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Franchise Tutorial 9: Intro to Operation Manuals

The operation manuals of a franchise system are the written documents that provide the franchisee with all the details to duplicate the business model. It is the proven operating system defined in writing. Critical success factors are identified and communicated so that franchisees can consistently duplicate success.

Depending upon the maturity of the franchise, there may be one general manual or, more typically, the document extends over a series of different manuals. A manual for management may be separated from a manual for employees. A pre-opening manual will often outline how to find the right location and how to build the physical store with typical licensing requirements and build-out processes. An advertising or marketing manual will provide all details regarding the use of the trademarks and provide standardized advertising formats.

A good set of manuals will serve to reinforce the franchise agreement and those areas that require consistency and compliance in order to preserve the integrity of the brand. No matter where in the world, each franchise location should deliver a consistent product or service. At each location there should be the same look and feel within the store, the food or service needs to be the same and provide the same experience to the customer. It is through this consistent duplication that a solid brand is established.

In the past, operation manuals were typically provided in hard copies to franchisees in a series of three ring binders. Today franchisors are increasingly making the manuals available electronically through a secure website. This allows updates to be done more easily and the franchisor can monitor that the changes have been viewed and downloaded by franchisees. Franchisees can print off appropriate sections as needed.

Operation manuals will vary in details and to what degree they outline the business model but strong franchise systems will leave nothing to chance. There is an emphasis on price value, quality, consistency and customer service. Topics typically covered in operation manuals include:

Overview of the company, its mission statement, vision, and company values
Clarity on expectations and roles of the franchisee and the franchisor
Site selection and store build-out
Operating standards and policies
Recipes or service procedures
Receiving and rotating stock
Opening and closing procedures
Detailed job descriptions
Hiring, training and leading staff
Administration, accounting, and reporting requirements
Supplier contacts and purchasing procedures
Proper use of the trademarks
Local marketing initiatives and advertising templates
Public relations initiatives

All of these topics are important and serve to provide franchisees with the details required in order to run a successful business. An established system and brand is the most common reason a franchise is entered into. Rather than starting a business and going through the typical trial and error that is experienced by an independent business owner, a franchisee can learn from other's experiences by simply following the manuals, often saving thousands of dollars in the process.

With so much information to cover, operation manuals may be quite comprehensive. In a start-up franchise system, the manuals may be more general in nature. As time passes and the franchise develops into an established and mature system, the operation manuals will evolve and become more detailed in scope so as to leave nothing to chance or misinterpretation. A franchisor will often use the services of outside consultants to ensure that the manuals cover all aspects of the operation and are easily understood. The manuals become the reference materials during initial training and throughout the life of the franchise.

To simplify and make the document more user-friendly, forms and checklists often complement the materials so that there is easy execution. Support materials such as operation software, employee policy and procedures, training materials for employees, all form part of the operation manuals and serve as a resource on how to use these tools.

In the franchise agreement, there is typically a clause stating that the operation manuals form part of the franchisee's obligations. The operating systems and standards outlined in the manuals must be complied with in order to protect the goodwill and reputation of the franchise system. Due to the proprietary nature of the operation manual's contents, the franchise agreement will clearly state that the manuals are to be kept confidential and returned in the event that the franchise relationship comes to an end.

During operational visits, the franchisor will look for compliance to the operation manuals and will make reference to the manuals where deviations exist. It becomes the standard reference for the entire operating system. There may be occasions where deviations are found to be positive and actually enhance the operations. These changes are often integrated into the manuals.

Operations are typically always evolving and therefore the existing operation manuals should be reviewed and updated annually to ensure that the manuals reflect current best practices and systems. Technology and systems change over time. Service or product offerings change in order to meet the changing needs of the customer. Experienced franchisees of established franchise systems often serve on operation manuals committees or participate in focus groups to contribute and identify best practices or processes that work well and should be shared with other franchisees.

Brand awareness is driven by repetition and uniformity, and operation manuals provide the tools to establish a brand. Useful, readable documents provide a framework to standardize the operating system, and are an essential part of any franchise system's success. It provides an objective standard against which to measure compliance and consistently duplicate the customer's experience.

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Posted Date: January 2011