Franchising by the book

Richard Chatten explains how a well-written Franchise Manual is an essential part of a franchise’s success.

When people buy into a franchise, they are buying into the company’s know-how, including a proven methodology that puts the know-how behind the system into practice. Franchisors must, therefore, develop a system that allows franchise owners to replicate their proven methodology. That’s what the franchise owner wants to buy and that’s what franchisors are responsible for delivering.

Many companies have devised an excellent product or service but this cannot be franchised until they also devise an operating system, which can be replicated as a proven methodology. This will be based on analysis and documentation of all the intellectual and operational components which contribute to the way the franchise works.

The weakest link in franchising is where there is a lack of system completeness. A franchise system can be considered incomplete and unprepared for franchising until it has achieved the following:

  • Clearly identified the target market
  • Devised a marketing strategy to reach that market
  • Established how to build repeat referral business
  • Set up an efficient administrative system
  • Devised an effective training system
  • Organised a deliverable support structure
  • Documented every aspect of the business in manual form

Having identified the components of his methodology, the prospective franchisor must then record those components in an operating manual which becomes a reference book on how to operate the business down to the finest detail.

The problem is that the know-how and expertise often exists purely in the minds of management. They have operated the business for so long that operations have become second nature to them and they do not need to follow a documented game plan.

For a new franchise owner, however, operating the business is a completely new experience, so the only way he or she can learn is by studying and applying the operational principles behind it – which is instinctively done by the management after years of operation.

Before franchising, that expertise must, therefore, be identified in all its details and then transferred to a written, easily understandable format as a learning and reference instrument. The prospective franchise owner is inspired to invest in know-how only if it is seen to exist in the form of an attractive and well documented manual. It is a document which holds all the franchisor’s business secrets.

Although the manual is not normally available to the franchise owner until the start of the training programme for obvious security reasons, it should nevertheless be available for the prospect to see. Its very appearance should exude a sense of valuable know-how and so instil confidence in the mind of the prospect and stimulate him or her to want to buy into the system.

This valuable manual material must have the benefit of full copyright protection and only be communicated to others on the basis of a confidentiality agreement. This would form part of the franchise agreement, in which a franchise owner would be licensed to use the system for a specific period of time.

The contents of the manual should be informative, instructive and highly detailed, capable of leaving the franchise owner in no doubt as to what is required of them. The franchise contract should then require the franchise owner to operate their business as per the requirements of the manual in its updated form.

The provision of a high quality operations manual is a vital element in the proper marketing of the franchise and its subsequent successful operation on the part of the franchise owner. Remember, business format franchising means the transfer of a proven methodology reflected in a professionally produced manual and updated on an ongoing basis. Without that, a franchise cannot even get off the ground, let alone flourish.

In conclusion a good manual will:

  • Be in a readily user-friendly format
  • Instil confident in the prospect’s mind
  • Provide tangible evidence of the franchisor’s expertise
  • Portray strength of corporate identity
  • Demonstrate the franchisor’s professionalism
  • Add perceived value to the franchise package
  • Be the basis for an effective training programme
  • Provide the franchise owner with an operational reference guide
  • Keep the franchise updated in all respects