Franchise advisory councils exist to give experienced operators a formal channel into franchisor decision-making. When the topic is occupancy cost, FAC members are in a unique position: they can see patterns across the network that individual franchisees cannot. A single franchisee who suspects their CAM is too high has a data point. An FAC member who has heard the same concern from 12 members across 8 markets has a trend.
The challenge is raising this trend in a way that leads to action rather than defensiveness. The framing matters as much as the substance.
Why Occupancy Cost Belongs on the FAC Agenda
Occupancy cost is a unit economics issue. For most retail and food service franchises, the rent and NNN line represents the largest fixed cost outside of labor. When CAM increases outpace revenue growth, unit profitability compresses regardless of how well the franchisee executes on everything else.
FACs routinely address topics like royalty structures, marketing fund allocation, and supply chain costs. Occupancy cost deserves the same attention. It is within the FAC's legitimate scope because it directly affects franchisee profitability and, by extension, system health.
The objection — "leases are individual contracts between franchisees and their landlords, not something the franchisor can address" — is technically accurate but misses the point. The FAC's role is not to renegotiate individual leases. It is to identify system-wide patterns and propose resources, benchmarks, and support structures that help franchisees manage this cost category more effectively.
Framing It as Benchmarking, Not Complaint
The most effective way to introduce occupancy cost on an FAC agenda is through data, not anecdotes. Anecdote: "Several members are frustrated with their CAM charges." Data: "Among the 15 members who shared their 2024 CAM figures, the average year-over-year increase was 22%. The system average for prior years was closer to 7%."
This reframes the conversation from franchisee dissatisfaction to system performance metrics. Franchisors respond differently to benchmarking than to complaint. Benchmarking suggests a gap worth closing; complaint suggests a relationship problem to manage.
Specific framing that tends to work:
"We'd like to propose adding occupancy cost benchmarking to the annual data we collect from members. Here's why we think it matters and what we'd do with it."
"We've observed a pattern across multiple members that looks like it warrants a system-wide resource. We're not asking the franchisor to intervene in individual leases — we're asking for support in helping franchisees know when to request a review."
"We'd like to understand whether there are any existing resources — preferred vendors, educational materials — that franchisees can access when they have a question about their CAM reconciliation. If not, we'd like to work together to develop some."
What Data to Aggregate From Willing Members
Before bringing the topic to an FAC meeting, collect data from members who are willing to share. The ask is simple: total annual CAM charges for the most recent 2-3 years, store square footage, and market (metro/suburban/rural).
From this you can calculate:
CAM per square foot by year. This normalizes for store size and lets you compare across different lease structures. A 2,000 SF store paying $15/SF in CAM is paying materially more than the same concept in a store paying $9/SF.
Year-over-year change. A member whose CAM went from $24,000 to $36,000 in a single year experienced a 50% increase. That number, shown alongside the distribution from other members, illustrates whether the increase is an outlier or a trend.
Range and distribution. Showing the range (lowest to highest CAM/SF) and a median gives the franchisor context for how much variation exists. High variation in a mature system is often a sign that some members have negotiated better terms, some are in older leases that haven't been reset, and some may have leases with errors.
You do not need complete data from every member. A sample of 10-15 willing participants is enough to identify whether a system-wide pattern exists.
How to Propose a Network-Wide CAM Review Program
Once you have the data and the framing, a concrete proposal is more actionable than a general request. A network-wide CAM review program could include:
Annual benchmarking. The franchisor (or FAC-commissioned third party) collects CAM/SF data from participating franchisees annually and publishes a range. Each franchisee knows whether they are above or below system average.
Audit window reminders. The franchise support team flags members whose reconciliation window is approaching and reminds them to confirm their audit window status. This is a calendar function, not legal advice.
Preferred vendor list. A short list of CPA firms or tenant-side auditors who have experience with franchise lease reviews. The franchisor doesn't endorse outcomes, just provides access to qualified resources.
Educational module. A short training module (30-45 minutes) in the franchisee portal on how NNN leases work, what a reconciliation includes, and how to determine whether a review makes sense financially.
These four elements require relatively limited investment from the franchisor and provide concrete value to franchisees who are managing this cost with limited support.
What Success Looks Like
Success is not "the franchisor agrees that every lease in the system is correct." Success is:
- Occupancy cost appears on the standard QBR review checklist
- Franchisees have access to at least one trusted resource when they have questions about their CAM reconciliation
- The system has CAM/SF benchmarks so individual franchisees know how their location compares
- Franchisees know when their audit windows close and are not losing recovery opportunities through ignorance of their rights
The FAC's role in achieving this is raising the issue, bringing the data, proposing specific resources, and following through on implementation.
Verification Action
Before your next FAC meeting, survey 10 members with the following three questions: What was your total CAM for 2024? Did you receive your 2024 reconciliation? Do you know when your audit window closes? The answers will tell you whether you have enough data to bring a substantive proposal to the table — and whether the system has a monitoring gap worth addressing.
Frequently Asked Questions
Can the FAC request that the franchisor negotiate preferred CAM terms with specific landlords? For leases the franchisor controls or has influence over (e.g., locations it developed and assigned to franchisees), this is reasonable to request. For existing third-party leases between franchisees and their landlords, the FAC can advocate for support resources but not for the franchisor to intervene in individual lease relationships.
What if the franchisor is resistant to collecting occupancy cost data? Start smaller: propose adding a single field to the existing franchisee performance survey — total CAM for the most recent year. Once that data exists, it is easier to make the case for deeper analysis.
How should the FAC handle members who are currently in disputes with their landlords? Keep those situations separate from the systemic discussion. The FAC meeting is not the venue for individual disputes. Focus on the system-level pattern; individual situations are for qualified legal and financial counsel.
Is it appropriate for the FAC to commission a CAM audit firm to conduct reviews for members? Yes, this is a legitimate member benefit. The FAC can negotiate a preferred rate with a tenant-side auditing firm, similar to how associations negotiate group purchasing rates. Members can opt in voluntarily; the FAC facilitates access without guaranteeing outcomes.
What if other FAC members are not interested in this topic? Present the data first. Occupancy cost is abstract until someone sees that the member with the highest CAM/SF is paying 70% more per square foot than the median. Numbers make the issue concrete in a way that general concern does not.
The franchise operator resource hub provides a starting point for understanding CAM review and NNN lease cost options.