Documentation of a franchise

There are really only two types of documentation you require to be a a franchisor; a Franchise Disclosure Document and an Operations Manual. However, these two documents are the lifeblood of your business, your franchisees business, your brand consistency, and your ability to achieve and maintain franchise consistency.

The Franchise Disclosure Document

If you are considering franchising your business, you likely already know in general what an FDD is. Though it goes beyond the scope of this website to address every segment of a franchise disclosure document, the book How and Why to Franchise Your Business dives into the details about each  segment of the FDD.

The Difference Between The Franchise Disclosure And The Franchise Agreement

The franchise agreement is contained within the franchise disclosure document, but is really a completely separate document. The the Disclosure section of the FDD is all about disclosing the history of the franchisor and the key terms of the franchise relationship. The franchise agreement is the legal document which governs the relationship between the franchisee and the franchisor for the time of day franchise. Early mistakes and either of these can cause long-term problems within a franchise system. This is one of the key reasons why seeking experienced counsel is so important!

The Operations Manual

The Operations Manual is the document that guides the franchisee day-to-day in operating the business. It should address overall business concepts, operational concepts, and franchise specific requirements, for example:

Business Specific:

• Corporate Structure
• Finance
• Hiring Procedures
• Licensing

Operations-Specific:

• Marketing
• Pre-opening Checklist
• Closing Checklist

Franchise-Specific:

• Trademark requirements
• Reporting and Audits
• Transfer and Renewal
• Resale

These lists are by no means exhaustive; A good rule of thumb is that any operation that a franchisee or an employee will perform at least once a year should be documented.
Having each and every process documented not only allows for a brand enforcement and consistency, but also removes ambiguity in exactly what the expectations are franchisee.
The segments of the Operations Manual should written by either the individuals who actually perform the duties or a management team member who has held that position. This person should receive direction and a template from an individual or team tasked with the creation of the overall document. Centralized over site is necessary to insure that the individual processes and procedures come together as a cohesive document.

This can sound like a daunting process, and though it is not an easy undertaking a good franchise consultant can help guide you through it in a reasonably quick and painless fashion.