Franchise operations manual

This is the ‘bible’ of the franchise business and forms a significant part of the franchise contract. It is the franchisee’s primary source of information and guidance and should contain a detailed description of the franchisor’s system and how to operate it on a daily basis.
 
Essentially, it will specific to the needs and requirements of the franchise system such as regulating opening hours, product description, stock control stock ordering procedures, handling customer complaints, the payment of fees, and policies in regard to advertising, marketing and promotions.
 
It will cover set up procedures, including advice on researching the market, business and tax registration, insurance, opening bank accounts, cash security, site set up, and the preparation of a marketing plan.
 
But it will also refer to building brand awareness, human resources, health and safety matters and basic accounting procedures, such as VAT returns and the observance of other statutory obligations.
 
In many franchises this information is contained in one volume but it could run to several, each book dealing with the operation of just one aspect of the franchisee’s business.
 
The manual is “flexible” in that it allows for changes to be incorporated. Given that a franchise is an ongoing commercial enterprise, alterations to procedures may need to be made in the light of experience and circumstances to allow the franchisee to operate the system more efficiently.
 
In fact, most agreements oblige the franchisor to “develop, improve, and enhance” his/her system for the benefit of everyone in their network. He/she can accommodate such improvements in the manual. It is the franchisee’s responsibility to keep their staff up-to-date with such changes and to make maximum use of the manual in his day-to-day operations.
 
The manual is usually used as the basis for franchisee training, each section being discussed in detail in a workshop situation.
 
The franchisor jealously guards the content of his Operations Manual and will not want to part with it prior to the franchisee signing a franchise agreement. He/she can rightfully claim that it holds the “secrets” to his business system. Even when the franchisee is on board the manual is only ever on loan to them and must be returned when the agreement expires.
 
By Tony Fitzpatrick, Franchise Your Business Ireland
To contact Tony email
info@franchiseyourbusiness.ie
 
Why the Operations Manual is needed
by Michael Finnegan, MFA
 

The basis of franchising is that an opportunity is identified, a business model is developed and proven in the marketplace, it is developed into an operating system, the legal status is documented in the Franchise agreement and it is condensed into an operations manual as the framework to ensure uniformity and conformity across a Franchise Network.
 
The relationship between the franchisor and the franchisee is critical to the success of the development of a successful franchisee network. In order to provide the franchisee with the information, terms and conditions and work methods and practices the franchisor must develop an effective and user-friendly Operations manual in order to ensure consistency across the franchisee network. The issue of an Operation manual, on or before Induction training, is an obligation under the terms of the Franchisee Agreement and failure to do so could put the franchisor in breach of the contract.
 
Numerous references to the Manual are contained in the Franchise Agreement so, to a large extent, the contents of the Manual should replicate the obligations set out in the Franchisee Agreement is a detailed way, e.g. day to day operating requirements, ongoing development of the business, accounting procedures, reporting procedures. By operating requirements is meant explaining exactly how a requirement must be carried out. This could take the form of a detailed flowchart of the process or an SOP (Standard Operating Procedure), which gives the franchisee a systematic outline of the expectations of the Franchisor in terms of the specification to be delivered in terms of preparation, delivery, and quality. This ensures the uniformity of the service across all the franchisees in the network.
 
The franchisor, when developing the Operations manual, needs to have already defined and documented the requirements for running a successful business based on his/her own business or on an already established pilot franchisee. These processes/ procedures are then written in a format that will give the franchisee the knowledge to set-up and begin trading. Manuals can be as large as two hundred pages or as small as thirty. What is important to accept that the original Operations manual will be amended and changed over the lifetime of the growth on the franchisee network through changes to procedures, instructions and the on going process of continuous improvement that is the lifeline of any business.
 
Many franchisors ask “Why do I need a manual when I have the franchisee agreement” The answers are varied but I believe the following explains why.
  • To fulfil the franchisor contractual obligations
  • To reinforce the terms of the franchisee agreement.
  • To set and monitor quality standards.
  • To impose conformity across the franchisee network.
  • To set benchmarks for monitoring and management.
  • To act as the vehicle for induction and training of new franchisees and staff.
  • To ensure a systematic method for updating new systems or procedures.
  • AND to implement a process for continuous improvement.
Operations manuals are very specific to the requirements of the business and to the intended audience. In many instances the audience are the franchisee and their staff who may have little business or management experience but who know how deliver the service or product through practical experience. Therefore they require maximum support and guidance in a user-friendly framework and language. It provides the end user with everything they need to know to operate and develop their business.
 
The preparation of the Operations manual is generally the least exciting aspect to the launching of a successful franchise network but as experience shows with many of the most successful franchisee operators the manual becomes the engine for the future development of the business. Manuals tend to reflect the life cycle of the business, set up, day-to-day operational and management procedures, business development. Franchisors need to critically examine each stage of the business model, document and share their requirements and aspirations with the team of people who they are dependant upon for their future success.
 
To contact Michael email info@mfa.ie