CHAPTER 7

MANAGING THE
FRANCHISOR'S
OPERATIONS PROCESS
 LEARNING OBJECTIVES

 The students will be able to

 Learn why a franchisor has a promotional and operations

process
 Learn about the components of the promotional package
 Learn about how to develop the operations process.
 Learn about the components of the operations package
 FRANCHISE PACKAGE

 A franchise package, otherwise known as a franchise license

is at the heart of every franchise system. It contains the
franchisors complete business concept.

 Franchise Package Consist of:

 Promotional Package
 Operations Package
 PROMOTIONAL PACKAGE

Solicit franchisee applicants

to the franchise system.
Provide basic information
about the franchise.
Illustrate the follow-up
forms used to sign
franchisees.
Essentials of franchising
agreement of advertising.
 COST ASSOCIATED IN SOLICITING NEW
FRANCHISEES

1 . A d m i n i s t r a t i ve E x p e n s e s

2. Recruitment Cost
a. Advertising
b. Sales

3. Promotion Cost

4. Training and schooling Cost

5. Supplementary Services and Related

expenses

6. A d m i n i s t r a t i ve C o s t
a. Personal contact
b. Follow-up
c. Personal Data Sheet
d. Financial Data Sheet
 1. ADMINISTRATIVE EXPENSES

 Hiring and training salespeople to recruit or solicit

prospective franchisees.

 Non-personal costs of franchisee recruitment

 a. cost of publishing brochures
 b. advertising
 c. promoting the business through trade show

 Running background checks on prospective franchisees.

 Performing analyses.
 2. RECRUITMENT PACKAGE

 It is usually consist of a recruitment

brochure, a disclosure document,
and other information about the
benefits and opportunities of
becoming a franchise with the
franchise system.

 This package is used as part of the

franchisor’s response to initial
inquiries by the prospective
franchisee.
RECRUITMENT BROCHURE INCLUDES THE
FOLLOWING INFORMATION:

1.Description of the business

2. The principal people in the franchise system
3. The franchise system
 Territory covered
 Operating assistance
 Needed to start franchise
 Ongoing assistance through franchisor
 Franchise system regional and national
 Marketing programs
 Credit card system
RECRUITMENT BROCHURE INCLUDES THE
FOLLOWING INFORMATION:
4. Operating a franchise
 Location
 Training
 Insurance
 Assistance
 Management and planning
 Standards of performance
 Trademarks and trade names
 Duration of the franchising agreement
 Franchising and others fees
 Franchisee right to assign
 Business forms recommended and supplies
5. Investments
6. Franchise application
 3. PROMOTIONAL PACKAGE

 A description of business, product or services.

 Background information about the franchisor and franchised
system.
 Historical information concerning development and operation
of franchised unit.
 Amount money required for acquisition of franchise
 Assistance offered by the franchisor.
 Site, equipment, and building information.
 Marketing factors
 Financial information about franchisee and franchise system.
 PERSONAL CONTACT INFORMATION
SHEET

 is a form for recording preliminary

information about a prospective
franchisee, including the
prospect's , and phone number,
how the contact was made, and an
impression of the initial contact
recorded by the person contacted.
 4. TRAINING AND SCHOOLING COST

 the actual materials created or

utilized for training and time spent
in each training module or
conference.

 This is calculated into the total

because every moment an employee
spends in training is time away from
their job.
 5. SUPPLEMENTARY SERVICES AND
RELATED EXPENSES

 Supplementary services, supporting, or enhancing include

safekeeping, consultation, expectations, and hospitality. On
the other hand, facilitating supplementary services include
payment, billing, order-taking, and information

 They include packaging, pick-up and delivery, assembly,

installation, leaning, and inspection. Sometimes there's a
charge for these services.
 6. ADMINISTRATIVE COST

 expenses an organization incurs that are not directly tied to a

specific core function such as manufacturing, production, or
sales.
 These overhead expenses are related to the organization as a
whole, as opposed to individual departments or business
units.

Examples:
 a. Personal contact
 b. Follow-up
 c. Personal Data Sheet
 d. Financial Data Sheet
 OPERATIONS PACKAGE

fairly extensive, and the materials often put in the

form of manuals. The information contained in the
manuals is meant to assist the franchisee to
properly conduct the operations of the franchise.
 10 MAJOR MANUALS IN A FRANCHISE
BUSINESS

1. Operating Manual
2. Training manual
3. Location Selection criteria
4. Marketing Manual
5. Advertising Manual
6. Field Support Manual
7. Quality- Control Manual
8.Pre-opening Manual
9. Site inspection Manual
10.Recording and Reporting Manual
 1. OPERATING MANUAL

 Operating manual is often referred to as the bible of franchise

system.

 It should describe each major function and operating

procedure of the business.
 The manual typically illustrates in graphs, charts, and
pictures how the franchisor and franchisee conduct business
together
 It also an instructional tool useful in the programs run by the
franchisor for training new franchisees.
 Covers the essential administrative, legal, and functional
aspects of the franchise system.
 2. TRAINING MANUAL

 It is a guide for teaching operating procedure and personnel

management.

 Category of Training Programs

 Formal Training Program- provide opportunity for the
franchisor to help new franchisee develop special knowledge
about the franchise system and the business factors
important to running a successful franchised business.
 Ongoing Training Program- is usually provided by field staff of
the franchisor after the franchisee has entered business.
 OUTLINE TOPICS IN THE OPERATING
MANUAL

 Section1: Introduction
 Section2: General Rule of Operation
 Section3: Unit Operation
 Section4: Management
 Section5: Store Operation
 Section6: Sales Operations
 Section7: Inventory
 Section8: Maintenance Control
 3. LOCATION SELECTION CRITERIA

 Economic strength and potential of a particular region.

 Economic strength and metropolitan area
 Availability of transportation for supplies
 Employment trends and employment mix
 Demographic characteristics within the particular market
segment in terms of purchase of product or services.
 Land development and construction cost
 Location of primary competitors.
 4. MARKETING MANUAL

 It describes the franchisor’s marketing philosophy.

 It discusses in a detail the features and characteristics used
to market the franchised business’s offering, which may be
consumer or industrial goods, durable or non durable goods or
service.
 5. ADVERTISING MANUAL

 Advertising manual covers at least four topics:

 Advertising-is an effective communication and promotion of

the franchised product to the targeted audience.
 Promotion- promotion materials are designed to attract
market response or enhance existing customer demand.
 Graphics- provides the franchisee with information about how,
where, and when to use trademarks, logos, and service marks
 Public Relation Program- is to generate favorable publicity for
the franchise system as well as for the individual franchise
location .
 6. FIELD SUPPORT MANUAL

 Should identify and outline the

services provided by the franchisor
to each franchisee.
 Field Support Manual includes
service such as: training,
inspection, record keeping,
financial planning, and quality
control standards and procedures
 7. QUALITY CONTROL MANUAL

 Helps the franchisee maintain

desired standards of quality, service
and performance, and presentation
 8. PRE- OPENING MANUAL

 Includes checklist of activities and steps that must that must

be completed before a grand opening can take place.
 9. SITE INSPECTION MANUAL

 Describe s each item that is included in an inspection, along

with the criteria used and procedures to be followed by the
franchisee including a daily or weekly log for the franchisee
to complete.

 2 Major Category of Site Inspection

 Appearance Category- list items for inspection that are
internal and external to the business facility.
 Maintenance Category- contains items by which to rate the
neatness and cleanliness of customer and employee work
areas, as well as adherence by the franchisee to the
recommended preventive maintenance program.
 10. RECORDING AND REPORT KEEPING
MANUAL

 Describes a standardized accounting and record keeping

system that will provide a means of obtaining accurate
financial information with a minimum of time and effort
 End of Presentation