Franchisee advisory councils can serve as a useful interface in
the franchise relationship. Not only will this type of organization
play a useful role as a communication vehicle, it can be a
resourceful sounding board if properly structured and utilized.
Conversely, poorly organized and led franchisee councils can lead
to conflict or futility.
The laws in those provinces with franchise legislation grant
franchisees the right to associate with each other without
interference or penalty from a franchisor. Associations may be
created by franchisees and exist independently of the franchisor
(often called "franchisee associations") or they can be
established, funded, and supported by the franchisor (commonly
referred to as "advisory councils").
A common feature of an advisory council is that it is created by
the franchisor and exists only with the franchisor's continuing
financial support and guidance. The franchisor retains oversight
over the activities of the council and its decision making
authority. At the outset, the franchisor will usually prepare the
council's governing documents, establish a method for member
selection (e.g. appointment, election according to regions), and
require certain conditions for membership (e.g. that a franchisee
not be in default under its franchise agreement). Nearly all
advisory councils constitute their membership through election,
rather than appointment by the franchisor.
Advisory councils have been used by franchisors as a means of
communicating to franchisees important developments, such as the
introduction of system-wide changes, and facilitating research and
development on new products and services that may be offered by its
franchisees. The council typically meets with the franchisor
quarterly or semi-annually. Rarely would the council have veto
rights over franchisor decisions, but it is equally rare that a
franchisor would ignore its council's recommendations. The
topics discussed by the advisory council vary considerably and may
include discussion of the manner in which goods and services are
provided within the system, equipment selection and financing, and
approaches to advertising, promotion, and marketing.
Successful advisory councils share many characteristics. First,
they are chaired by someone who keeps discussions focused on
relevant issues and is able to encourage an open constructive
dialogue between other council members. Second, the
franchisor's senior management must be involved with the
council and be prepared to listen and take action on legitimate
concerns. The council should not be used as a forum for
"divide and conquer" by the franchisor or to subvert the
resolution of challenging issues. Third, there should be
involvement of mature, commercially minded franchisees that respect
the rights and responsibilities of the franchisor and are genuinely
motivated to enhance the value and goodwill of the entire franchise
system. Those driven by personal agendas do not contribute to the
smooth operation of an advisory council. Finally, discussion topics
should be of interest to both parties, who should adopt an
interest-based attitude to problem solving, rather than the more
adversarial, "winner takes all" approach of positional
All good advisory councils share a common goal: fostering
constructive two-way communications between a franchisor and its
franchisees by having a select group of franchisees discuss on a
regular basis matters of mutual interest with the franchisor. In
the right environment, franchisee advisory councils can be an
effective means of advancing the shared interests of both
franchisor and franchisee. Prior to implementing a franchisee
advisory council, wise franchisors should consult with their
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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