Articles > Franchising

Drafting an Operations Manual for your Franchise

April 24, 2021   Philip EvangelouRyan Leaney

The Operations Manual is one of the most important documents in a franchise business. 

A well drafted operations manual clearly outlines the standards, specifications and procedures that a franchisee must comply with in order to successfully operate their business and ensure they deliver a consistent representation of your brand. 

Early on in the life of your franchise, the operations manual might be brief as it will take time to develop and define the key processes that have produced your business’s success. Combined with terms in your franchise agreement, you can ensure that the procedures in the operations manual will be binding upon your franchisees.

Important topics to address

  1. General information – how do you describe your business? Maybe you want to provide a history of business or detail your eth
  2. ‘The Franchisor-Franchisee relationship – how would you like to define the roles and responsibilities of both parties in the franchise relationship?
  3. Personnel – what are the role descriptions, recruitment, training and performance criteria for employees?
  4. Products and Services – what are the products and services provided by each franchise? What do franchisees need to know in order to deliver these products and services. (Eg. ingredients and recipes if you are a hospitality franchise.) 
  5. Suppliers – will you be requiring your franchisees to source their products from specific suppliers?
  6. Business Premises – what are the design and fit out specifications for a franchisee business premises. How would you like to govern the way in which the franchisee uses the premises?
  7. Equipment – do you have specific machinery or software systems that the franchisees are required to use? How do they use this equipment safely and efficiently and what are the servicing requirements?
  8. Customer services – how would you like your franchisees to engage with their customers? Is there a particular way in which they should be delivering your services? When selling a product like a burger, do you want them to ask if they “would like fries with that?”
  9. Health and Safety – are their any requirements around first aid, fire safety, accident reporting or any other relevant workplace health and safety procedures?
  10. Human resources – what are your policies in regard to workplace conduct such as harassment, bullying or discrimination? What are your dispute resolution procedures for franchisees and their employees. Who should be contacted if these issues arise?
  11. Financial matters – how much should employees be paid, what accounting systems should be used and how should income be reported?

Other things to bear in Mind

  1. The operations manual will often contain your ‘trade secrets.’ Be careful when sharing this manual with possible franchisees prior to them signing a franchise agreement. This could be done by allowing them to view a copy under your supervision. You might also require them to sign a confidentiality agreement prior to viewing.
  2. Make sure that your operations manual is consistent with your Franchise Agreement and does not conflict with any legislative requirements within the jurisdiction of your business and their franchise location. 
  3. Make sure that your Franchise agreement enforces the procedures within your Operations Manual, ensuring that a breach of the manual equals a breach of the agreement. This agreement should provide that the operations manual can be updated and that those updates will be binding upon current franchisees.
  4. You have an obligation to act in good faith to all your franchisees and so any changes to your operations manual require that they not be too onerous on your franchisees and that they are provided with reasonable notice of any changes and are given enough time to comply with those changes.

To Sum Up

The Operations Manual is the DNA of your franchise business. It is vital that you take the time to think about its purpose and plan out all information you need to provide. This is a living document and will need to be updated to ensure that your business can evolve.

If you have any further questions about drafting an Operations Manual or need legal assistance as a franchisor or a franchisee, get in touch with our franchise lawyers. You can call us on 1300 337 997 or fill in the contact form on this page.

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.

About Ryan Leaney

Ryan LeaneyRyan works with OpenLegal as paralegal. His main legal interests are Corporate, Property and Employment Law.