Are you franchising your business and want to learn more about the franchise operations manual? What’s in a franchise operations manual and how they are used in franchise systems?
The franchise operations manual is the blueprint and how-to guide of a franchise system. Within the operations manual franchisors provide detailed information about system standards, operating procedures, suppliers and requirements for the development, marketing, and operation of a franchised business. As a franchise system grows, over time, the franchise operations manual becomes the communications hub where a franchisor formally communicates all system standards and operational requirements that must be followed by franchisees. When you franchise your business, in addition to the FDD, the operations manual is a key legal and business documents that you'll need. Since operations manuals are confidential, the contents of the manual are not publicly disclosed. However, the table of contents to the manual must be included in the FDD.
Below we discuss further the role of the operations manual, who prepares it and, the content included.
The Role of the Operations Manual
For franchisors, the role of the operations manual is 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.
Who Prepares the Operations Manual
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.
What's Included in a Franchise Operations Manual
Operations manuals typically include the following topics and information:
- Confidentiality and Legal Notice
Initially the operations manual should include information disclosing that the contents of the manual are confidential, should not be shared, and should not be publicly disclosed. This section should also explain the role of the manual and how it relates to the franchise agreement and system standards that the franchisee will be expected to follow.
- Brand and Team Introduction
This section should be all about the story behind your brand, your founders, your customers, what makes your brand unique, and your management team. This should also include a directory and information about who franchisees should contact in for support and assistance.
- Development of the Franchised Business
This section should cover every milestone that a franchisee should be expected to complete from the date of signing his or her franchise agreement right to the grand opening of the franchised business. Depending on the type of business this section should topics like securing a location, build-out and construction, purchase requirements, inventory requirements, initial training, pre-opening assistance, and grand opening marketing. There's more, but the point is that this section should be the road map for taking the franchise from where they are today to the opening of their new business.
- Training and How To
This section should cover everything from initial training, pre-opening training, on-going training and the day-to-day operations of the franchised business including making the products you sell and performing the services that you provide.
- Operating Systems and Requirements
This section should cover the your entire supply chain including approved suppliers and vendors, inventory requirements, point of sale systems, and standards and specifications for all key components, services, and products required for day-to-day operations.
- Marketing and Business Development
This section should cover all of the steps involved in marketing and promoting the franchised business. Including system requirements related to approved media, approved marketing ads, use of social media, use of digital marketing and the system website.
There's much more to an operations manual and, many will depend on your industry, your business, and the systems that you develop and put in place.