What is a franchise Operations Manual?
Entering into a franchise agreement can provide a quick route to profitability for a new business owner. For an insight into the key advantages of franchising, please see our ‘Introduction to Franchising‘ article here.
When taking a franchise, the franchiser (the person granting the franchise) will usually provide the franchisee (the person taking a franchise) with two key documents; the Franchise Agreement and the Operations Manual.
What is a franchise Operations Manual?
The Operations Manual governs the day to day running of the business. It contains the methodology and quality control provisions that the franchisee must adhere to whilst operating the franchise. Given that the document contains commercially sensitive business “know how”, a franchisor usually requires the franchisee to sign a confidentiality agreement prior to disclosing a copy of the Operations Manual.
The operations manual is usually an evolving document which can change over time when business processes are streamlined or refined. The franchisee should be comfortable with the overarching principles set out in the Operations Manual prior to signing the Franchise Agreement. Breaching the Operations Manual can also lead to a breach of the Franchise Agreement which could trigger numerous adverse consequences, including termination the Franchise Agreement.
What is a Franchise Agreement?
The Franchise Agreement contains the principal terms upon which the franchise will be granted and governs the legal relationship between the parties. It includes:
- The term of the Franchise Agreement and renewal provisions;
- The payment obligations of the franchisee;
- The training demands of the franchisor;
- The termination provisions;
- The resale provisions of the franchise.
A franchisee should always review the provisions of the Franchise Agreement in depth before signing the agreement, since they will be unable to alter the terms of the Franchise Agreement post signing, without the franchisor’s consent (which is unlikely to be forthcoming). It is important for the franchisor to keep the intended business relationship in mind whilst carrying out a review of the Franchise Agreement, because franchisors typically utilise template documents across their franchise network which may not necessarily reflect the intended agreement.
Joel Gocool specialises in advising on and negotiating franchise agreements. Joel has a wealth of experience in identifying the key considerations a franchisee should make before starting a new franchise venture. If you require advice on franchising, please contact Joel Gocool on 01276 686 222 or at Joel.Gocool@Herrington-Carmichael.com.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to your own particular matter before action is taken.
The risks of copyright infringement can be mitigated by undertaking analysis at the outset and, where appropriate, by ensuring that licences are in place…
Commercial contracts: in 2022 and beyond businesses are looking further than their ESG initiatives to achieve net zero.
The 28th of April 2022 saw one of the biggest legislative changes to the UK building industry in close to 40 years. The Building Safety Act 2022 (“the Act”) received Royal assent, meaning it is now an act of Parliament and has come into force as law (albeit many of...
The Legal Room UK Podcast features a diverse range of specialists offering expertise on a variety of topics.
Subscribe on whatever podcast platform you use.
This month we are looking at employee inductions. Hannah King and Usof Shah will consider what these are, why they are important and what areas...
Our team explains the process around insolvency, looking at transactions at an undervalue, looking at case examples where this might happen and what...
This month's episode covers right to work checks. Usof Shah and Jack Rose will be discussing the legal requirement to conduct right to work checks...
Top Legal Insights
Award winning legal advice
We are solicitors in Camberley, Wokingham and London. In 2019, Herrington Carmichael won ‘Property Law Firm of the Year’ at the Thames Valley Business Magazines Property Awards, ‘Best Medium Sized Business’ at the Surrey Heath Business Awards and we were named IR Global’s ‘Member of the Year’. We are ranked as a Leading Firm 2022 by Legal 500 and Alistair McArthur is ranked in Chambers 2021.