Franchise Operations

The FranSource team has extensive experience related to the operational aspects of a franchise business. From drafting the Confidential Operation & Policies Manual to assisting clients in determining appropriate franchise policies and procedures, our clients receive the guidance and direction required to develop successful franchise operations. The services listed below are provided individually or as part of our Franchise Essentials Development Program.

Developing the Confidential Operation and Policies Manual

A major key to the success of a franchise operation is a standardized system that franchisees follow to ensure consistency and quality throughout the franchise organization.  A “Confidential Operation and Policies Manual” is one of the most effective methods of conveying policies and procedures to new franchisees.  Existing franchisees also benefit from a comprehensive Manual as it relates to company policies and the ongoing operation of the franchise business.  The Manual saves valuable resources at the corporate level by minimizing the time key personnel spend answering many of the same questions.  When properly implemented, the Manual also ensures greater consistency between independently operated locations.

The Confidential Operation and Policies Manual produced by FranSource acts as both a training guide for new franchisees and an operations and policy guide for established franchisees.  The NASAA and the Federal Trade Commission allow the Manual to be a unilateral extension of the Franchise Agreement. In this capacity the Manual serves as the vehicle through which the franchisor may modify policies, processes, procedures and other "nonmaterial" aspects of the franchise business without requiring modifications to the franchise agreement.  The pagination system used by FranSource is specifically designed to allow for easy updating of the manual as modifications and enhancements to the system warrant.

FranSource determines the content and design of the Manual through the use of questionnaires, interviews, and on-site visits with key personnel. Content includes pre- and post-opening policies and procedures.  Forms and other materials used in the operation of the franchise are included. The Manual typically averages 200-250 pages in length.

Producing the Styles Guide

The production of a Styles Guide may be required when compliance with extensive design and layout specifications is mandated. When the specifications and requirements are more basic, this information is usually included in the "Confidential Operations and Policies Manual." Information provided in the Guide includes specifications, requirements, costs, ordering policies, and vendor information for items such as carpeting and flooring, wallpaper, paint, wall decorations, ceilings, counters, tables, chairs, display cases and racks, menu boards, windows, entranceways, restrooms, and signage.

Establishing Franchise Reporting Requirements and Performance Standards

FranSource assists the client in determining appropriate reporting requirements for the franchise business. Franchisees may be required to provide information to the franchisor regarding sales revenues, royalties, financial data, income and sales tax returns, and other information deemed relevant by the franchisor. In addition, FranSource provides considerations and recommendations regarding minimum performance standards or inventory purchasing requirements when appropriate to the franchise business. When performance standards or inventory purchasing requirements are implemented, FranSource drafts the appropriate provisions for the Disclosure Document in compliance with FTC guidelines.

Determining the Exclusive Territory

Franchisees typically operate within an "Exclusive Protected Trade Territory" established by the franchisor. The Franchise Agreement details the Exclusive Territory granted to the Franchisee and provides for variables that may impact the territory or the franchise location. FranSource assists in defining the criteria and system used to establish exclusive territories.

Establishing Site and Location Specifications for the Franchise Business

Franchisors typically offer some level of assistance and guidance to franchisees relative to the site selection process for the franchise business. Franchisors have the right to dictate the type, style, size and other criteria related to the franchise location and site. FranSource assists in establishing appropriate requirements and creating appropriate forms to be completed by franchisees for approval of the franchise location.

Determining the Franchise Fee, Royalty, and Other Sources of Franchise Revenue

Using established criteria as well as statistics compiled from similar type companies, FranSource assists in determining the franchise fee, royalty, advertising and marketing fees, and other fees appropriate to the franchise business.FranSource also provides recommendations and considerations related to other possible sources of franchise revenue including promotional fees, administration fees, regional and national advertising cooperative fees, product markup, training fees, and various franchise services.