Part one: Training Requirements When Entering a Franchise Agreement

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Table of Contents

• Comparing different franchise systems
• Look beyond operational training
• Training staff
• Conclusion

Franchisees entering into a franchise agreement will normally be trained by the franchisor on how to manage certain operations within the business. In turn, franchisees will be required to train their employees. To ensure the success of your franchise business, however, training must be maintained throughout the term of the franchise relationship and every training opportunity should be seized. In fact, ideally, you should also be utilising training programs outside the franchise relationship so you and your staff can grow the business. You will find part 2 here.

Comparing different franchise systems

Have your franchise solicitor enquire into the various training systems on offer by the different franchisors. If you have not previously operated a franchise business, a comprehensive and ongoing training program will be extremely valuable in gaining the necessary skill set to manage the business.

In certain franchises, the franchisor will have the potential franchisees take part in the training program. This is usually paid for by the potential franchisee and will often, to the inconvenience of the franchisee, be conducted during work hours. This training is akin to an interview process and does nothing to guarantee a position as a franchisee once the program has come to end.

Having an operations manual is a prerequisite for any franchisor. If you’re contemplating a franchise relationship, familiarise yourself with its contents and have your franchise solicitor do the same. In other words, read the manual cover to cover before you start your training, because otherwise you’ll miss valuable opportunities to ask questions and raise concerns. A franchise solicitor would advise you to learn the entire operations manual, or you may be at risk of breaching the franchise agreement.

Look beyond operational training

As a new franchisee, you should be looking beyond the compulsory training requirements offered by the franchisor, and take steps to learn any business skills that will benefit you and the business. You may think you have the necessary know-how, but you could always benefit from refreshing the skills you already have and attaining new skills along the way.

These days, there is an array of educational training programs aimed at expanding business acumen and broadening your commercial skill set. These programs might assist you with managing your stocktake or organising your employees’ payroll by learning how to use accounting software, such as Xero. Ask your franchise solicitor which skills you should be learning.

Government bodies, financial advisers, franchise lawyers and other professional industries are useful resources for learning about the various taxation requirements and relevant legal fields (Australian Consumer Law and employment law). Given many of these businesses and government bodies offer complimentary, educational newsletters, it would be wise to stay on top of any developments in the law. Otherwise, ask your franchise solicitor to keep you informed.

Training staff

Your employees are the front line of the franchise business and should be equipped with the right knowledge and training. Employees are, for many franchisees, the difference between success and failure, and should be valued as such.

Your employees need to understand more than the bare essentials, such as how to handle cash and how to open/close the store.  Training should extend to things like cooperating with other employees and managers and building rapport with the clientele. The more training you give your staff, the more likely you are to succeed, as the franchise will perform better as a result. By wasting less and keeping costs low, the revenue stream will expand and the business will grow.

Have your franchise solicitor check the franchise agreement for compulsory training clauses. These are often inserted into the agreement to ensure staff satisfy the minimum standard of service upheld by the franchisor. These training requirements might be initial or ongoing so have your franchise solicitor review the franchise agreement to be sure. Failure to train staff in accordance with the terms of the franchise agreement could result in a breach of the franchise agreement and potential legal action from the franchisor. Speak with your franchise solicitor if this occurs.

Conclusion

Training is important for you as a new franchisee, and for your employees as the front-runners of the business. By being complacent with your training requirements, you not only risk the success of the franchise business, you also risk breaching your obligations to the franchisor under the franchise agreement. To speak with a franchise solicitor about avoiding these legal risks, contact LegalVision on 1300 544 755.