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The Franchise Manual Podcast

The Franchise Manual Podcast is about all things "Franchise" and the people that make it look easy.
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Now displaying: 2020
Dec 5, 2020

My Podner in this episode is me, Kit Vinson (finally!), and I'm going to talk to you about what franchisors should know about their franchise operating manual.

Time Stamps

Kit Vinson Intro

00:00:29

Segment 1

00:02:15

Get to know Kit Vinson

Segment 2

00:13:30

Topic Segment – The Franchise Operating Manual

Segment 3

00:00:00

There are no Quickdraw Questions in this episode

 

Topics Discussed in this Episode

What’s Included in a franchise operating manual?

Every manual is customized to the industry of the company, but there are elements of a franchise operating manual that are common to all manuals.

  • Introductory chapters
  • Pre-Opening chapter
  • Human Resource chapter
  • Daily Operating Procedures chapters
  • Marketing chapter
  • Sales Chapter

 

What is the process for producing a franchise operating manual?

  • Creation of the custom outline for the manual
  • Legacy documentation review
  • Identification of the content experts
  • Information gathering phase
  • Production phase
  • Revision phase

Make the manual creation process fun so that you can start the flow of your team’s creativity juices.

 

How often does the typical franchise manual need updating?

Manual updates should be completed on a regular basis. Younger franchise systems will need to update their operating manual more frequently because their systems seem to evolve at a much faster pace than that of a mature franchise system.

If you do not keep your franchise operating manual updated regularly, you increase the probability of you having to explain to a judge why your manual isn’t up-to-date.

 

How are franchise operating manuals typically distributed to the franchisees?

  • Hard copy (paper)
  • PDF
  • Web based platform (Wiki-style)

Hard copy manuals have extreme limitations. They are not secure. They are only a snapshot of your system on that day. Media limitations.

PDF manuals are searchable, but they are not secure. They are also a snapshot of your company’s system on that day.  They are relatively easily to update but you run the risk of having multiple versions of your manual floating around your system.

Web based, online operating manuals are secure, they are extremely easy to update, you can track your franchisees activity in the manual, and you can include multimedia content such as videos.

 

What are the functions of a franchise operations manual?

First, the Franchise Operations Manual is the authority document of the franchise System Standards. The System Standards are the standard procedures that a franchisor requires of all franchisees in order to duplicate the customer experience in every location. The customer experience is the driving force behind profitability. If you can duplicate a favorable customer experience, then you may have a business that you can franchise. If you have a well prepared Franchise Agreement, it will refer to the Franchise Operations Manual as the System Standard. This way, as your system grows and your System Standards change, you only have to update the manual instead of updating the Franchise Agreement.

 

Second, the Franchise Operations Manual is the most effective tool for protecting your Brand. A company’s Brand is one of its most valuable assets. The Brand is also the asset that is at most risk when a company decides to franchise. When you franchise a concept, you are putting your Brand in the hands of other people, all of whom likely have different ideas about the best direction for the company. A properly prepared Franchise Operations Manual, with well-defined and organized System Standards, will be one of the few tools you have to manage the Brand and control the franchisees when they try to act on their vision for what is best for your Brand.

 

Third, the Franchise Operations Manual will likely be the principal tool for training new franchisees. It is the “Your Company for Dummies” book. You have to assume that most of your franchisees will not have experience in your industry. They may not have any business experience at all. It is very common for a retired schoolteacher or a retired military person to invest in a franchise. This is not to suggest that schoolteachers or military personnel don’t have any business savvy, it is only to say that they were not formally trained in business and have not practiced it during their career. Your manual needs to be a document that not only trains them on your system of providing a favorable customer experience, but also one that brings them up to speed on how to manage a business.

 

Fourth, a well prepared documentation of the procedures that has helped make your company a success will help you sell your concept to potential franchisees. Put yourself in the shoes of a potential franchisee. If you received a Franchise Disclosure Document (FDD) that showed you that the company had a 50 page document describing all of its operating procedures, you might be a little concerned.

You will also take your Franchise Operations Manual with you when you meet with potential franchisees for the first time. In that meeting, you will attempt to sell the concept to the prospect. Like all good sales people, you will likely have a few sales tools to assist you. You will probably present a PowerPoint presentation of the concept, you will review the company’s performance in the FDD, and you will present the Franchise Operations Manual as your proof that you have a well documents system for success.

 

Fifth, you don’t get very many opportunities to convey your corporate culture to your franchisees. Initial training lasts a week or so. Annual conferences last a few days per year. Ultimately, it is the franchise operating manual that will have the most contact with your franchisees, so what better place to show them who you are.

 

 

Kit Vinson

www.franman.net

kit.vinson@franman.net

214-736-3939 x 101

 

Feb 4, 2020

My Podner in this episode is Brendan Charles and he’s going to talk with us today about what franchisors should be teaching their franchisees about site selection, real estate negotiations, and build-out. Bad decisions in these areas can be detrimental to the success of the location. Everybody has some skin in the game here. This discussion will benefit both new and seasoned franchisors.

Time Stamps

Brendan Charles Intro

00:00:28

Segment 1

00:02:44

Get to know Brendan

Segment 2

00:15:38

Topic Segment – Site Selection, Real Estate, and Buildout

Segment 3

01:25:10

Quickdraw Questions

 

Topics Discussed in this Episode

  • You only get one chance to get the real estate right.
  • Real estate is one of the three main controllable in a franchise business model but real estate is only a “controllable” until you sign the lease.
  • If you don’t know what your break even is BEFORE you start looking for real estate, then your real estate decision could break you.
  • #1 rule in site selection – Never fall in love with a space.
  • The real estate brokers’ incentives are not necessarily aligned with yours – the more you pay in rent, the more the broker gets paid on commissions
  • Know exactly what your site selection criteria are BEFORE you start your search
  • How do you develop site selection criteria when you only have one location to go by?
  • Utilize the free services of your real estate broker to provide the demographic reporting
  • Once you have multiple locations in operation (data points), then you can compare performance with location attributes and fine tune your site criteria
  • Onboard your broker about the brand – make sure they share the enthusiasm of the brand’s potential as they will be your #1 sales person when presenting the concept to potential landlords
  • Spend a full day viewing all available locations in the “Market Tour”. Take copious notes on the good as well as the bad locations
  • Boil your options down to 3-5 locations
  • Time kills all deals. You have to move FAST after your market tour and get the letters of intent out quickly.
  • The franchisor should be very involved in the site selection process – don’t sit on the sidelines
  • Submitting a good letter of intent is the most important step in the whole landlord negotiation process – rent, term, tenant improvements, etc.
  • If you don’t get the Letter of Intent right, there is no way you will get the build out right, and if you don’t get the build out right, you’ll be behind schedule and way out of budget
  • Once the letter of intent is delivered, the landlord is on notice to respond, however, that doesn’t mean that you can stop looking.
  • Always have backup sites in your pocket
  • Use two LOIs to leverage the deals against each other.
  • Once you reach the lease stage, the due diligence of the space continues – make sure that the space is exactly what the landlord advertised it to be. This is done with a site survey
  • The drawings from the landlord aren’t always accurate so don’t rely on them
  • It is best to utilize a national architect for every franchised location rather than local architects
  • Floor plan design in a restaurant – the dining room is your money maker and should be maximized
  • Familiarize yourself with the design review process – go down to the city offices and meet the people who will be doing the plan review
  • Identify general contractor bid pool – qualify them – Have they built in the market you are in? – Do they have the relationships with the city officials, etc. Avoid too many GCs in the bid pool
  • At the time of the build-out, the interests of the landlord are in line with yours because they get rent money once you open your doors for business, so they can be a good source of referrals of general contractors.
  • Poorly planned design submitted to the city will stall the process
  • Be aware of a TAP Fee – a fee by the city in order to tap into the utilities. This can be very expensive
  • Ensure you have a plan to get your FF&E paid for and delivered on time according to the contractors timeline
  • Qualify the bids by ensuring that everything in the bid is supposed to be there and nothing is there that isn’t supposed to be there. Be sure to clarify who will be responsible for what activities and purchases. Make sure there is a clear matrix of responsibility.
  • No hammer can swing until the building permit is issued
  • There is no return on investment for the franchisee to be on site every day once hammers start swinging, rather, they should be focused on the bigger picture of doing the activities in preparation for the opening day such as hiring staff and marketing for the grand opening

 

 

Brendan Charles

Red C Business Advocacy

www.redcadvocacy.com

Brendan@redcadvocacy.com

Phone -   303-333-3420

 

Kit Vinson

www.franman.net

kit.vinson@franman.net

214-736-3939 x 101

 

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