The franchise operations manual is the how-to guide used by franchisors to communicate system standards and requirements to franchisees. Information contained in the operations manual typically relates to training, development of the franchised business, operating standards, system procedures, marketing, approved suppliers and other information related to the on-going operations of the franchised business.
Franchisors are required to disclose the table of contents of their operations manual in Item 11 of their FDD. Because operations manuals contain confidential information that is only shared between franchisor and franchisee, other than the table of contents, the operations manual itself is not disclosed in a franchisor’s FDD. The operations manual can take many forms from traditional printed materials to online digital guides and videos.
Below we discuss further the role of the operations manual, who prepares it and, the content included.
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.
Operations manuals evolve over time. What your manual looks like on day 1 will be very different from what it will look like 2, 3, and 4 years from now. Ultimately it’s up to you to prepare and continuously update your operations manual. However, when you’re just starting out its always a good idea to have your franchise lawyer and franchise consultants involved in the process.
Operations manuals typically include the following topics and information:
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