Memo to T-Rex: It's real, it's on - FCA moving to fully inclusive board
When in November '06 – as newly elected Chair – I reported to the Board my interest in pursuing 'inclusiveness' i.e. to make the Franchise Council of Australia more meaningfully and visibly representative of all associated with the franchising sector, I remember a wag quipping that we had been claiming to be truly representative for so long he had begun to believe it. So why bother.
I accepted the intended humour and partial truth of the barb. While the FCA has long and genuinely been open to the opinions and concerns of non-franchisor members (and has been introducing new layers of involvement progressively), a cynic might argue that it has been lip service – and be believed. That has been the thrust of the various adversarial associations that have plagued us, and they have found willing political ears. These 'associations' have given a number of ethical franchisors pure hell and no one is immune. Perceived non-inclusiveness has been the FCAs Achilles Heel.
Sample question 2007: "If the FCA is so representative of franchisees, why then is there only a handful of franchisee members and no seats on the Board?" Simplistic as this is, it has been difficult to argue against. We know that franchisees have been far more interested in making a crust within their own competitive environments than in the broader franchising picture. We also know old school franchisors who have shuddered at the notion of formal franchisee voice: "We'll all be rooned."
These realities have tied us down. They have been daunting hurdles to overcome during a period of many years when the FCA has had to concentrate on transforming itself from a virtual non-entity into a professional, tightly structured, financially sound force to be reckoned with. But much of that work has been completed, under the leadership of Stephen Giles and Richard Evans. And I (and others) had a feeling that a corner had been turned –naturally and without fuss that the sector had matured in a rush, and we should not feel constricted by the mores of the past. That which seemed unthinkable a year or two ago was now do-able.
Cast your mind back a couple of years and imagine this. The FCA asks around 50 franchisors to pose a set of questions to their Franchise Advisory Councils and authorise the FACs to respond to the FCA direct. Action is immediate and within one week, 20 sets of responses are received. Rather than go through their FACS as suggested, many of the franchisors have circulated the questions to every franchisee in their networks. Responses from the others are continuing to come in.
Pipe dream, huh? But it has just happened, for real.
What does this tell us? It says that in general terms, franchisors are eager to give their franchisees an uncensored voice, and that franchisees regard the opportunity as sufficiently important to participate and act urgently. I don't know how you fare with surveys, but if every franchisee responded to PoolWerx requests for information within a week we would be in seventh heaven. A corner has indeed been turned. Our expectation is participation of around 2,000 franchisees and while it will take a minute to put the outcomes together, a couple of things are resoundingly clear. Yes, franchisees believe the FCA is or can be valuable to them. Their key interest is in access to bulk bought goods and services (already in train). And the most intriguing response is that they place great importance on political representation in areas like WorkChoices, industrial relations, workers compensation, wages and so on. They are seeing the FCA as champion of their pressing causes and this is incredibly healthy.
Backtrack a moment. Our questions were based on a 'listening tour' undertaken in December and covering Brisbane, Sydney and Melbourne. This was led by Tony Melhem, an award winning Gloria Jeans franchisee who now sits on the FCA Board, representing a Franchisee Forum made up of franchisees from all states and territories. Along with members of the State Committees, Tony asked invited franchisees to state their concerns, needs and wants, gathering an impressive body of information. I am sure that this process and topics arising has contributed much to the success of the subsequent survey – based on what franchisees want rather than what we think they want.
I wonder how much franchisee interest this kind of event would have inspired just a few years back. I would have been inclined to expect responses like, "What's the point? It's window dressing and nothing is going to come of it anyway." Something has changed – or perhaps many small things.
The upshot is that even now, we are in a position to credibly answer the franchisee representation question.
Franchisee voice – any franchisee; they don't have to be members – is actively sought and carefully listened to by franchisee representatives on State Committees. These reps are members of a formal Franchisee Forum under FCA auspices. This is chaired by a franchisee member of the FCA Board, who has full voting rights. And this is how the voice of Joe Zee, pool technician of Dubbo, becomes broadcast in the FCA boardroom and both represented and followed through by a voting Board member who is him/herself a franchisee. We have not been able to say this before. We have not been able to tender the results of statistically significant, uncensored franchisee surveys. We have only lately been able to point to the availability of underpinning franchisee services like centralised buying, favourable insurance, free mediation and education. Now we can, and not only because of a change in structure, but also an evolutionary change in attitudes.
Franchisee membership? Practically, the issue of actual franchisee membership of the FCA is far less important than that of 'their participation – but important it remains. The fact is that franchisees will not join the Council unless they see value in membership through a small businessperson's eyes. For their fee of a couple of hundred dollars, they want to see an immediate return on investment. There are a couple of angles here.
- The level of franchisor cooperation associated with our franchisee questionnaire suggests a new ability to communicate the practical ROI advantages of membership within networks.
- We knew this had to happen. We just didn't know how to do it. But now we can listen to what the franchisees are thinking. They're telling us how to do it and we can adjust accordingly.
- Franchisors may see strategic advantage in franchisee membership and fund it in their initial fee structure, as part of franchisee membership of various committees eg FAC, or across the board.
Certainly large scale franchisee membership is an ambition, it's firmly on the table, and the path is much clearer and more open.
All of this is stacking up very well and there are no losers. Even the politicians and bureaucrats win. They are very keen to deal with clearly representative associations, rather than a whole set of fragmented interest groups because it makes their lives easier and there is less pushback. If they want a particular issue addressed, we're able to develop a workable answer and hand them their solution on a platter. For example, the Productivity Commission's inquiries regarding the retail tenancy's initial findings recognised problems but did not recommend legislative response.
We have not accepted that and at the second round of submissions, we're going back not only with the recommendation that there be a voluntary code of practice to which tenants and landlords need to adhere, but also a completed draft of that code as we see it. In this case, we are very clearly representing franchisees, as the tenants and rent payers. More to the point, we are not simply trotting out a token franchisee, but a voting member of the Board who has the systems in place to credibly gather the views of his peers and examples of exploitative circumstances.
Where will all this lead? Somewhere interesting I am sure. It's worth noting that Australia is one of only five nations in the world that have embraced franchisee inclusion at Board level, and also that the immediate past President of the US-based International Franchise Council was, for the first time, a franchisee. Inclusion offers an exciting road ahead and we are fortunate to have our new Executive Director Steve Wright to approach it with a fresh mind and perspective.
Forgive the short story, but I have barely begun. In this message I have focused on franchisee inclusion, however similar structures are also in place for suppliers, lawyers, women, and educationalists. I will address these, and their implications in future issues of The Franchise Review.
Cheers,
John O'Brien
Franchise Council of Australia News
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