In the suite of Franchise documents usually provided to franchisees is the Franchise Operations Manual. Think of this as the instruction manual to your franchise business, it will set out the detail as to exactly who, what, when, where and how to operate the franchise business.
Usually, the terms of the franchise manual are made binding by a relevant term in the Franchise Agreement, and, therefore, a breach of the Manual represents a breach of the Franchise Agreement. This includes updates to the Manual from time to time made by the franchisor.
But what actually goes in the Manuals?
Usually, these documents are prepared by the Franchisor themselves, as opposed to a Franchise Lawyer, however a lawyer should be utilised to check the ‘legalities’ of the contents.
Here is a checklist to use of potential ‘chapters’ that are commonly included in an operations Manual:
- Technology – the manual may prescribe which software or accounting systems must be adopted by the franchisee, and how they are to be set up, run and updated;
- Reporting – the manual may set out exactly what is required with respect to reporting, and may even include prescribed forms to be used by franchisees;
- Client/ customer interaction – we’re pretty sure the line ‘do you want fries with that?’ is contained in McDonald’s franchise Operations Manual. If you have specifics as to how customers are to be handled, the ops manual is the place to put this information.
- Presentation – particularly with retail or hospitality franchises, presentation is key! Here, such things as design, lay-out, colour schemes etc. may be included.
- Suppliers – it is common for franchisors to have a list of prescribed suppliers to maintain consistency across the franchise network. The details of those suppliers and the supply arrangements are included here.
- Pricing Structures – while the Franchise Agreement may set out the fees and/ or royalties’ payable by the franchisee, any updates to same or prescribed costs to end consumers will be included here.
- Complaint handling procedure – while the Code has a formal dispute resolution procedure that applies to all franchise relationships in Australia, it is a good idea to have an internal system too.
- Staff – it’s a good idea to provide contact details of, for example, line managers, IT workers and even the CEO within the Operations Manual.
There is no hard and fast rule as to what is to be included in an Operations Manual, and it will, of course, depend on the nature of the business being franchised. Because it’s a legal document, however, it’s important the Operations Manual is prepared consistently with your obligations as Franchisor. Your franchise lawyer will be able to review the document so as to detect any legal issues.