Latest / Franchise Conversations with Fexingo: Buying, Running, and Scaling Franchise Businesses / How Top Franchisees Use Customer Advisory Boards
Transcript
- Lucas: Luna, I have been digging into a strategy that some of the sharper franchisees are using, and it is deceptively simple — they are forming customer advisory boards. Luna: Like a formal group of customers who meet regularly to give feedback? I have seen that in B2B, but not much in retail or service franchises. Lucas: Exactly. And it is picking up steam. The idea is to recruit a diverse set of customers — maybe eight to fifteen people — and meet with them quarterly to get unfiltered input on everything from pricing to product mix to the in-store experience. Luna: Who is doing this well? Lucas: One standout is a regional fitness franchise called FlexFit — about thirty locations in the Midwest. They started a board about eighteen months ago, and within six months, their member retention rate jumped twenty-two percent. Luna: Twenty-two percent? That is huge for a gym. What did the board actually tell them? Lucas: The biggest insight was around class scheduling. The franchisee had been running the most popular classes at 5:30 PM, assuming that is when people want to work out. But the board — which included a mix of teachers, nurses, and remote workers — revealed that many members preferred 6:00 AM or 7:00 PM slots. They adjusted the schedule, and attendance in those new time slots grew forty percent. Luna: So they were literally serving people at the wrong times. That is a fix that cost nothing but listening. Lucas: Right. And that is the beauty. The board also flagged that the pricing structure — a flat monthly fee — was deterring people who only wanted to come twice a week. FlexFit introduced a lower-tier plan with limited access, and within three months, they added two hundred new members across three test locations. Luna: I wonder how franchisors view these boards. Some might worry about franchisees making changes that dilute the brand. Lucas: That is a valid concern. But most franchisors I spoke with actually encourage it, as long as the board's recommendations stay within brand guidelines. In fact, some franchisors are starting to share aggregate board insights across their networks, so other franchisees can benefit. Luna: So it becomes a tool for the whole system. How do you recruit a board that is actually representative and not just your biggest fans? Lucas: That is the critical part. You need a mix of high-spenders, occasional users, and even a few people who have complained. FlexFit recruited by offering a free month of membership and a fifty-dollar gift card per session. They aimed for twelve members — four from each segment: loyalists, occasional users, and recent joiners. Luna: I imagine you also need to avoid the echo chamber. If everyone agrees, you are not getting real insight. Lucas: Exactly. A good facilitator — sometimes the franchisee themselves, sometimes a third party — can ask pointed questions. Like, 'What would make you consider leaving?' or 'If you could change one thing about this location, what would it be?' Luna: And how often do they meet? Quarterly seems right for a board, but do you get enough data? Lucas: Quarterly is standard, but some franchisees supplement with shorter monthly check-ins via video call. The key is not to overburden the members. You want their honest opinions, not survey fatigue. Luna: What about the cost? Is this really cheaper than hiring a market research firm? Lucas: Absolutely. A typical market research project for a single location can run ten to twenty thousand dollars. A customer advisory board costs maybe two to three thousand a year in incentives and snacks. And you get ongoing, relationship-based feedback rather than a one-time snapshot. Luna: That is a no-brainer for any franchisee with more than one location. But what about the legal side? If customers are giving advice on pricing or operations, could that create any liability? Lucas: Good question. Most franchisees structure the board as an informal focus group, not a formal advisory committee. You avoid any fiduciary duty by making it clear that the board is purely advisory and that the franchisee makes final decisions. A simple one-page agreement outlining that is enough. Luna: Still, I imagine some customers might feel ignored if their advice isn't taken. How do you manage expectations? Lucas: Transparency. At the end of each meeting, the franchisee summarizes the feedback and explains what they can and cannot act on. Then, at the next meeting, they report back on what they implemented and the results. That closes the loop and keeps members engaged. Luna: That also builds loyalty. When customers see their input shape the business, they become advocates. Lucas: Exactly. One FlexFit board member told me she felt like a co-owner. She even started bringing friends to the gym. That kind of organic word of mouth is priceless. Luna: So, Lucas, if today's conversation gave you a practical idea that might save you a few thousand dollars or improve your retention, it might be worth a coffee. If it did, there's a link — buy me a coffee dot com slash fexingo. That's where listener support goes to keep this show ad-free and focused on real tactics. Lucas: Yeah, and honestly, we hear from listeners who say these episodes have helped them make better decisions. That's the whole point. So if you found value, that link is there. Luna: Back to boards — one thing I want to dig into is whether this works for single-unit franchisees. Is it only for multi-unit operators? Lucas: Not at all. A single-unit food franchisee I spoke with in Denver started a board of eight regular customers. They suggested adding a loyalty punch card with a digital component. That one change increased repeat visits by fifteen percent over three months. You don't need scale to benefit. Luna: So the barrier to entry is really just the willingness to listen and a small budget for incentives. Lucas: Exactly. And the best part is, the board tends to self-select people who are passionate. They want to help. You just have to give them a structured way to do it. Luna: I am curious about the demographics. If your customer base is mostly one age group, you might not get diverse perspectives. How do you ensure diversity? Lucas: You have to be intentional. If your typical customer is a thirty-five-year-old mom, you might specifically invite a few empty-nesters and college students who still come in. Otherwise, you end up with a board that mirrors your most vocal customers, not your full base. Luna: Have you seen any franchisees take this too far? Like, trying to please every suggestion and losing focus? Lucas: Yes, that is a real risk. One franchisee I heard about tried to implement six different menu changes based on board feedback in one quarter. It overwhelmed the kitchen and confused regulars. The key is to prioritize — pick the top two or three ideas that align with your brand and have the highest potential impact. Luna: So it is about discernment, not democracy. Lucas: Exactly. The board advises; the franchisee decides. And if you communicate that clearly from the start, everyone stays happy. Luna: I want to ask about the online component. Could a franchisee run a virtual advisory board to get broader geographic input? Lucas: Absolutely. Some multi-unit franchisees run hybrid boards — they meet in person at one location and video-conference in members from other areas. That gives you regional diversity without the travel cost. Just be careful about time zones and make sure the virtual members feel equally heard. Luna: One thing I think about is the risk of groupthink. If the board becomes too cozy with management, they might stop being critical. Lucas: That is why some franchisees rotate members every twelve to eighteen months. Term limits keep the feedback fresh. And you never want the board to feel like a rubber stamp. Luna: So, if I am a franchisee listening, what is my first step tomorrow? Lucas: Identify your target segments — maybe three to four customer types. Then personally invite one or two from each group. Offer a clear value proposition: free product, a gift card, and the chance to shape the business. Set a first meeting for sixty minutes, with a simple agenda: what's working, what's not, and one thing you would change. Luna: And keep it small. Eight to twelve people is the sweet spot. Lucas: Right. And after the first meeting, you will know if it is working. Most franchisees tell me they wish they had done it years earlier. Luna: It is one of those low-cost, high-touch strategies that seem obvious in hindsight. But it takes a bit of humility to actually ask customers for advice. Lucas: Yeah, it does. But the franchisees who do it are seeing real returns — not just in retention, but in employee morale too. When staff see that leadership is listening to customers, they feel more empowered to suggest changes themselves. Luna: That is a nice ripple effect. Alright, Lucas, good stuff. Next episode, let's talk about how franchisees are using zero-based budgeting to cut waste. Lucas: Perfect. I have a case study on a janitorial franchise that saved eighteen percent on supplies. Save that one for next time.