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The Franchise Operations Manual contains specific information essential to the preliminary and ongoing operations of a franchise. It covers several very important functions in a franchise system. The franchise manual acts as:
• A sales tool for potential franchisees: providing a demonstration of your knowledge and the strength of your systems
• A training guide for new franchisees
• A reference tool for established franchisees
• A legally enforceable quality control document – without it, you cannot implement system principles
• A cost control tool – saving both the franchisee and the franchisor money by improving and systemizing operations (labor control, purchasing controls, etc.)
• An important part of your defense in sensational liability actions – by helping the franchisor clearly determine the franchisee as an independent contractor and explaining important areas of compliance
• A conventional franchise operations manual (sometimes divided into multiple manual documents) will contain between 300 – 500 pages and should have dozens (and perhaps hundreds) of photos representative of the franchisor’s standards of operations.
In addition to the Operations Manual, we will also help create formal training programs for franchisees. These training programs are intended to help the franchisor consistently train franchisees, and are most valuable for companies with more aggressive growth plans. A typical franchisee training program will include
Day-by-day and hour-by-hour agendas
• PowerPoint slides covering each classroom topic in detail
• Recommendations as to use of outside resources
• Role playing exercises
• On-site activities and hands-on training procedures
• Quizzes and tests that will the documentation of your franchisee’s integration of the information you are providing
Other items that can be developed include:
• Train-the-Trainer Manuals and Programs – intended to help franchisees train their own staff on an ongoing basis
• Pre-Opening Manuals – designed to help franchisors whose businesses are highly site reliant establish, negotiate, and build-out franchised locations
• Master Franchise Operations Manuals – which will encompass information on franchisee recruitment, franchise sales, pre-opening support, ongoing support, and reporting for those franchisors with International Master Franchises or Licenses or those conducting business domestically using an Area Representative (or Development Agent) program
• Training Videos for franchisee employees – video is a great device to communicate standards of quality to the lowest levels of the business.
Can Your Business Be Franchised?
Can your business be franchised? If you have a thriving business that is receptive to a regional or national system of marketing then franchising may be the right choice. To help you ascertain if your business could be franchised, assess some of the qualifiers described below.
First, evaluate yourself as a prospective franchisor. Franchising is more than the business of selling services or products. You will also be a mentor, coach, and you will be perpetually supporting your franchisees. You will also be a collecting an initial fee for the franchisee to begin business and then receiving royalties for the life of the franchise.
Always remember to permit your individual franchisees the flexibility to administer their own businesses and always allow them act as independent business owners, not employees. It is important you thoroughly set forth the guidelines of the Franchisee relationship in the original contract, the Franchise Disclosure Document, and all communications to franchisees.
Don’t consider franchising your business unless you have an identified, local market for your product or service. Marketability is established by need, and need is determined by competition. If you have a unique way of operating a business and you have a unique business model, it is feasible you could franchise it.
Demand is the essential force here. It is just as central as uniqueness. Your unique product or service must be desired not only by the business people who wish to buy franchises from you, but also by the people who will buy products or services from those franchisees. If your product or service is relatively new and not broadly offered by anyone else but is in demand, you first must determine where your products or services would sell, based on the requests of your present customers.
If your product or service isn’t new, you can hire market research firms to create reports on the types of consumers in various regions. You can also perform your own study on the Internet. Government agencies can also provide demographic information and market research data. The U.S. Department of Commerce, Bureau of Economic Analysis, and the U.S. Department of Labor, Bureau of Labor Statistics has conducted extensive studies on regional consumer behaviors. Search for “consumer habits” on these government websites. If your product or service is unique or in demand, secure this uniqueness through the use of a trademark, for a product, or service mark, for services, so that the public connects your product with a particular trademark. Apply for a registered mark as soon as possible, before the first franchise agreement is offered and reached. Determine that no other entity has already obtained the rights of your mark. You can do so for less than $600 by contacting one of many trademark search firms or by visiting online at http://www.uspto.gov.
Before you commence your franchising plan, prepare a comprehensive business plan so you can look at the financial expenditure each new franchisee will require to get up and running; then contrast that with the revenue you can expect to receive from fees, royalties, and sales. Include costs that are specific to franchising, such as operating costs such as salaries and benefits for you and head office employees, trainers and sales staff; as well as rent, office equipment, car allowances, and travel. Include the cost of finding franchisees — ads, traveling to franchise shows, preparing brochures and videos, and entertaining. Add an adequate amount for startup and ongoing legal, accounting, and advertising fees.
Be very conservative on the timing and income you require from your franchisees. You will have determined the mixture of franchise fees, royalties, and product or service sales that will produce income from your franchisees. Estimate when you expect these revenues will paid, instead of basing your predictions on how your business worked in the past.
Evaluating the Franchisor
Before deciding to invest in a franchise it’s important to appraise all aspects of the franchise program. This includes appraising the franchisor. Specifically you want to know how they govern the franchise program and whether they deliver as promised. One of the most useful ways to evaluate a franchisor is by acquiring feedback from current and former franchisees. There is a secondary method to conduct a franchisor evaluation, which can supplement the feedback obtained from the franchisees.
Alternative Ways to Evaluate the Franchisor:
• How does the franchisor accomplish the franchise sales procedures?
• How a franchisor accomplishes the sale of new franchises can say a lot about the franchisor.
• Was your request for franchise information handled on a timely basis? If you had to wait more than a week to obtain an acknowledgement of your interest in the franchise or franchise information, it could signify a lack of staffing by the franchisor. The franchisor should have a digital information packet which can be emailed to eligible candidates.
• Do your e-mails or calls to the franchisor sales staff engender a prompt response?
• If the franchise representative is taking an assertive sales approach, it could be an indicator that the franchisor is trying to promote fast growth.
• Is the franchisor or its representative quick to respond to your emails and telephone calls?
• If a telephone call or email fails to result in a response within 2-3 days, it could indicate a lack of management or professionalism on the part of the franchisor and its staff.
• Are your inquiries being addressed?
• When pursuing a franchise opportunity, it’s common for a franchise applicant to have a number of questions. A timely response to a question or appeal for information by the franchisor signifies that the franchise operation is well organized. This indicates a well managed organization.
Discovery Day
Many franchisors have a Discovery Day which is a chance to assess the franchisee and respond to any issues or inquiries that hadn’t been mentioned before. Be cognizant of the following items which can be an indication of franchisor performance.
• Did you receive a Discovery Day outline prior to the meeting?
• Did you receive assistance relating to travel and accommodations for your visit?
• Will you be meeting with a cross section of the franchisor organization?
• Was the Discovery Day process professional or was it very sales orientated?
An important but somewhat difficult area to evaluate is the franchisor’s company culture. After working together with the franchisor’s staff for many weeks, one should gain a sense of how it is to work with the franchisor. A franchise relationship can last many years and there must be a well-suited relationship between both parties. If there is any trepidation on the part of the franchise candidate, then it may be best to reconsider. Merging franchisee feedback with an evaluation of the franchisor will provide a franchise candidate the ability to make a more intelligent evaluation of a franchise opportunity.
Source by David G Komatz
