Updating your Operations Manual: A Critical Task for Franchisors
When it comes to identifying the "governing documents" that serve as the the infrastructure for a franchise system, it is extremely difficult to overstate the significance of a franchisor's "operations manual" and the critical role that it serves. Designed to inject a form of flexibility into the franchisor - franchisee relationship (compared to the static terms contained in the franchise agreement) the operations manual (if properly referenced and identified in the franchise agreement) the operations manual should serve as a critical vehicle to enable you to consistently refine, further develop and modify (within reason) the components of the franchise system and the day-to-day obligations of franchisees.
Considering the interdependent relationship between the "franchise agreement" and the "operations manual", it is critical that franchisors constantly refine, update and supplement the operations manual to insure that the operations manual accurately identifies and reflects:
- Current franchisee training obligations.
- Current Area Developer and Area Representative training obligations. Keep in mind that if you offer multiple franchise opportunities that go beyond a "single unit franchise" you must maintain separate operations manuals. That is, if you offer area development or area representative rights, you must prepare and maintain a separate operations manual for area developers and area representatives;
- Current approved suppliers and vendors;
- Current architectural plans and specifications;
- Current rules and restrictions respecting the utilization of trademarks and trade dress; and
- Current procedures respecting the reporting of gross sales and reporting information;
There are many other topics that must be maintained and continuously updated in the operations manual. However, the key is to consistently implement a franchise compliance program that is focused not only on the annual renewal of your franchise registrations but also the overall composition and accuracy of the operations manual. Otherwise, should franchisee litigation arise, you may be exposing your franchise system to unnecessary "legal headaches" and potentially frivolous claims.
