The Franchise Operations Manual

The franchise operations manual is comprised of the confidential information provided by a franchisor to its franchisees about the operations, systems, and procedures of the franchised business. The operations manual serves as the “how-to” guide for franchisees and as an important legal instrument by which a franchisor communicates and advises its franchisees about required operational elements of the franchised business including, for example, exclusive suppliers and vendors that franchisees must use and purchase from. The operations manual can take many forms from traditional printed materials to online digital guides and videos.

Because the operations manual contains confidential information that only a franchisor shares with its franchisees, the operations manual is not disclosed in the FDD. However, the FDD must disclose the number of pages and table of contents to the operations manual.

What Start-Up Franchisors Need to know About the Operations Manual

As a start-up franchisor your operations manual will serve an important business and legal role in your franchise system. The operations manual is a critical tool that should be used to organize and document the operational requirements, systems, and procedures for establishing and running the franchised business and for training your franchisees. Your operations manual also serves an important legal role as it will be the primary instrument by which you communicate mandatory and required systems and procedures to your franchisees. Within your FDD and franchise agreement there will be numerous references to your “confidential operations manual” and your FDD and franchise agreement will state that your franchisees are legally required to follow the systems and procedures that you disclose in the operations manual and that you may, in the future, modify from time to time.

Who Prepares the Operations Manual

When developing a franchise system, the operations manual, along with the FDD, represents one of the most critical franchise development documents. 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 because your operations manual needs 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.

Type of Content That Should be Included in Your Operations Manual

Consider that the goal of your operations manual should be to accomplish the following objectives:

• Introduce your new franchisee to your management team, your brand and your mission as a business;
• Inform and educate you franchisees about how your franchise system operates, your relationship with them and the exclusive manufacturers and supplies that you require that they use;
• Inform and educate your franchisees about the steps involved in building-out and establishing their franchised outlet;
• Inform and educate your franchisees about how to conduct the day-to-day operations of the franchised business;
• Inform and educate your franchisees about their administrative and reporting obligations; and
• Inform your franchisees about the confidentiality of the operations manual.

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:

Information Goal 1: The Role of the Operations Manual

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 Role of this Operations Manual;
• The Confidential Nature of the Information Contained in this Operations Manual;
• Updates to this Operations Manual; and
• Legal Disclaimers.

Information Goal 2: Your Story and Mission

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:

• Our Story;
• Our Founders and Management Team;
• Who Our Customers Are;
• The Services That We Offer (Overview only);
• The Products That We Sell (Overview only); and
• How We Deliver Value to our Customers; and

Information Goal 3: What The Business Does and How It Does It

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 Services and Products that we Offer (Detailed how to’s);
• How to Provide our Services;
• How to Develop, Prepare and Provide our Products;
• The Steps to Providing [Describe your service];
• The Steps to Producing [Describe your products];
• Pricing: How to Price or Provide Estimates for [describe your service];
• Pricing: How to Price [describe your products];
• Exclusive Suppliers of [Products or Services that You Provide];
• Customer Service;
• Managing Employees;
• Utilizing Your [point of sale / business management] Systems; and
• Reporting Revenues and Performance Data

Information Goal 4: Marketing and Business Development

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 right mindset for building a successful business;
• Marketing Strategies Approved by Us with Examples;
• The Role of Direct Mail with Examples;
• The Role of Print Media with Examples;
• Use of Our Website;
• Use of Social Media;
• Email Marketing;
• Newsletters;
• Use of Groupon and Similar “pre-sale discount” Sites; and
• Using [Customer Relationship Management] Systems

Information Goal 5: Approved Products, Suppliers and Suppliers

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:

• Buildout and Construction Requirements and Plans;
• Approved Suppliers;
• Approved Products and Services;
• Insurance that You Must Maintain;
• Logging into our CRM System;
• Scripts for Answering Phone Calls;
• Scripts for responding to emails;
• Requesting Approval of Other Vendors; and
• Order forms.

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.

More Information

Contact us at (800) 976-4904 or by email to Learn more about how we can can help you franchise your business or, if you are an existing franchisor, how we can help you grow your franchise.