As the franchisor needs to manage and maintain their business and the franchisees that work for them, the provision of training is a common requirement in the Franchise Agreement and Disclosure Document. Here, we flesh out the some of the training obligations you may have as a franchisor.
What is included?
Training is usually provided at the commencement of the franchise. This initial training will introduce the franchisee to the general operation of the business. You can expect this initial training to cover topics such as the day-to-day management of business, briefing on preferred suppliers, an outline and summary of the franchise system and ways that the franchisee is expected to perform their services. In other words, the training should provide guidance on the franchise’s philosophy and operation of business.
The Franchise Agreement and Disclosure Document should outline whether the franchisor is obliged to provide this initial training, as well as their responsibilities in providing ongoing training. Although it is very common for an initial training to take place, ongoing training is often upon the discretion of the franchisor.
Who bears the costs?
The costs involved to facilitate initial or ongoing training can either be a part of the initial franchise fee, separated as an individual fee or can also be borne wholly by the franchisor. The responsibility of training fee costs vary according to the franchise and it would be important to refer to the Franchise Agreement or Disclosure Document. There is often a term included in the Franchise Agreement requiring that the franchisee take part in an initial training and any ongoing training as required by the franchisor.
Are there other forms of training?
The franchisor may require the franchisee to attend corporate events such as sales conferences or annual meetings in order for them to be aware of the current state of the business and their strategies for growth. Aside from such events, a franchisor can commonly provide documents such as a training manual for new employees, standard requirements or operational policies. This is beneficial for franchisees to take responsibility in developing the business.
What are the benefits of training?
As mentioned previously, the training obligations in providing training will depend on the Franchise Agreement and Disclosure Document. Despite the costs and time involved in setting up training for new franchisees or maintaining ongoing training programs, it is an essential investment that can potentially minimise risk and assist in the smooth running of all franchisees. New policies and procedures may be introduced or new employees may come on board. These are scenarios that are important for franchisors to consider when developing their training plan and strategy. After all, continuous training opportunities allow for franchisees to maintain their skills as well as the system of standards that are in place.
If you are a franchisee and are curious about the your training obligations, contact one of our LegalVision franchise lawyers to review your Franchise Agreement. If you are a franchisor who wants to understand how best to implement your training strategies in your legal documents, our franchise lawyers can assist in drafting the appropriate clauses according to your growth plans!