Franchisors Need an Effective Board of Directors
Part 2: How to Profile and Choose the BOD
by Ed Teixeira
A competent board of directors or advisory board can be an invaluable
resource for a franchisor. In the case of small or medium sized franchisors
having advisors from outside the family offers the opportunity to receive advice
that is objective and based upon experience.
In part 1 in the
Franchise Expert Blog I wrote about the benefits that a franchisor gains
from having a competent and effective board of directors or advisory board. In
this article I’ll address how to profile and choose the members. Since some
business owners would prefer to have an advisory board rather than a formal
board of directors (which has more power than an advisory board), the process we
describe below can apply to either group. We’ll refer to these collectively as a
“Board”. Since a board of directors is a legal body, franchisors should
understand the differences between the two and consult their attorney before
choosing the type of board to use. You’ll also need to have documents drawn up
in order to protect confidential information and the company.
Profile the people for a Board.
- Target particular areas in your franchise where you can use
help or input, such as franchise operations, finance, marketing
or other areas.
- Identify any potential problem areas and priorities that you
may need support with.
- Consider a broad range of people, including attorneys, CPAs,
fellow executives, and educators. Include people with an
expertise in franchising and those from the business segment you
operate in. In other words, people with experience and skills
that are different from yours.
- Don’t make the mistake of installing friends and family
members on a Board especially if they lack the credentials. They
may be unwilling or uncomfortable providing honest feedback and
- 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.
- The membership term for a board of directors will typically
run from one to three years with staggered terms.
- Expect to pay your Board members a modest fee per meeting,
depending upon 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 available when serving on a Board.
Be objective and honest when identifying the type of people 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 people for a Board
- Speak to business associates, the Chamber of Commerce and
trade associations in your market area to find out if they have
anyone they would suggest or recommend.
- Academic institutions can be a source of talent especially
if a local college or university has a business school.
- The local media can be a source of candidates since they may
be familiar with business leaders from your market.
- Attorneys and accountants can be good board members and also
a source of other candidates for a Board.
- There are firms that conduct searches for Board members;
however, they charge a fee. For small franchisors the fee can be
Choosing the people for a board of directors or advisory board is the most
important part of the process. Add people who complement the business skills of
franchisor leadership by bringing in people with a combination of new abilities
and experience who understand the business you're in. Influential people with
visibility in your industry or market area can provide competent advice and add
credibility to the franchise company.
© 2012 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He
can be reached at email@example.com
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