The franchise operations manual is the how-to guide provided by franchisors to franchisees about the training, operational and system requirements of the franchise system. Topics typically include information about initial training, developing the franchised business, opening and operating the franchised business, marketing, and system requirements as to designated vendors, and sources of supply.
The operations manual can take many forms from traditional printed materials to online digital guides and videos. Because the information contained in the operations manual is confidential, within the FDD, franchisors are only required to disclose the operations manuals table of contents and number of pages. Below we discuss the franchise operations manual in more detail.
For franchisors, the operations manual is an important tool used to organize, document, and communicate the operational requirements, systems, and procedures for franchisee training and the establishing and running the franchised business. Although operational in nature, the operations manual also serves an important legal role as it is the primary instrument by which a franchisor will communicate mandatory and required systems and procedures to be followed by franchisees. Within the typical FDD and franchise agreement there are numerous references to the “confidential operations manual” and the legal requirement that franchisees comply with the systems and procedures that the franchisor includes in the operations manual and as the franchisor may modify and supplement from time to time.
Many start-up franchisors spend the time to prepare their own operations manual and others rely on the assistance from franchise development professionals. Whether you prepare your operations manual yourself or work with a franchise development team, your participation in the development of the operations manual will be critical for your operations manual to reflect your business and your systems. When it comes to developing your operations manual it is critical that you avoid the generic and get to the heart of what your business is all about and how franchisees can duplicate your brand and success.
Consider that the goal of your operations manual should be to accomplish the following objectives:
Below we have identified some but not all of the information goals that your operations manual should accomplish and a sampling of what a portion of the operations manual table of contents may look like:
The first goal is to disclose information about the operations manual, the confidential nature of the information contained in the operations manual, and the role that the operations manual serves in your franchise system and the operations of the franchised business. As to this topic, a sample table of contents, may include:
The second goal that your operations manual should achieve is to convey “your story”, “the story of your business and the business that they are about to invest in“. Don’t underestimate the significance of communicating your story as part of the franchising process will be to empower your franchisees to duplicate your brand. In many ways franchisees will, in certain aspects but not legally, be your business partners and it is important that they share the same “mindset” as to the business, customers and the unique selling proposition of your business. As to this topic, a sample table of contents, may include:
The third goal that your operations manual should achieve is to educate (not merely describe) the services your business provides, the products that you offer and how you deliver or provide these services and/or products. This second section is the “how to” section and should be extremely detailed. As to this topic, a sample table of contents, may include:
The forth goal that your manual should achieve is to educate your franchisees about their obligation to market and develop their business. This is a critical section since, much more often than not, successful franchisees are not those working “in the business”, i.e. providing the service or selling product but, rather, those continuously working to market, promote and manage the franchise business. That is, teaching franchisees to work “on their franchised business” but not “in their franchised business”. As to this topic, a sample table of contents, may include:
The fifth information goal that your manual should achieve is to provide franchisees with complete detail as to establishing and operating their franchised business. This section should include detail and lists relating to issues such as approved build-out plans, requirements and restrictions for signage, lists of approved suppliers, recipes and step-by-step instructions for services and/or products. Basically a reference tool. As to this topic, a sample table of contents, may include:
Of course, there will be significant variation depending on your business and your industry. It is important to understand that your operations is a “living document” that, over time, will be adjusted, modified and supplemented. Developing the right operations manual will take you a long way toward establishing a solid foundation with your franchisees and maintaining control over your franchise system.
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