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WHO SHOULD WRITE YOUR FRANCHISE MANUALS?

by Simon Lord,
last updated 27/10/2015

October 2015 - When it comes to consultants and the production of franchise manuals, you don’t always get what you pay for.

Recently, my wife and I went to a new restaurant in the village where we live and got talking to the owner. He mentioned that he had franchised one of his other businesses, so we told him what we did and he started telling us about his franchising experiences. Strangely, he said that he had difficulty trusting advisors, so we asked him what he meant.

He said his advisors had told him that, in order to franchise his business, he would need operations manuals.
- Quite correct, we said.

The advisors had come in and asked him lots of questions, then gone away and produced a thick manual.
- That’s good, we said.

He had been charged almost $30,000 for the process – did we think that was reasonable?
- It sounded a lot, but whether it was fair would depend on how much work was required, we said.

Then he said he wasn’t very pleased with it, anyway.
- ‘Why not?’ we asked.

‘Because a lot of it had obviously been cut and pasted from other franchise manuals,’ he replied.
- How did he know this?
‘They’d left the other franchises’ names in several places!’

Bad Practice

I have heard similar tales before, and they always make me angry. Why? There are three main reasons:

i) The new franchisor was charged for a service that actually damaged their franchising prospects. Of course there will be similarities between franchises operating in the same industry, such as hygiene practices in food outlets. But every franchise has subtle variances in operating systems, procedures and presentation which are what give it a marketable point of difference. By not taking the trouble to identify those points of difference and codify them for that specific business, the advisor is eroding the franchisor’s competitive advantage, not – as they should be­ – enhancing it.

ii) The potential franchisees of the business are being ripped off. Franchises are marketed on the basis that the systems behind them have been tried and tested and, if properly followed, will give franchisees every opportunity to build a profitable, sustainable business. If the franchisees are trying to follow systems that have been copied from other companies and which do not reflect actual practice in the business upon which the franchise model is based, then they are unlikely to achieve the results they expect.

iii) The franchisors from which the original material was copied have had their intellectual property stolen. They will have paid someone to develop and analyse their systems, test them and codify the results to create a unique manual that sets out what makes their franchise model work. By copying sections of any other franchise’s manual and selling it to the new franchisor, the advisor has committed theft and embroiled the new franchisor in the act, too.

If the advisor had written a number of manuals for similar businesses in the past, they might be able to claim that by reproducing their own work they were keeping costs down for everyone. That might seem reasonable in some circumstances –­ after all, references to employment law or disciplinary procedures are likely to be common in many structures. But in this case, entire sections of the manual had been copied from that of a well-respected international franchise – a business that the advisor was extremely unlikely to have worked on, and which would certainly never have consented to share its content.

Stay Out Of Trouble

Now, although I have only heard one side of the story, it rings true. The franchisor didn’t name the advisor but I’m reasonably confident that I could have made a few educated guesses and struck gold. Such people have, sadly, been around for many years. They prey on the naive and, by undermining the foundations of fledgling franchises, do damage far beyond the simple theft of intellectual property. They damage franchising itself – a sector that makes a huge contribution to the upskilling of our entrepreneurs and business people.

So if you, as a business owner, ever consider franchising your business, here are three key tips about choosing an advisor.

1. Look for advisors in reputable places –a good place to start is www.franchise.co.nz. Find out how long they have been advising franchisors and what professional memberships they have.

2. Talk to several, not just one. You’ll get a clearer picture of what you are looking for and who you want to work with. Ask to see their client list – large companies usually do very thorough due diligence before appointing advisors.

3. Ask for references and check them out thoroughly. Talk to people they did work for three or four years ago. It takes that long for franchisees to become established and the quality of the advisor’s work to become evident.

Remember, anyone can claim to be a franchise advisor with no qualifications whatsoever, so you must check who you are entrusting with your business. You owe it not just to yourself, but to your future franchisees, too.

This article first appeared in NZ Business magazine

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