What is a Franchise Operations Manual?

An Operations Manual is akin to a user guide for the franchise business; it sets out the details as to how to run the business and is typically a frequent point of reference for franchisees. There are no rules as to what needs to be included in the Operations Manual, and, indeed, there is no legal requirement to provide one, though most franchisors do.

What is Included in an Operations Manual?

The Operations Manual typically contains chapters detailing:

  1. The background and history of the franchise network and key personnel
  2. Any mission statement or network goals
  3. How to operate the business day to day, including any opening and closing procedures, how to communicate with clients and customers, and similar. A fast food business, for example, may include here how food items are to be compiled and cooked, whereas a trade-based business may provide detailed step-by-step guides as to how certain tasks are to be performed
  4. A list of approved suppliers
  5. Reporting forms, and details of reporting procedures
  6. Employment law information, such as details of any applicable modern awards and any prescribed employment documentation
  7. Policies, such as an electronic information policy, any relevant anti-discrimination policies, and similar
  8. A directory of contacts from within the Franchisor
  9. Any applicable style guide and branding information

What form should an Operations Manual be in?

Just as there are no hard and fast rules as to what needs to be in the Operations Manual, there are no hard and fast rules as to how it is to be presented. At Magnolia Legal, we typically recommend investing in some software that will host the Operations Manual online, as this will provide user-friendly updates and notification functionality. Some options include Delightree and Optimiso (with whom Magnolia Legal has no affiliation!).

Is compliance with the Operations Manual Mandatory?

Typically, yes, but this is only the case because of a relevant clause in the Franchise Agreement. The relevant clause will say something like ‘The franchisee must comply with the Operations Manual as applies from time to time’.

How do I update the Operations Manual?

Using relevant software, updating the Operations Manual and notifying franchisees of the update should be a relatively simple process. Keep in mind when updating the Operations Manual, that the obligation to act in Good Faith will apply, and regard to the interests of the franchisees and the impact of the update should be had before any change is implemented. Also, consider when any change should become binding; for example, a deletion of a menu item in a food-based franchise should only be implemented after an applicable period to enable the franchisees to use up existing core ingredients. It is also important that any change to the Operations Manual should not contradict an operative clause of the Franchise Agreement.

Where do I start?

Deciding what to include in your Operations Manual can be a daunting task, so to assist we have put together these hints and tips:

  1. Decide who is going to draft the Operations Manual – a number of consultants specialise in drafting Operations Manuals, though of course, you can manage the process yourself. If going solo, you should have someone on hand to review your work and ensure it is easy to understand and accurately reflects your franchised business. To the extent you choose to include any legal documentation in your Operations Manual, such as binding policies, these should be prepared by a lawyer
  2. Record your day – it sounds simple, but simply recording what you do in a typical day (presuming you operate the business to be franchised), including what precise tasks you do, who you are in contact with, and where you go will help establish what needs to be included in the Operations Manual. Write down exactly what you do, and then use that to create step-by-step guides and appropriate chapters.
  3. Look at your Franchise Agreement – several clauses within a Franchise Agreement will typically refer to the contents of the Operations Manual ‘as applies from time to time’. For example, ‘the franchisee must only obtain supplies from the Approved Supplier list as contained in the Operations Manual as applies from time to time’. This is a mechanism that franchisors use to ensure there is some flexibility within their network. So, to help decide what to include in your Operations Manual, look at what the Franchise Agreement says will be in there, and create a list based on that.
  4. Consider risk – dependent on the industry in which the franchise will operate, there will be different risks. For a fast-food business, for example, those risks might arise concerning food handling and storage. For a trade-based business, those risks may relate concerning exposure to chemicals or dealing with dangerous items. The Operations Manual can be a great risk mitigation tool – identify what the relevant risks are in your business, and create policies and procedures to help reduce the risk of those risks eventuating.


At Magnolia Legal, we can provide assistance with your operations manual by drafting certain inclusions and undertaking a review for legal issues and consistency with your Franchise Suite. Contact us here if you would like to discuss further.

Disclaimer: This article contains general information only and does not constitute legal advice. Magnolia Legal disclaims any liability arising from reliance on this article. Our terms of use apply