Definitive Guide to Franchise Operations

June 17, 2024
Digital Transformation
Franchise Management

Don’t try to do everything by yourself, but try to connect with people and resources. Having that discipline and perseverance is really important.

-Chieu Cao, Co-founder of Perkbox

Franchise operations refers to the set of protocols and practices that franchisees must follow. Put simply, it is the structured business practices of running a franchisee based on the franchisor's operations manual.

Franchisors encounter several operational challenges with their franchisees, especially as the grow or expand. The best way to navigate these challenges is through a comprehensive document known as the franchise operations manual.

In this post, we will discuss some of the most common franchise operations challenges and how a franchise operations manual can help navigate these challenges successfully.

Top 5 Franchise Operations Challenges

While franchising your business is a great way to expand, it raises some unique challenges. Some of these challenges are discussed below:

1. Difficulty in Maintaining Brand Consistency

One of the main franchise operations challenges is branding. Expect difficulties because you will have very limited control over how various franchisees use and display your brand.

2. Challenges in Hiring and Retaining Employees

The services industry, especially retail and restaurants, has a high turnover rate risk. This includes entry-level, part-time, and temporary positions. In addition, inconsistent training and onboarding, limited benefits, and generally low pay in the services industry pose a risk for franchise operations.

3. Legal and Regulatory Compliance

Franchisors must comply with several legal and regulatory requirements. They must register the franchise with the appropriate government agencies and follow state and federal laws. This requires franchisors to be aware of the franchise laws in the given area and adhere to all registration and disclosure requirements.

4. Hurdles in Building a Strong Infrastructure

Another challenge in franchising operations is building a robust IT infrastructure to support the current and planned growth. The success of any franchise business largely depends on well-structured systems and procedures that offer clear directions for future franchise growth. Without a franchise software stack, franchise operations can become inefficient and manual.

5. Financial Management

Financial management issues are another common challenge in franchise operations. Managing marketing budgets, royalty payments, shared costs, and payable and receivable deadlines are complex affairs because they are dependent on multiple teams collaborating and there are conflicts between the interests of the franchisor and the franchisees.

Wondering how to navigate these challenges successfully? Read on.

How does the Franchise Operations Manual Help?

The franchise operations manual is a detailed how-to guide or blueprint of a franchise system. It is a comprehensive document that mentions everything that potential and existing franchisees need to know about the parent company, their role as franchisees, and how they will run their franchise unit as part of the larger franchise.

The key objective of a franchise operations manual is to ensure that all franchisees operate their businesses in alignment with the standards set by the brand.

Below are some of the areas where this manual helps in navigating the challenges related to franchise operations:

  • Time Management: Provides all the information, including opening/closing hours of operation, pricing, refunds, warranties, customer complaints, and other resources to franchisees and franchisors for building and growing a franchise.
  • Training: This section covers the details of the training and support programs that the franchisor offers to the franchisees, such as the initial training, manuals, newsletters, ongoing training, webinars, and conferences.
  • Staffing: It provides information about the franchisee's optimal staffing requirements, the training process for new employees, and ongoing staffing programs.
  • Policies and Business Processes: This section of the manual covers the core aspects of running a franchise business, such as site selection,  equipment, customer service, accounting, and more.
  • Equipment and Inventory: This section covers detailed information about assets, equipment, and inventory, descriptions of the franchise's products or services, and similar details.
  • Communication and Reporting: This section defines various communication and reporting channels and protocols. It includes phone, email, meetings, etc., that the franchisor and the franchisees use to collaborate and report.
  • Administration: The manual offers guidance on software or systems that the franchise employs to manage the administrative needs of the franchisees.
  • Marketing and Advertising: It provides details on brand standards for marketing, including guidance on using advertising material, logos, and other promotional strategies.
  • Field Operations: This offers guidance on where and how to establish the franchise, including details about field operations, layout, design, signage, and more.

Why Do You Need a Franchise Operations Manual?

A franchise operations manual outlines every aspect of running the franchise operations for all parties involved. Needless to say, it is critical to the outcomes of franchising.

Here are the two reasons why you must invest time and resources on your franchise operations manual:

1. Definitive Reference Resource

At times, even after providing all the necessary resources, franchisees might not be certain about how specific functions are expected to operate. The manual is then the de facto resource for areas of dispute, offering definitive guidance to parties involved in franchise operations. It also helps franchisees met clear and well-defined terms regarding operational standards.

2. Maintain Consistency of Operations

A successful franchise is always defined by the quality and consistency of its customer experience, regardless of the location. The franchise operations manual helps ensure that every franchisee follows the same playbook, following well-defined standards, thus ensuring a consistent and satisfactory customer service experience across the franchisees.

Franchisees can also benefit from optimal business strategies and successfully deal with franchise operations challenges coming their way. This results in efficient and more streamlined operations with higher chances of success in the long run.

Overall, the franchise operations manual is important because it covers the franchisor’s entire business model to help new business owners successfully replicate it across various locations. In addition, it offers clear and adequate direction to all franchisees in the wider network.

In summary

In this blog, we have discussed potential franchise operations challenges and how you can solve them using a comprehensive franchise operations manual. A good franchise operations manual is the key differentiator between a good and great franchise.

Hubler's Franchise Management software can help you manage your franchise operations efficiently by optimizing workflows, improving collaboration, and making data-driven decisions to drive business growth.

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