The Operations Manual is a key document of the franchise suite. It’s the document that will detail the franchise system and procedures which all franchisees are required to adhere to. While our franchise lawyers have not seen a copy (these things are highly confidential!), we are pretty sure the obligation to offer ‘fries with that’ is a fundamental piece of the McDonalds franchise operations manual. This article will look at franchise operations manuals and how franchisors can draft a good manual.
But drafting, updating, and distributing an operations manual is not simply a process of writing down what you do in the franchise business. Thought needs to be given to the legal considerations, including the application of applicable law, and contractual rights of the parties. If you are a new franchisor and are creating your very first operations manual or an existing one tasked with the job of bringing the document up to date, here are some key tips:
1. Keep it Confidential – before you provide a copy to anyone, have them sign a deed of confidentiality or similar. After all, the content of the manual is the very system you are expecting franchisees to pay to exploit.
2. Use a Template or Checklist – if you simply rely on your existing business knowledge, chances are you will miss out on some important inclusions in your manual. Have you thought about privacy? Occupational health and safety? Ongoing systems updates? All of these are topics regularly covered in the manual. A great template is published by the Franchising Council of Australia.
3. Make it Match your Franchise Agreement – the two documents should be carefully cross-checked to make sure there is no inconsistency. When a new franchise is signed on, they often receive the Operations Manual at the same time as the Franchise Agreement.
4. Be wary of Making Promissory Statements – your operations manual, in effect, represents a binding contract by the inclusion of a reference to same in your franchise agreement. Accordingly, you should avoid making statements that are promissory in nature, such as expected turnover or the provision of ’24 hour franchisor support.’
5. Be Aware of your Right to Update – unless your franchise agreement contains an express clause permitting updates, it is questionable whether you have a contractual right to do so. Some franchise agreements contain caveats to this ability, for example that any major updates only occur after consultation with the franchise network.
6. Be Mindful of Good Faith – updating the manual is an act governed by the Code, including the statutory obligation of good faith. Accordingly, updates which alter the way the franchise business is conducted should not be made on a whim, and only after consideration of the effects of same on individual franchisees.
If you need assistance with drafting a operations manual or reviewing a franchise matter, get in touch with our franchising lawyers. Our franchising team are experienced in drafting and reviewing contracts for all franchise matters and can also assist you with resolving disputes between franchisees and franchisors.