The cornerstone of any franchise program is the operating manual. Often referred to as the “bible” of a franchise, it contains explicit details on how to properly conduct business as part of a franchised system. At a minimum, the manual sets quality standards and provides a cohesive framework to ensure uniformity across an entire franchise network. The importance of this document cannot be overstated. The franchise operations manual will list the agreed upon standards and procedures for the franchise. As a franchisee, you will be expected to carry out business according to these standards. If you fail to abide by these rules, you may be subject to serious consequences including loss of your right to operate the franchise or even litigation.
Below is what you might expect to find in a franchise operations manual:
Introduction: This section will include introductory remarks such as a message from the founder, an explanation of what the manual entails and its purpose and a provision of what is expected between the franchiser and franchisee.
Overview of the Franchise Program: All franchise manuals include a detailed description of the franchise system, explaining how it is set up and how the various components function. The detailed responsibilities of both the franchiser and franchisee may also be discussed.
Operating Guidelines and Instructions: This area of the operations manual will be broken down into many subsections addressing issues such as personnel, customer service, product and/or service delivery, pricing and purchasing policies, inventory control, accounting principals, insurance requirements and payment of franchise fees, among others. As a franchisee, you will constantly be referring to this section of the manual.
Directory of Contacts: Most manuals include a comprehensive directory of names, addresses and telephone numbers for franchise personnel, suppliers, associations and other franchisees. You will be expected to use the contacts that the franchiser provides, unless specified otherwise within the franchise agreement.
In addition to the above, the manual should also document all quality standards that are required and how the franchisee is expected to maintain those standards; the day-to-day support that the franchiser will provide (i.e. setting up the business, marketing, business development, etc.); the benchmarks that will be used to measure quality (i.e. mystery shoppers, unannounced inspections of units, audits, etc.); and how the manual will be updated when new systems and procedures are introduced. The operations manual of a well-established franchiser is likely to be substantial - possibly exceeding five hundred pages or more.
In order to fulfill your obligations under the terms and conditions set forth in the franchise agreement, you need to operate your franchise according to the procedures outlined in the operating manual. The bright side is that the operations manual will boost your productivity and profitability because the system has been proven. The downside is that you can't get too creative. Don't fool around with the franchiser's procedures or policies. By signing the franchise agreement, you now have certain contractual obligations to comply with. The franchiser will expect you to live up to your end of the bargain.
