Governance Focus on the Future

It is our view that franchising, by its very nature, demands a strong governance focus on the future; not least because 1) franchising involves long-term contracts, oftentimes spanning 15 or more years (in combined terms), and 2) the franchisor-franchisee relationship is complex to manage over time. Meanwhile disruptive forces such as technology advancements, market shifts, competition, societal changes and so on, provide a moving landscape requiring sometimes frequent business and franchise model adaptation. All of this means a franchisor has a need and a responsibility to take business and franchise strategy seriously. The franchise system stakeholders’ future sustainability will, to an important extent, depend on it.

Franchising boards, and/or associated governance structures, need to ensure that enough time is focused on the future, as opposed to the past and current issues and decisions. In simple terms – enough time needs to be allocated to being ‘on’ the future business rather than in the current or past.

Recent research, conducted in New Zealand by the Institute of Directors and EY (Directors’ Fees Report 2018) indicated that ‘Directors are working harder and longer as they grapple with an increasingly complex business environment and more company risk.’

Franchisors have the same issues, and potentially more – as identified at the outset.

Recent research by Franchize Consultants, involving selected New Zealand franchising companies, indicated a future focus ranging from 33% to 80% of regular governance meeting time. In addition to regular meeting time, some companies supplement this with separate strategy and planning meetings.

It is natural that different companies will have different future focus time needs, given each company faces a unique operating context. Notwithstanding, all franchising companies need to invest the governance time needed to foster a sustainable franchise system, long-term.

Relevant questions:

• How much future focused governance time do you need to ensure your long-term franchise system sustainability?
• Does your governance resource dedicate enough time currently and, if not, what changes do you need to make?

About the Franchising Best Practice 500 Series

This is part of a series of franchising best practices. Franchize Consultants is sharing and publishing these best practices weekly for the betterment of franchising. We know that better knowledge and execution of franchising best practices leads to bigger and more valuable franchisor and franchisee businesses.

We have assembled the first 40 best practices into The Best Practice Handbook, which is available for purchase.