In franchising there are two important documents. First, the franchise agreement which is a formal agreement between a franchisor and a franchisee. It is “written in stone” so that once a franchisee enters into the agreement it cannot be altered without the franchisor and the franchisee agreeing to make the alteration.
The other important document is the operations manual which sets out the day to day operational requirements on the franchisee. This document can be altered by the franchisor, and indeed it should be, because inevitably the business will evolve during the course of the franchise and therefore the manual needs to be constantly updated. From a franchisee’s perspective it is important that there is nothing in the manual that conflicts with the franchise agreement and that the manual contains all of the information that the franchisee was expecting to find in the manual. It is for this reason that increasingly franchisors are allowing prospective franchisees to view the manual (but not to take it away) before they commit to the franchise.
Whilst it is conceivable that a franchise would not have an operations manual, this would be most unusual and would, inevitably, raise doubts as to whether, in fact, the franchise was a true business format franchise.
Written by: John Pratt
Partner, Hamilton Pratt