Want to save on the $20,000 to $45,000 that franchise consultants charge to write an operations manual? Already have an operations manual but want it reviewed by a franchise expert? Need a sample table of contents and technical writing instructions so you can get started writing your own operations manual?
The information contained in the article below is based on 30-plus years experience reviewing and drafting not just dozens, but hundreds of franchise operations manuals. It is also based on experience testifying in franchise litigation cases involving pitfalls and other "problems" in franchise operations manuals. The end result is a common sense approach to help you write a customized manual that is more professional and user friendly than one produced by a high-priced franchise consultant. And you will avoid the high legal risk of using franchise kits and template manuals.
A legal introduction to franchise operations manuals: Because the operations manual is incorporated by reference in the franchise agreement, it becomes a living legal document requiring oversight and review by a franchise attorney. This is not to say a franchise attorney should write your operations manual. Heaven forbid, doing that would be very, very expensive. And, for the reasons discussed below, it would also be a waste of money and result in a very mediocre manual.
Building A Solid Foundation For Franchise Operations Manuals
Drafting A Franchise Operations Manual in Three Easy Steps Copyright 2008-2013, Kevin B. Murphy, B.S., M.B.A., J.D.
OVERVIEW OF AN OPERATIONS MANUAL DRAFTING - REVIEW PROCESS Drafting a franchise operations manual seems daunting, especially for a company that has never written one before. A franchise operations manual is actually easy to draft, but requires a special focus to avoid franchise liability issues unique to the world of franchising.
Written correctly, an operations manual is a daily reference tool, guiding someone unfamiliar with your business through day-to-day operating procedures. An operations manual is often called the Bible of Operations and so different from an Employee Handbook (a much smaller document covering employment conditions, corporate culture and on-the-job behavior policies). A good operations manual reduces the user's endless stream of questions, like "how do I do this," and becomes a 24/7 reference guide. Having been a franchise owner myself, I can tell you my operations manual was used constantly. I even brought it home at night to read for the first couple months. I was so impressed with my manual (and other elements of the franchise I joined, like training and start-up assistance provided) that I did not hesitate to give a strong two thumbs way up to prospective franchisees who approached me about whether or not to buy a franchise from the company. I probably helped the franchise company sell at least 20 franchises, maybe more.
Intimidated by the franchise industry's legal requirements, FDD franchise disclosure documents, operations manual and training program disclosures, etc., many companies delegate responsibility for writing their manual to a high-priced franchise consultant. But using someone to write your operations manual who knows literally nothing about your business never makes any sense when everything is considered objectively. And besides a hefty price tag of $20,000 to $45,000 to write the manual, using franchise consultants (or template operations manuals) brings another, even more expensive result – legal risk. WHY USING CONSULTANTS AND TEMPLATES ARE RISKY BUSINESS Paying someone who knows nothing about your business, and having them try and learn it from scratch, at your expense, is just a common business sense, very bad idea. Using franchise consultants for what is a relatively easy and straightforward task has never made any sense - except to the consultants who charge exorbitant amounts to write franchising operations manuals. It’s one of those little franchise secrets that consultants, not surprisingly, don’t ever mention or discuss. Actually, they probably laugh about it all the way to their bank to cash your checks.
Using a consultant to write a franchise operations manual or buying a template operations manual also carries significant, long-term legal risk. The principal legal risk comes from including inappropriate topics, chapters and policies that are commonly found in company owned, chain operations manuals. If these are included, as they invariably are in franchise operations manuals and template operations manuals, very significant franchise liability issues arise.
Because franchise consultants are not franchise attorneys or experts, they are entirely oblivious to this risk. The same goes for companies that hawk cheap template manuals. They have no clue where the bullets come from in franchise litigation. As a consulting and testifying franchise expert, I routinely find operations manuals drafted by franchise consultants and do-it-yourself template manuals containing inappropriate chapters or topics. And these get franchise companies into hot legal water that becomes very expensive.
The plain truth is franchise consultants don't even bother to try and learn your business before writing the operations manual. They could never come even close anyway. Instead, they rely on boilerplate manuals used for other clients, where (hopefully) all instances of burgers, are searched and replaced with tax returns. The end result is an operations manual that is both very mediocre and dangerous. Giving a mediocre operations manual to a franchise owner who has invested tens to hundreds of thousands (or in some cases millions) of dollars in your business model, as well as ten to twenty years of their life, is definitely not the best way to start or ensure a smooth franchise relationship.
And if your operations manual contains inappropriate chapters or topics, the seeds of a future franchise lawsuit are sown and can't be undone. Be prepared to spend mind-boggling amounts when you enter the franchise litigation arena - where the price tag is hundreds of thousands of dollars and up. This is also a fact you won't hear from companies selling operations manual templates that are supposedly "fast and affordable."
One seasoned franchise attorney in his book about franchising a business says "you will need between $100k and $150k to .... hire a franchise attorney .... and an experienced franchise consulting firm..." He talks about the McDonalds Operations Manual as a lesson in excellence, but fails to mention the most important lesson: it was all done in-house by McDonalds (as it should be) and not by outside franchise consultants who charge exorbitant amounts to write boilerplate manuals. In 2012, I learned another (not surprising) fact about a prominent franchise consulting firm that writes operations manuals as part of its "packsage deal." A former employee who was paid just above minimum wage told me she was given their boilerplate manual and told to adapt it to clients (the search and replace, etc.), all within a twenty-hour timeframe - draft to final product. If she ever spent more than 20-hours on an operations manual assignment, she heard about it long and hard. So 20 times, let's be generous, $10/hour is $200. And they charge $25k to $45k. Like I said earlier, they're laughing all the way to the bank when they cash your checks.
THE BEST PRACTICE APPROACH TO WRITING A FRANCHISE OPERATIONS MANUAL Besides the expensive and legally risky approach there is another, best practice approach based on my 30-plus years of writing, editing and reviewing hundreds of franchise operations manuals. The essence of this approach is also common sense - letting the true expert on your business write the manual. Who is that? Typically this person is the founder, or a small team of management personnel who know business operations inside and out. While a franchise expert's involvement in the process is important, even critical, the expert’s role should be carefully limited to a planning and editing capacity. That way, you're not spending money foolishly and unnecessarily. This is not something you'll ever hear from franchise consultants and for a good reason. They don't want to shoot themselves in the foot and let a $20,000 to $45,000 project slip away. HOW LONG SHOULD A FRANCHISE OPERATIONS MANUAL BE? I've seen statements like "A good operations manual should be at least 500 pages long." Of course the support behind this assertion is not included and it's just another bit of misinformation. I have edited very professional operations manuals that are just under 100 pages in length and do a very competent, professional job. I've also reviewed franchise operations manuals that are volumes long and thousands of pages in length.
There is no formula or true answer other than . . . it depends on the business model and the life cycle of the business. Certain business models, restaurants for example, require a lot more detail and can be lengthy. But I have come across very good restaurant operations manuals that come in at under 200 pages. Other business models, education for example, require less detail and can do a very adequate job at 100 pages or less. How long was the original McDonalds franchise operations manual? Would it surprise you to learn it was only 15 pages long? Of course, this was back in the 1950's, an era when franchise companies did not have to disclose anything. There were no FDD's or operations manual requirements, etc. Currently the Mighty Mac operations manuals are many volumes and thousands of pages.
HOW LONG DOES IT TAKE TO WRITE A FRANCHISE OPERATIONS MANUAL? There are online statements from franchise consultants that "It takes 300 to 1,000 hours to write it all down. Employing a franchise consultant to do it for you can free up that amount of time which you can then spend on further developing your business." Let's stop and apply a little common sense. The franchise consultant spends 300 to 1,000 billable hours that your company is paying for, supposedly trying to learn your business from scratch and write it all down? And this learning experience frees you up to work on other parts of your business? No hand-holding or answering a barrage of consultant questions? Give me a break - it should be obvious to anyone with half a brain how ridiculous these statements are. And the reality is they're paying someone minimum wage and giving that individual a max of 20-hours to finish the assignment.
If you follow the three steps outlined below, you can produce a professional, customized operations manual, in-house, using your own team of experts in under 200 hours (4 to 5 weeks).
THREE EASY STEPS FOR DRAFTING AN OPERATIONS MANUAL:
1. Develop a Custom Table of Contents The drafting process begins with planning and developing the Table of Contents for your operations manual. The Table of Contents is ultimately based on the metrics of your particular business. A good starting point is a review of various tables of contents used either by franchised competitors or companies in the same industry segment. From this review, you will get an idea of what should be included in an operations manual. We can obtain various tables of contents for your company to review as part of developing its own table of contents for your business model. You can buy a sample table of contents for an actual franchise operations manual by clicking on the PayPal link below.
An important part of the Table of Contents planning process is making sure all appropriate chapters and topics for the operations manual are included. But an absolutely critical part is ensuring that inappropriate subjects and topics are not included. Knowledge of both franchise management best practices and franchise manual legal pitfalls is essential here. That's why a seasoned franchise expert's input and planning is so important during this first step. A testifying franchise expert who has experience testifying about franchise operations manuals will know where the bullets come from in franchise litigation. As mentioned, franchise consultants and operations manual template companies, on the other hand, have absolutely no clue.
Also, because the operations manual is incorporated by reference in the franchise agreement (which is a franchise industry practice) it becomes a living legal document, requiring legal oversight by a seasoned attorney. Certain parts of the operations manual need to be disclosed in the various items of the FDD Franchise Disclosure Document. The franchise contract is also reviewed with a particular focus. Some operations-specific information may be inadvertently included in the contract by the attorneys, which is not a good thing. That's because most attorneys have never owned a franchise before and have no idea how things happen in the real-life franchise lane. Operations-specific information needs to be moved out of the contract and over to the operations manual.
Finally, the operations manual needs to be appropriately protected. One franchise company discovered the consequences of not doing this properly when one of their franchise owners broke away and started using all the info in their manual to start a competing business. To their surprise it was ruled that because they had not properly protected their manual, they could not claim the information was proprietary and confidential. And the company had used a huge law firm with a franchise attorney section to prepare its FDD and oversee the operations manual. Huge mistake that could have been easily prevented with just a little franchise expert foresight and planning.
2. Draft the Individual Chapters The second step is giving the person(s) within your company who have drafting responsibility samples of franchise operations manual writing styles, along with coaching on drafting techniques, guidelines and order of topics. The writing style for an operations manual is the first and principal difference to learn. In school, we all learned the narrative writing style: the standard sentence-and-paragraph format. Its purpose is to impress the reader, and is usually descriptive, lengthy and complex. Letters and memos are common examples of narrative writing. Good for a letter or memo, but not effective for complicated and lengthy material. When you write an operations manual, an entirely different style of composition - technical writing - is required. Its purpose is not to impress, but to get a message across quickly and clearly. Technical writing is not rocket science. Technical writing rules, do's and don'ts, can be easily learned and applied. All that's required is some minimal instruction and you won't find this information in any bookstore. I offer an online workshop on how to write a franchise operations manual using a technical writing style that includes my 22-page proprietary monograph on the subject, complete with "before" and "after" examples from actual franchise ops manuals. Send me an email if you're interested.
With these how to write an operations manual instructions, your people can begin drafting each chapter of the manual using their extensive operational knowledge of the day-to-day, week-to-week, etc. aspects of your business. This is where over 90% of the work will be done as it should be, in-house, by your management team. Getting them to this starting point can be accomplished at a cost that amounts to a few hours of outside professional time.
3. Professional Editing and Review The third and final step is having a franchise expert review each chapter as it is drafted and comment on the professionalism and sufficiency of the chapters from a franchise industry best practices - franchise operator perspective. It is also the time to make sure your operations manual will not get you into legal hot water down the road. This is where the remaining 10% of the time is spent.
Many of our clients comment on a positive byproduct of the editing process. Based on the comments made and "what if" or "how about" scenario questions asked as I edit each chapter of their manual, the client considers and re-focuses the metrics of their entire business model. This results in a stronger and more competitive approach to both marketing and operations. In short, the final operations manual takes the entire business to a higher level. The manual also becomes a training and continuing reference tool for managers and employees, allowing them to perform their tasks at a more optimal and consistent level.
SUMMARY - IT'S LIKE RIDING A BICYCLE FOR THE FIRST TIME Like doing anything new for the first time, the first chapter is always the most difficult to draft, as you or your management personnel learn and apply operations manual drafting techniques using a technical writing style under the advice and guidance of a professional editor. But writing a franchise operations manual is not rocket science. After a brief, initial learning curve, it’s usually smooth sailing through the rest of the document.
This approach produces a professional, easy to use and update manual based on the best knowledge and operational techniques known by the true expert in how to operate your business - you and your management team. It also ensures the most efficient use of resources and talent, and eliminates having to pay a franchise consultant $20,000 to $45,000 for this relatively simple, but important task.
Whether a company ultimately franchises or not, the process of planning, documenting and implementing standardized operating procedures and systems via operations manuals, like blue chip franchise and non-franchised companies do, makes any firm operate more efficiently and competitively. It ensures consistent and uniform operations, helping train personnel with different skills learn to perform tasks in a consistent manner. This is important for any business and more than justifies the investment of time and effort.
Also, once you've learned the technical writing style, this can be applied to other forms of communication and documents in your organization, with positive effects on clarity and understanding.
Finally, it's important to realize the process of writing your operations manual never stops. As the business model evolves in response to opportunities and threats, so must the operations manual – the ultimate reason why writing the manual yourself to begin with makes imminent common sense. As one franchise company's chief executive and founder observed "I found that not only was writing my own operations manual a cost savings; it was imperative."
FOR OPERATIONS MANUAL PLANNING AND EDITING ASSISTANCE Send us an email. Include whether you’re looking for help planning and developing or reviewing a franchise operations manual or just a regular operations manual for a non-franchised business, along with some background information about your business. Also if you're interested in a sample table of contents for an operations manual, click on the PayPal link below. We will respond promptly during normal business hours.
REVIEWING YOUR EXISTING OPERATIONS MANUAL If your company already has a franchise operations manual, we can review it. As a consulting and testifying franchise expert, I've encountered franchise operations manuals and other factors that expose even fairly large franchise chains to unnecessary vicarious liability risk. It's something worth looking into. Identifying and eliminating pitfall areas makes a lot of sense from a cost-benefit standpoint.
"Enlarge the place of thy tent, and stretch forth the curtains: spare not, lengthen thy cords and strengthen thy stakes" Isaiah 54:2
Copyright 2012, Franchise Foundations, a San Francisco professional law corporation. The information you obtain at this franchise website is not, nor is it intended to be, franchise legal advice. You should always consult a franchise attorney - franchise lawyer for individual advice regarding your own situation and franchise disclosure documents. Use experienced FranchiseLawyers and FranchiseAttorneys for advice with your franchise legal documents and needs. Use an experienced MBA Franchise Expert for help with franchise consulting issues.
Last Franchise Website Update: September 15, 2012
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