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Franchise operations manuals contain all the information a franchisee will need to run a branch within your franchise system. Indeed, the information within your manual can range from more general instructions regarding compliance standards to more detailed instructions on the quality of your goods and services. 

This article will explain why operations manuals are essential in ensuring consistency across your franchise system.

Training Franchisees

In the franchise operations manual, you can include as much detail as you think is necessary to operate the franchise system. Often, what you include in the operations manual will depend on the nature of the business. For example, an operations manual for a franchise restaurant might detail procedures around food safety and proprietary recipes. Alternatively, the operations manual for a hotel franchise may include procedures about the guest’s welcome and farewell experience.

When creating this document, you should consider the best way to present this information to someone who has never run one before. For instance, you may find a checklist regarding your business concept to be a suitable option. Further, an operations manual can be a training guide for franchisees operating their branch business. Additionally, the operations manual can be a reference text throughout the training period.

For example, an operations manual can cover:

  • the goods a franchise can and cannot sell;
  • which suppliers your franchisee can source their products from;
  • whether the franchisee should use particular software or technological equipment;
  • reporting obligations and forms;
  • any performance targets you want the branch to meet; and
  • any compliance standards.

Providing written detail about how the franchise should operate can become a reference guide for franchisees as they find their feet. This can promote a healthy franchise relationship, given the franchisee is aware of your expectations for running the franchised business.

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Consistency Throughout the Franchise Network

Consistency is often the key to the success of a franchise network. So, it may be a good idea to think about your franchise from the customer’s perspective. If you were a customer, you would want to walk into any branch of a franchise system and expect the same quality of goods and services.

Ultimately, an operations manual can ensure uniformity of customer experience. Additionally, it can ensure quality control across locations since it provides the guidelines a franchisee should follow. Franchisors often take further steps to ensure consistency by including minimum performance standards in the franchise operations manual. Therefore, as a franchisor, you can include:

  • a general set of obligations that all franchisees must meet;
  • a set of obligations that the franchisee agrees are appropriate to operate the franchise; or
  • on some occasions, establish minimum performance criteria without consulting franchisees.

Minimum performance requirements can ensure that all franchise locations operate consistently. Although, you should be aware that including requirements that are too difficult to adhere to could deter potential franchisees from entering the franchise system. It is a good idea to balance setting performance standards to promote consistency and allow the franchised business to grow naturally over time.

Legally Binding A Franchisee

Furthermore, you should note that the franchise operations manual is not a legal document. Although, it is standard practice for legally binding franchise agreements to refer to the operations manual and require the franchisee to comply with it. In some cases, the franchisee may also be bound by the terms of the operations manual since it forms part of the contractual terms of the franchise agreement.

A binding operations manual can be necessary if you include minimum performance standards in the agreement. Additionally, a binding agreement means you can compel a franchisee to perform in line with the standards the manual outlines.

However, if the operations manual is binding, you must clarify what are recommendations and what they must follow. This way, your franchisee can delineate what they are contractually bound to complete and what recommendations can guide them to make certain decisions.

Recommendations can come from a description of your franchise’s core values, whereas obligations can come from key performance indicators.

Key Takeaways

Franchise operations manuals contain all the information necessary for a franchisee to run a branch in your franchise system. An operations manual is essential for any franchise system since it can:

  • help train franchisees when they initially enter the franchise;
  • ensure consistency in the customer experience across the franchise system; and
  • become create legally binding standards for franchisees to meet.

If you have questions about drafting an operations manual, our experienced franchising lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

What is an operations manual?

An operations manual contains all the information that is necessary for franchisees to run a branch in a franchise system. What you include in your operations manual will ultimately depend on the nature of your business.

What is a franchise agreement?

A franchise agreement is the leading contract that will bind you and your franchisee together in business. 

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