UNDERSTANDING THE VALUE OF A PROPERLY DEVELOPED OPERATIONS MANUAL
By: Michelle Thompson, J.D.
As an experienced franchise operations consultant, I am often asked by potential franchisors, “Just how critical is the operations manual to a franchise program?” I explain that the operations manual serves many purposes throughout the franchising process:
SALES
To start, the operations manual serves as a sales tool
when meeting with potential franchisees. It is a concrete representation of the
franchise business system and confirms that a franchisor is offering something
of value.
TRAINING
Secondly, the manual serves as a training tool.
Franchisors use the operations manual—along with other tools including,
equipment manuals, software manuals, and digital presentations—to train
franchisees on the day‐to‐day operations.
REFERENCE
Also, the operations manual is a reference tool that
the franchisees will use to ensure that they are following the system according
to a franchisor’s specification.
LEGAL COMPLIANCE
Last, but certainly not least, the operations manual
is an extension of the franchise agreement insofar as it is a franchise
compliance tool. It is the measuring stick that franchisors use to determine
whether franchisees are living up to the franchise organization’s standards.
With this in mind--aside from the franchise agreement--it is the document a
court will most likely use to impose liability on a franchisor.
COMMON MISTAKES WHEN DRAFTING AN OPERATIONS MANUAL
Given the significance of a well-drafted operations
manual, it is key to understand how to avoid common mistakes with respect to
drafting the franchise operation manual, focusing primarily on organization,
presentation, completeness, quality of writing, and utility of the manual as a
franchise compliance document.
MISTAKE #1: FAILING TO ORGANIZE THE
OPERATIONS MANUAL IN A LOGICAL AND CONSISTENT MANNER
In an attempt to complete the operations manual as
quickly as possible, franchisors often will fail to take into consideration
whether franchisees will be able to easily reference information in the
document. Consequently, many topics—both related and unrelated—fuse together,
resulting in an oversight or misunderstanding of the information that was
intended to be usable and helpful. Thus, significant attention should go toward
breaking the operations manual into easily referenced sections that have
relevant sub‐headings. It is also important to take the time to create an
outline that will seamlessly guide you through the drafting process.
MISTAKE #2: FAILING TO PRESENT
INFORMATION AND MATERIAL IN AN ATTRACTIVE MANNER
Some franchisors will neglect the presentation of the
materials found in the franchise operations manual. For instance, franchisors
might have a document that starts at page one and continues on to page 950.
Thus, readers do not have any sense of where one section ends and another
begins.
The
most presentable manuals possess the following characteristics:
Master Table of
Contents and Individual Section Table of Contents
● A master table of contents at
the beginning of the volume
● Individual tables of contents
(in addition to the master table of contents) before each section make locating
topics simple
Short
Paragraphs and Lists
● Text featuring short
paragraphs and large number of lists instead of lengthy narratives puts
necessary information at the reader’s fingertips
● Graphic elements, such as
lines, bullets, boxes and the like, used to set off important pieces of
information
Pictures and
Images
● Pictures and images used to break
up and/or support text; they provide a level of concreteness that can only be
carried out via a picture or diagram
Headers and
Footers
● Graphic headers and footers
used to “frame” each page and provide separate spaces at the top and bottom of
each sheet for page numbers, copyright notices, page titles, section titles,
etc.
Headings
● Headings set off in enough
white space to make them easy to see at a glance
● Main headings in the text are
centered, capitalized, and set in 14‐point bold type; on the tables of
contents, they are flush with the left margin
● Secondary headings in the
text are also capitalized and set in 14‐point bold type, but are placed flush
with the left margin; on the tables of contents, they are indented under main
headings
● Subheadings in the text are
set in 12‐point bold type, capitalized, and placed at the left margin; they do
not appear in the tables of contents
● Where further distinctions
are needed, headings are set in 12‐point bold type, upper‐ and lower‐case
letters, and are flush left with the left margin
Page Numbering
● Each manual page is labeled
with a consecutive number following its section letter: A‐1; A‐2; A‐3; etc.
The professional appearance of the operations manual
lends credibility to the documents and ensures that it fills its roles in
sales, training, and franchise compliance.
MISTAKE #3:
FAILING TO INCLUDE ALL NECESSARY INFORMATION THAT FRANCHISEES WILL NEED TO
SUCCESSFULLY OPEN, RUN, AND GROW THE BUSINESS
Far too frequently, franchisors will document what is
needed to run the business on a day‐to‐day basis, but will fail to adequately
provide information concerning what is necessary to open and grow the business.
Given that the operations manual is used to augment or expand the franchise
agreement, it should include—but not be limited to—detailed information in the
following areas: accounting, bookkeeping, cash controls and reporting;
advertising, promotion and signage; selling, prospect management, and client
management; site selection, construction, design, furniture, fixtures, supplies
and equipment; management, personnel, insurance, hours of operation; crime
prevention and crime reporting; accident prevention and accident reporting.
MISTAKE #4: FAILING TO ENSURES THAT
LANGUAGE IS UNAMBIGUOUS AND CONSISTENT WITH THE FRANCHISE AGREEMENT
Often, procedures and/or language in operations
manuals are in direct conflict with the franchise agreement. The basic rule is
that operations manuals, training manuals (including audio‐visual media), and
other written standards provided to franchisees should be uniform in message
and content. The manual should be clear on areas where the franchisor asserts
control over day‐to‐day operations necessary to protect the uniformity and
quality of products and services distributed under the proprietary marks of the
franchisor. Similarly, non‐essential operating information contained in the
manual as an aid to the franchisee should be distinguished from mandatory
requirements. These non‐essential issues could be characterized as “suggestions”
or “better practices” in the interest of communication and uniformity to smooth
operations within the system.
Remember that the operations manual should be designed
to reduce a franchisor’s potential legal liability. In addition, the franchise
operations manual should allow franchisors to set parameters and define the
franchisor‐franchisee relationship immediately upon the signing of the
franchise agreement.
Overall, the operations manual serves a central document within every franchise organization. Specifically, operations manuals impact every part of the franchise process, including: (1) sales; (2) training; (3) on‐going support; and (4) franchise compliance. So, great care should be expended to steer clear of the most common mistakes franchisors make when drafting operations manuals.
About the Author:
MICHELLE THOMPSON, a Chicago native, began her
professional writing, editing, and consulting career immediately upon
graduating from the University of Illinois College of Law in 1998. She started
as a writer, editor, and contributor at CCH, Inc., a Wolters Kluwer business
and leading provider of customer-focused tax, accounting and audit information,
software and services for professionals in accounting firms and corporations.
Later, she would serve as Senior Operations Consultant for Francorp®,
an international management consulting firm, specializing in franchise
development.
Today, with over twenty years of experience,
Michelle Thompson is an independent writer, editor, and business consultant. In
this role, she performs operations consulting, editing, ghostwriting, and
co-authoring services for a wide range of authors and other professionals. Her
most recent co-authored, published book is Full Circle - Race, Law &
Justice, which is the authorized biography of Legendary Trial Attorney
James D. Montgomery, Sr.
