Franchise Operational Manual

When assessing the suitability and quality of a preferred franchise, an intending Franchisee would be well-advised to undertake some early research to substantiate how much importance is placed by the Franchisor on providing their franchisees with fully-documented quality standards and operating procedures. For, it is the Operational Manual that reinforces the terms and conditions of the Franchise Agreement, provides the Franchisee with information about the working methods and practices, and sets out the way in which the Franchise must be operated.

As a minimum, it must set quality standards and provide a cohesive framework to ensure uniformity and conformity across the Franchise Network; at its most refined, the Operational Manual becomes an extremely powerful management tool for assuring quality. It is also an invaluable method for training the Franchisee and his staff at arm’s length – particularly where the Franchise Network extends overseas.

Here are some typical questions answered .

Why do I need an Operational Manual?

You need an Operational Manual to help you fulfil your obligations under the terms and conditions of the Franchise Agreement. The Franchise Agreement sets out your contractual obligations; a good Operational Manual will document – in operational detail – precisely how the Franchisor expects you to fulfil those obligations.

How will an Operational Manual benefit my Franchise?

A well-documented Operational Manual will help you develop your profit potential through:

· More effective and efficient management. · Greater customer satisfaction. · Increased customer loyalty. · Forging stronger links between you, your Franchisor and your customers.

When will I see a copy of the Operational Manual?

Although not obliged to do so, you should ask the Franchisor to show you a copy of the Manual when you have signed the Intending Franchisee Confidentiality Agreement. However, at this stage, you may not be able look at the Manual in depth, nor will you be allowed to take it away with you.

Traditionally, Franchisors provide Franchisees with a copy of the Manual during Induction Training. Sometimes, however, the Manual is provided to the Franchisee on signing the Franchise Agreement. As it is an obligation under the terms of the Franchise Agreement for the Franchisor to provide the Franchisee with a copy on loan – on or before Induction Training – failure to do so could put the Franchisor in breach of the Contract.

What does the title Franchise Manual cover?

The title Franchise Manual is a generic term used to describe all documentation used by the Franchisor, and provided to the Franchisee on loan, which assists in the operation and management of the Franchise.

Cross references should be made to, for example, the EPOS manual, manufacturers’ instructions for the safe operation of equipment, Approved Supplier Lists – and their location. For example, these may be put on the website, kept as independent instructions but retained within the Operational Manual; or they could be additional manuals originated by a parent Company but not specifically produced by a Franchise Division. An example of this would be a Health & Safety Manual or Personnel Manual.

Here, it is worth noting that the Franchise Agreement may refer to an Operating, Operations or Operational Manual. For consistency, the title of the manual should reflect the wording used throughout the Agreement.

What should I be looking for?

Numerous references to the Manual are made in the Franchise Agreement so, to a large extent, the content of the Manual should mirror the obligations set out in the Franchise Agreement – ie. establishing the business; day-to-day operating requirements; and ongoing development of the business.

The Operational Manual of a well-established Franchisor – or well-established company that has decided to franchise all or part of its business – is likely to be substantial, documenting the Franchisor’s Know How and Business System in operational detail. By ‘operational’ detail we mean explaining precisely how a requirement must be carried out, not merely noted as part of a checklist. Checklists are very useful but the detail that lies behind them must also be documented to ensure conformity to a given specification is followed by all franchisees in the Network.

For a newly franchised business, it is acceptable to develop the Operational Manual gradually as new systems are developed and procedures are improved through operational experience. Usually, the Franchise is piloted over 12 to 18 months, so the manual may be developed as a Pilot Edition. Once the Franchisor is satisfied that the systems and procedures work in practice, rather than theory, then the Pilot Edition can be amended and published as a full First Edition.

What operational detail should be covered in the Manual?

The Franchisor should document:

· The minimum Quality Standards required by the Franchisor. This will ensure that franchisees attain and maintain the same quality standards for Operating and Managing the business.

· The Responsibilities of the Franchisee in carrying out and maintaining those quality standards

· The main Responsibilities of the Franchisor and the day-to-day support that will be provided in relation to the main disciplines – eg. setting up the business, marketing, financial management, business development. · The Benchmarks by which the Franchisor will measure quality – eg. KPIs, Franchisee Audits, mystery shopper, complaints – together with any supporting charts, forms etc to be completed. These will provide the yardsticks for continuous improvement.

· Examples of Best Practice in relation to operational requirements – eg. how the corporate image must be maintained to ensure uniformity across the Network, how the Franchisee will be expected to market products and\or services, how the Franchisee will be expected to train and motivate any staff, what financial controls and systems are to be put in place.