Reading time: 3 minutes

If you have ever read through a franchise agreement, and you were wondering where all the nitty gritty details were, like how long you should be cooking the fries for or how particular technical systems function – stop. You shouldn’t be looking in the franchise agreement, but rather the operations manual. Most franchisees are not aware that an operations manual exists as the franchisor does not provide them with one at the outset of entering into a franchise. Requesting a copy before you sign a franchise agreement is a significant step to understanding your possible obligations. We set out below how the manual guides the operation of the franchise.  

It May Form Part of the Franchise Agreement

Although the operations manual is not a legal document in itself, in many franchise agreements, it is commonly cited in the substantive provisions. This means that although you do not need to read or sign the operations manual, you could actually still be bound by the terms and conditions within it! As this could be the core basis at which you operate the franchise system, it would be prudent to request a copy preferably before you sign the franchise agreement.

What Should I Be Expecting in the Operations Manual?

The operations manual basically provides you with day-to-day instructions on how to operate your business. It can cover numerous areas, including:

  • How to price your goods/services;
  • Customer service strategies;
  • Marketing strategies;
  • Cleaning standards;
  • Reporting requirements; and
  • Performance guidelines.

What Should I Ask the Franchisor About the Operations Manual?

Franchisors are typically protective of their operations manual as they contain important trade secrets, intellectual property and details about a franchisor’s business system. It is important to cite the document and understand in detail how the franchise actually operates. There are some questions you could keep in mind while reviewing any operations manual:

  • Are there any minimum performance requirements?
  • Will you be provided with guidelines on how to use the intellectual property?
  • How will you know which laws you need to comply with as a franchisee?
  • Will you be provided with guidance on how to deal with customers?
  • Are there price recommendations or obligations?

Key Takeaways

Once you have a clearer picture of your obligations as a potential franchisee, you can be more confident that you are signing the agreement with a full understanding of how you should operate. Don’t rush into purchasing the franchise and always request a copy of the operations manual, so you understand the extent of your obligations.

Questions about your franchise’s operations manual? Ask our franchise lawyers on 1300 544 755.

Webinars

Key Considerations When Buying a Business

Thursday 11 November | 11:00 - 11:45am

Online
Learn which questions to ask when buying a business to avoid legal and operational pitfalls, so you can hit the ground running. Join our free webinar.
Register Now

Innovation Nation: How to Make the Most of Australia’s Business Innovation and Investor Visas

Thursday 18 November | 11:00 - 11:45am

Online
Want to expand your business into Australia? You need the right visa. Register for our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer