The Franchise Operations Manual: A Powerful Tool for Communicating Your “Best Practices”
By: Stacey McKibbin, Systems Implementation Director
You've worked hard building and developing your business model. You’ve spent years making mistakes and learning about the exceptions to the rule. By doing this, you’ve created, implemented and honed many different systems and processes for how to best manage your day to day operations. Now that you’re starting to franchise your business, how do you possibly begin to communicate all the systems and processes necessary to successfully duplicate your business model?
Unlike your employees who can simply knock on your door or peek around the corner to ask a question, your franchisees are going to be scattered across the United States, possibly across the globe. Given that they’ve chosen to invest in your model over the hundreds of other franchise opportunities available, what are you going to do to ensure they are successful?
Enter, the Franchise Operations Manual. The Franchise Operations Manual is a very powerful tool for communicating systems and processes. The objective of this manual is to clearly define each step of your best practices. You may be asking yourself, what are my best practices? Best practices are defined as “A way or method of accomplishing a business function or process that is considered to be superior to all other known methods." This is why the Franchise Operations Manual must be written by the team responsible for execution. You and your team know what works best; heck, you’ve spent years perfecting your best practices. Now, to take your business to the next level (franchising) you need to document it.
Do you need to document everything? Yes, of course you do. But does it need to be done BEFORE you begin to sell your first franchise? Absolutely not. A great Franchise Operations Manual is actually a “work in progress” and will be for the life of the document. We refer to these as “living documents.” This is because as the term “best practices” imply, this is the best known method for implementing a process or task. If during the regular course of business, you or your future franchisees find a better way to do something, by all means update the manual with this new process or system. One of the most cost effective ways to keep your overhead down is to constantly improve your processes. Find a quicker or cheaper way to do something, and you’ve just added to the bottom line.
So, how do you determine which parts of the Franchise Operations Manual must be completed before training and handing it off to a franchisee to implement? Ask yourself these questions: What are the tasks I must do every day, week, month, or quarter to operate the business successfully? What are those tasks that if missed, mean a hit to the bottom line? Everything from how to properly service a customer to managing costs and expenses.
Let’s take this a step further and classify these tasks into five categories: lead generation, conversion rate, number of transactions, average dollar sale, and profit margin.
- Lead Generation - what do you do to generate business for your product or service? What is the most cost effective advertising you've done? The most cost effective marketing efforts? Where do the bulk of your leads come from? Networking, referrals, word of mouth, traditional advertising.
- Conversion Rate - of the leads you generate, how many do you convert into clients or customers? How do you do it?
- Number of transactions - how many times does your customer transact with you a week, month or year? This is the most cost effective advertising you can do. It’s 6 times more expensive to acquire new customers than it is to sell to your current customers. So communicating to your franchisees how they can go about keeping in touch with their current customers is essential. Do you keep a database? If so, how? Is it in excel? Web based? The point here is that you document how and what you do. Considering the impact of this variable to the bottom line, its imperative you share it with your franchisees; setting them up for success.
- Average Dollar Sale - what is the average dollar sale for your product and/or service? What tactics do you use to upsell beyond the average ticket price?
- Profit Margin – What processes have you implemented that affect your cost of good sold? What are your current prices and how can a franchisee determine the pricing for their business?
These are the five things you need to focus on when building and growing a franchise business. Why? Because each one of these variables directly impacts the number of customers you get, the revenue they generate and the profit you take home. It’s that simple. So when you’re thinking about how you’re going to support your franchisees, think about these factors. What do you need to teach them about how to generate leads, convert them to customers, upsell your average ticket price, and so on? When you have those systems and processes identified, the next step is documentation.
Keep in mind, this doesn’t have to be an overwhelming task; it is recommended that you enlist the help of your team. They are a great help here as they’ve got a lot of experience implementing your best practices so documenting may be easier than you think. Since you’ve partnered with The Franchise Maker for your franchise development, we have a built in Franchisor Mentor Program™ designed to assist you with identifying and prioritizing the systems that must be communicated. In addition, we have created a Franchisee Evolution Training Program™ designed to guide and support your new franchisees through the first six months of business.
So when it comes time to writing your Franchise Operations Manual, no need to panic, we have you covered. Know that you have everything you need already stored inside your brain, or the brain of your team members. And The Franchise Maker® has the tools to supplement that knowledge. So, all that’s left is to get started.
ABOUT THE AUTHOR
Stacey McKibbin is the Systems Implementation Director for The Franchise Maker®. She moved to Southern California to pursue a career in International Business where she quickly rose through the ranks with the largest book distributor in North America. She was responsible for project execution of the company's 5 million dollar systems overhaul, including CRM, Vendor Managed Inventory (VMI), and Warehouse Management applications.
Stacey has experience in helping business owners manage their operational systems ranging from generating additional cash flow and revenues through marketing and sales initiatives, to implementing and optimizing processes, to resource management.
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