Documentation guidelines for franchise system rollout

What you need to know:

  • The discussion will debunk the belief (from a position of not knowing, ignorance or simply being crooked) by some potential franchisors that once they have one outlet running successfully, all they need is a lawyer to prepare a franchise agreement and they are set to franchise.
  • Other franchisors collapse as many of these documents into one, the Franchise Agreement, while still others are outrightly dishonest and want to make quick bucks from potential franchisees by hiding some material facts otherwise disclosed in some of these documents.
  • We will discuss all documents because the right thing to do is to follow international best practices when preparing your franchise offering.

Past many articles have explored your journey towards building a solid franchise system, from conceptualization, franchise system design and protecting your IP, prototyping to prove your concept, market research, franchise strategic planning to franchise systems development.

We exited with the seven systems needed to build and run your franchise business successfully.

The single-most important outcome from the system development process is documentation, which kept recurring in every system discussed “documenting what you know how to do so that you can train someone else”. This removes guesswork from running the business as it transfers the operating system from your head to a document that can easily be read and understood.

This document is the Franchise Operations Procedures and Training Manual which becomes the blueprint that all your franchisees use to run their franchised outlets.

Once you start engaging potential franchisees, you will use it to train them in every aspect of running their business. You will then loan it to them for the period of the franchise and update it regularly as you update your systems.

Needless to say, before attempting to franchise or applying the systems you develop-and updates-to your entire company-owned outlet network, they have to be run and perfected at the prototype outlet to ensure they are taking your business to where you desire.

We now turn to the documentation needed to protect the franchise system that you have spent a good part of your time building.

These documents are needed before you even start engaging potential franchisees as they will guide your engagement. The discussion will debunk the belief (from a position of not knowing, ignorance or simply being crooked) by some first-time franchisors that once they have an outlet running successfully, all they need is a lawyer to prepare a franchise agreement and they are set to franchise.

It is important to note very early that some franchisors do not prepare all the documents as presented in coming articles for a variety of reasons.

Some legal jurisdictions do not require preparation and sharing of some of these documents with potential franchisees.

Other franchisors collapse as many of these documents into one, the Franchise Agreement, while still others are outrightly dishonest and want to make quick bucks from potential franchisees by hiding some material facts otherwise disclosed in some of these documents. Some brands have approached me with requests to help them franchise as a way to off-load loss-making outlets to franchisees, with a negative response when I asked if they were ready to disclose that the outlets weren’t profitable.

Others have insisted on franchising even before proving their concepts and building some history of financial success.

We will discuss all documents because the right thing to do is to follow international best practices when preparing your franchise offering. We will then leave individual potential franchisors to decide what they wish to do with the information.

Whether or not you are a member of a franchise association in your country (franchise associations subscribe to the World Franchise Council’s Code of Ethics which, among others, includes the documents that franchisors must prepare and share with potential franchisees), following these guidelines will protect your franchise system from external threats and ensure its long-term sustainability.

Some of the documents discussed in coming articles can easily be prepared in-house by potential franchisors wishing to partly own the franchising process.

Others require inputs from franchise development experts and legal minds.

The bottom line is to have expertly-prepared documents that meet the threshold of international best practice.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project.

We work with country apex private sector bodies to increase the uptake of franchising by helping indigenous African brands to franchise.

We turn around struggling indigenous franchise brands to franchise cross-border. We settle international franchise brands into Africa to build a well-balanced franchise sector. We create a franchise-friendly business environment with African governments for quicker African integration.