Secret of production
The concept of “know-how” originated during the Anglo-American industrial revolution of the late nineteenth century. According to the definition of the International Chamber of Commerce, “know-how” refers to any set of knowledge, including professional knowledge and experience, regarding the technology and conduct of the production and sale of a particular product / service.
The detailed operating manual, or “aBC franchise package” for each particular franchise concept, has two key features: it outlines all the rules of operation within the franchise network under which the franchisee must act. Moreover, by providing detailed guidance, the franchisor has the ability not only to protect its concept, but also to protect its know-how and even trade secrets (especially in terms of recipes), the structure of each manual, in principle, has similar sections with information, but given the nuances of each business area, parties must personalize the key articles for themselves.
In general, the standard framework of the manual is as follows:
- The introduction is a description of the entire franchising system, the philosophy and ideals of the franchisor’s business, and it usually sets out the expectations of the entire network and each franchisee.
- Franchise system: A specific description of how the network works should describe how the various elements work and the relationship between the franchisor and the franchisee.
- Equipment – a list of the equipment required for networking, as well as the operating instructions provided by the equipment suppliers. This section should also include tips based on the franchisor’s experience in troubleshooting or troubleshooting any known common equipment malfunctions. It is important to add a list of contacts of the respective equipment suppliers and service points. Often the franchisor provides the franchisee with a design architecture and layout of the franchise premises.
- Organizational procedures – details for smooth and efficient
work of each franchise concept and each franchise point, respectively.
The main positions in this section are:
- Schedule of work of each point
- Detailed job descriptions for each employee
- Staff training
- Employee standards (i.e. clothing and appearance)
- Recruitment procedures
- Rules and disciplinary procedures
- Rules and standards of labor protection and safety
- Requirements and recommendations of pricing policy
- Product supply policy
Product/service quality standards, including complaints procedures - Accounting – a detailed description of the accounting standards the franchisee will use and the financial information to be provided
The franchisor. - Franchisee payments are a detailed procedure for calculating the payments that the franchisee is required to pay to the franchisor, including templates of any specific relevant payment forms.
- Cash flow control and banking procedures, which include cheque processing, digital payments and credit cards.
- Insurance policies – details of any insurance program offered by or through the franchisor; specific requirements that the franchisee must include in the policy
- Inventory control procedures
- Advertising and marketing – basic marketing tips and sales methods used in the franchise system; advertising at points of sale; description of public relations activities used in the franchise system; instructions for organizing a promotional campaign for the grand opening of the franchise point.
- Requirements for the use of franchisees trademarks or any other trademarks that distinguish the franchise system; a full description of the corporate identity of the franchise system
- A list of basic legal requirements a franchisee should know.
Standard Forms – This section should contain templates of all forms required by franchisees for their work, including forms already included in other sections of the manual.It should also include model employment contracts, employee confidentiality contracts, samples of other contracts used by franchisees in their day-to-day operations (e.g., commission contracts or contracts for specific work), and contracts used to work with clients.
List of franchisor employees – it indicates the contact details of the key employees of the franchisor, who can be contacted to resolve any issues.
Contact book – a detailed list of contacts that may be useful
for the day-to-day operation of the franchise point.
Every franchisor must ensure that its operating manual is constantly updated, any changes or additions to the operating manual must be immediately communicated to all franchisees, and that the franchise system keeps pace with the market and is competitive.
Services provided by franchisors
One of the most significant differences between a traditional distribution network and an established franchising system is the level of support that the franchisor offers to its franchisees in the form of initial services and ongoing services. The general rule is that franchisors assume the responsibilities associated with the development of goods and services. This includes system-wide advertising, supply support, administration and general financial support for doing business. In general, there is a place to introduce a strong system that provides enterprises with a sign of the quality of goods and services of the franchisor.
Depending on the specifics of the business, the franchisor has a different range of additional services offered: for example, for a franchisee in the cleaning services sector, the franchisor may offer additional support for administrative and accounting services, and for a fast-food restaurant with a small number of employees, the franchisor may provide regular intensive training in the specifics of working in this business. From the franchisor’s point of view, it is important that the entire system is organized in such a way that it creates a functional dependence on the know-how and services of the franchisor, so that the franchisee sees the value in paying regular payments, which are an integral part of the transferred franchise package.
The franchisor, within the framework of the transferred package, provides two groups of services:
- Preliminary services for franchisees (before starting a business)
- Intensive training programme including:
Detailed information about the goods/services offered in the package
Information on the current market situation and competition
Marketing strategies and methods
Recruitment and training methods
Procedure for accounting and reporting
— Supply management
Work on computer equipment and thematic software (if)
necessary)
— Service maintenance of specialized equipment
- Assistance in selecting the location of the franchise point.
- The franchisor is usually more aware of the geographic and demographic characteristics that must be met for the franchisee to operate successfully.
- Assistance in building or renovating spaces. (A single concept is usually best suited for a franchise network.It minimizes any disputes and usually turns out to be faster and cheaper to set up).
- Ordering and installing equipment.
- Ordering the first delivery of products.
- Provision of appropriate software.
- Recruitment. (Many franchisees may lack interview experience.)
- Assistance in organizing a promotional campaign for the grand opening of the point
- Current services (after franchise launch)
Regular visits and consultations of the franchisor’s representative
Training of new employees at the franchisee enterprise
Research and development of new products, and new marketing strategies
(Many franchising systems have increased their market share after adopting new concepts proposed by their franchisees)
Programs for joint procurement of products and services from third-party suppliers
Advertising and PR campaigns organized for the entire franchise system.
Providing a single advertising product for use in franchise points.
— Organization of participation in fairs
Implementing unified customer service procedures (customer relationship management)
Regular joint meetings with all franchisees, creation of an intranet network or publication
a regular corporate newsletter or magazine.
Development of a site that provides centralized access to the franchise network.
A great way to back up important information contained in guides
on operation, or providing updates to the operating manuals themselves.