.
Finding the Board Candidates:
- Speak to business associates, the Chamber of Commerce and trade associations for recommendations.
- Review academic institutions for talent especially if a local college or university has a business school.
- Check your local media as a source for candidates since they may be familiar with business leaders from your market.
Choosing people for a Bboard of Directors or Advisory Board is the most important part of the process. Add people who are influential in your industry or market area – those who provide competent advice and add credibility to the franchise.
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