The franchise operations manual is a document that enables an organisation to guide an individual, whether that’s an employee or franchisee, on the functions of the business.
A recent British Franchise Association legal seminar delivered interesting thinking around the operations manual – it was mentioned in all but one presentation – and why it is a critical piece of the franchise picture.
It is a strange truth that, in buying a franchise, the franchisee often doesn’t know fully what they are buying. The know-how of the business is confidential until the final signing of the franchise agreement.
The operations manual will be referred to in the agreement and should show fully how the business is run. That’s in effect what a franchisee is buying – and so a prospect franchisee will be guided by their franchise lawyer to review the manual before making the commitment. It is unlikely that a franchisee will be given the manual to review in depth until they have signed the franchise agreement and paid the franchise fee.
Typically, the franchise agreement will reference the franchise operations manual in excess of 40 times. It will outline the key terms of the franchise, but refence the detail in the operations manual, which is a more fluid, dynamic ‘document’ that can be changed more easily than the legal agreement. The legal agreement will, in most circumstances, prevail should there be any challenge, so major terms cannot easily be changed on the whim of a franchisor.
Franchises should have something unique to offer a franchisee. The very essence of what a franchisee is ‘buying’ is contained in that manual and therefore it becomes core intellectual property.
In theory, it should be possible to pick up a manual and deliver the business model for that franchise just by reading and following the instructions. Every single aspect of the business would be covered, and a franchisee would need no experience of that business to deliver it. It’s a great theory and not quite accurate. The operations manual should really be the reference that supports induction training, growth, development of the business and ultimately the exit plan for the franchisee. The nub of that is that it should support the activity – not be the only part of the franchise model that a franchisee receives.
When exploring a manual, I would expect to see the background and history of the business. This is most likely well documented during the initial discovery phase of buying a franchise and is a ‘read once and move on’ section. It’s importance, however, is in setting the background story and ensuring that a franchisee is clear about the heritage of the business and their part in it.
I’d expect to see brand values, missions and ethos. What is this company really trying to deliver on – what lies at its heart? This is the bit I’d reference before buying a franchise – show me what values you’re asking me to buy in to. There isn’t a right or wrong here. Can you, in representing that brand, get behind the brand ethos? Does the business epitomise those brand values or does it just aspire to be that?
Then there is the practicality of how business is won. I don’t want to see a regurgitation of a 1980’s best selling book on how to sell. I want to see shared best practice for that business model that tells me what, where and how I should be working to get new business. Will it help you to get new business?
Now you’ve got to deliver the business – the ‘operations’ part. What are the service standards or key performance criteria – and are they realistically achievable? I’d look to see what depth the manual is going into to support the delivery of the business. Is it clear what needs to happen? Are there hints and tips, learned through the pilot franchisees and those that have gone before? Is there more shared best practice here that isn’t just from a best-selling business book, but clear, empirical evidence of what is the right way to do things in that business? This part of the manual needs to be firmly rooted in practicality.
I like to see standards set for employing, training and managing staff in the business. Again, not just theory. Specifics on the job roles, contract suggestions, employment hours, growing a team, management basics that are right for business you’re working in.
Then a guide around managing the business itself. Reporting standards, not just legal (HMRC and other agencies have great website for this) but the requirements for this business. The relationship with the franchisor should be defined. Expectations around how support can be accessed, communications, reporting and standards.
The challenge for franchisors (and therefore franchisees too) is that businesses evolve. They innovate change, new legislation, products or technology may be introduced. I would want evidence that the manual has been updated and understand how that happens.
The operations manual is your reference book – make sure it’s relevant, current and useful.
And that there is one.
