Achieving franchise system compliance

Uniformity and consistency are part of the customer’s expectation of a franchise and are important for the franchisee as well as the franchisor. As many franchisors are in fact corporations, the system and image obligations under the franchise should extend to cover all employees.

The franchisor should clearly outline the expected standards to which the franchisee and their employees will be required to adhere. These standards will usually be presented to the franchisee in the form of an operations manual.

The franchisor should ensure that the operations manual is readable and sets out a practical summary of laws, regulations and organisational standards. It should also detail the operational procedures for particular units within the organisation and contain practical examples applicable to the organisation. The operations manual can be prepared by the franchisor, with the assistance of an experienced franchise consultant. It should, however, be reviewed by a lawyer to ensure it is consistent with the franchise agreement and disclosure document and does not expose the franchisor to liability.

The franchise agreement should provide the franchisor with rights of inspection to ensure compliance. It is important that the agreement facilitates enforcement of standards, even to the extent of ultimately enabling the termination of the franchise agreement.

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The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.