Franchising Module

Republic of the Philippines
State Universities and Colleges

GUIMARAS STATE COLLEGE
McLain, Buenavista, Guimaras
COLLEGE OF BUSINESS MANAGEMENT
Ferrer, Reyan E. Julieta G. Infante, Ph. D.

Vargas, George G.
Chapter V
Managing the Franchisor’s Operation Process
The written information provided in the franchise package represents the types of support a
franchisor provides a franchisee. A franchise package is generally divided into two parts, the
promotional package and the operations materials.
 Promotional Package
Is the carefully prepared information developed and given by the franchisor to prospective
franchisees in order to:
1. Solicit franchisee applicants to the franchise system.
2. Provide basic information about the franchise.
3. Illustrate the follow-up forms used to sign franchisees.
This should explain the basic purpose and substantial requirements of the franchise program,
specifying intrinsic values and services provided to a franchisee, suggesting probability for
franchisee success in the franchise system, and identifying a typical offer the franchisor makes to
a franchisee. It will typically include items relative to disclose documents required by law,
essentials of the franchising agreement and even explanations of the recommended information
reporting and bookkeeping systems as well as a certain advertising practices used by the
franchisor.
The franchisee is primarily interested in learning bout the franchise system, including how it
operates and what requirements or conditions a franchisee must meet with this company. The
franchisee would be interested in learning about the items identified in the ff. list:
• A description of the business, its products and/or services.
• Background information about the franchisor and the franchised company.
• Historical information concerning development and operation of a franchised unit.
• Amount of money required for acquisition of the franchise.
• Assistance offered by the franchisor to the franchisee.
• Site, equipment and building information
• Marketing factors associated with promotion and sale of the franchise system’s products
and services.
• Financial information about the franchisees and the franchise system.
Prospective franchisees want to buy a consistent customer experience that is proven, day after
day, to be successful in the marketplace.
Five approaches to the marketplace:
• Biggest: a dominant assortment (products or geographical locations).
• Quickest: orientation toward fast service to be the fastest.
• Cheapest: lowest prices on a day-by-day basis.
• Hottest: quickest availability of newest fashion, newest technology.
• Easiest: high service orientation.
 Administrative Expenses
The franchisor must develop a method of determining the expenses of administering a franchise
program. The primary administrative costs are typically those of hiring and training salespeople
to recruit or solicit prospective franchises. The non-personnel costs of franchisee recruitment,
such as costs of publishing brochures, advertising or promoting the business through trade
shows. Further expenses may be incurred in running business checks on prospective franchisees,
performing analysis of their current or former businesses ad inquiring into their credit ratings.
 Recruitment Package
Usually consists of a recruitment brochure, a disclosure document and other information about
the benefits and opportunities of becoming a franchisee with the franchise system. This package
is used as part of the franchisor’s response to initial inquiries by a prospective franchisee. It
discusses the major points about the franchise and the principal people involved in running the
franchise system.
Most brochures will include the types of following information:
1. Description of the business.
2. The principal people in the franchise system (primary ownership).
3. The franchise system.
4. Operating a franchise
5. Investments
6. Franchise application (attached or information how to receive one).
 Operations Package
It is fairly extensive, and the materials are 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. There are at least ten major manuals or information packages which may make up
the operations package.
* Operating manual * Field support manual
* Training manual * Quality-control manual
* Location selection criteria * Pre-operating manual
* Marketing manual * Site inspection manual
* Advertising manual * Reporting manual
 Operating Manual
It is often referred to as the Bible of the franchise system that is a ready and regular reference to
address the vagaries and uncertainties of day-to-day operations of the franchised business. It
should describe each major function and operating procedure of the business. The operating
manual is also an instructional tool useful in the program run by the franchisor for training new
franchisees. It covers the essential administrative, legal, and functional aspects of the franchise
system.
 Training Manual
A guide for teaching operating procedures and personnel management used in formal and
ongoing training programs which ideally fills in the gaps between the knowledge of a
prospective franchisee or future employee and the level of performance expected by the
franchisor.
Formal training program provide opportunity for the franchisor to help new franchisees develop
specific knowledge about the franchise system and the business factors important to running a
successful franchised unit.
Ongoing training is usually provided by field staff of the franchisor after the franchisee has
entered business. The first ongoing type of training is provided just prior to the opening of the
franchised outlet.
Training Development Program

Training development program are generally developed based on the notion that new franchises
have little or no specific business knowledge about the franchise system. A training program
should develop basic management and business skills. Basic economics, profit motives and
incentives, cost controls, management and leadership practices, financial tools, and marketing
principles, as they apply to the franchised business, should be included in the training. A good
training will allow sufficient questions to be asked and answered accurately and concretely and
will allow for interactions between new franchises.
 Location Selection Criteria
One of the most crucial decisions confronting the franchisee is the selection of the site for new
franchised business. Location for new franchised business is usually based on a variety of factors
including economic strength and potential of a particular region; economic strength and potential
metropolitan area or market area; availability for transportation of supplies; employment trends
and employment mix; demographic characteristics within the community or particular market
segment in terms of usage or purchase of the product or service; traffic ingress and egress at sites
being considered; land development and transaction costs; and location of primary competitors
within the primary service area.
 Marketing Manual
Describes the franchisor’s marketing philosophy. It discusses in detail the features and
characteristics used to market the franchised business’s offering, including information about
packaging, labeling, and consumer services that franchisees should make available. It should
state the franchisor’s pricing policies, including new product strategies, product mix strategies,
price-adjustment strategies, and how to initiate price changes and respond to price change in
competition. Also it should describe the market position the franchise system seeks, in terms of
the market segment and customer groups targeted and the competitive position the franchise
system wants to reach and/or maintain. It should also contain a wealth of information about how
the franchise system attracts and maintains customers through the basic products, pricing, place,
and distribution policies, as well as information about current customers and collecting market
intelligence. It clearly identifies the marketing philosophy of the franchise system.
 Advertising Manual
A guide to effective communication and promotion of the franchised product to the targeted
audience covering at least four topics:
1. Advertising. It contains illustrations of direct mail pieces and newspapers display mats,
as well as audio-visual disk sampler presentations, brochures, and presentation booklets.
2. Promotion. Materials that are designed to attract market response or enhance existing
customer demand.
3. Graphics and Signage. It provides the franchisee with information about how, where, and
when to use the trademarks logos, and service marks.
4. Public Relations. Generates favourable publicity for the franchise system as well as for
the individual franchise locations.
 Field Support Manual
The field support manual should identify and outline the services provided by the franchisor to
each franchisee. This manual would likely to include such services as training, inspection,
record-keeping, financial planning, and quality-control standards and procedures, as well as
recommend forms and procedures for use in evaluating the performance of the franchised
business.
 Quality-Control Forms
Proper quality control helps the franchisee maintain desired standard of product quality, service
performance, and presentation. Franchisors generally wants the highest possible standards for
their products and its delivery in the marketplace because they realize that consumers are
becoming increasingly interested in product quality. The franchisor must address each point of
contact between the franchised business and the customer, and develop standards for product
quality as well as for interaction with the customer. Policies and standards should exist for the
following types of customer interactions; credit on product or service sold; technical services
available; maintenance services available; customer inquiries about the company; products,
product features, delivery schedule, or other backlog policies; and how complaints or
adjustments to purchases are to be made.
 Pre-Opening Manual
Usually the manual includes checklists of activities and steps that must be completed before a
grand opening can take place. The four time periods considered important prior to the grand
opening of franchised business are as follows:
1. Six months prior to grand opening.
2. Three to six months prior to grand opening.
3. One to three months prior to grand opening.
4. Thirty days prior to grand opening.
These checklists help the franchisee a logical plan to complete essential activities before opening
the business. A time-balanced approach helps ensure that the franchisee has not forgotten to
complete these activities or is not trying to accomplish too much before the grand opening.
 Site Inspection Manual
Part of the motivation for a franchisor to develop a franchisee system is to ensure consistency
throughout the business units in the system. A franchisor should develop an approach to site
inspection that helps the franchise system achieve consistency in the external features of the
outlet. Typically, an inspection will look at certain physical attributes as well as less-tangible
factors such as store ambience, attractiveness of decor, cleanliness of restrooms and operating
equipment, neatness of customer service and work production areas, and personal appearance of
the employees. The sample site inspection form identifies two major categories, appearance and
maintenance.
Appearance category lists items for inspection that are internal and external to the business
facility.
Maintenance category contains items by which to rate neatness and cleanliness of customer and
employee work areas, as well as adherence by the franchisee to the recommended preventive
maintenance program.
 Recordkeeping Manual
The franchisor, working with an accountant, needs a recordkeeping manual in which to develop a
standardized accounting and recordkeeping system. A well-planned system will provide a means
of obtaining accurate financial information with a minimum of time and effort. The
recordkeeping parts of the financial system should allow for weekly, biweekly, or monthly
income statements reflecting sales and expenses, a cash budget which helps the business plan its
financial activities, and a balance sheet on monthly, quarterly, semi-annual, or annual basis.
Summary
The promotional and operations package represents the support a franchisor provides a
franchisee. Often these two forms of support are divided into two separate packages, the
promotional package and the operations package. The promotional package contains the
materials used by the franchisor to solicit prospective franchisees to the franchise system, the
basic information concerning the franchise, and the follow up forms used to trace to conclusion
the actions and decisions made on each prospective franchisee.
The promotional package contains the recruitment, promotional training and schooling, and
supplementary services offered by the franchisor as well as the approach taken to developing
administrative control over the recruitment, selection, and training process of franchisees.
Questionnaire:
1. What do you call this package which contains the manuals meant to assist the franchisee
to properly conduct the operations of the franchise?
a. Recruitment package b. Operations package
c. Promotional package d. Administrative expenses
2. What do you call this package which consists of a recruitment brochure, a disclosure
document and other information about the benefits and opportunities of becoming a
franchisee in the franchise system?
a. Recruitment package b. Operations package
c. Promotional package d. Administrative expenses
3. What manual often referred to as the Bible of the franchise system?

a. Marketing manual b. Advertising manual
c. Operating manual d. Training manual
4. What manual discusses a guide for teaching operating procedures and personnel
management used in formal and ongoing training?
5. What kind of manual describes the franchisor’s marketing philosophy?

6. What kind of manual guides to effective communication and promotion of the franchised
business to the targeted audience?
7. What manual identifies and outlines the services provided by the franchisor to each
franchisee?
c. Field Support manual d. Pre-opening manual
8. What manual includes checklists of activities and steps that must be completed before a
grand opening can take place?
c. Field Support manual d. Pre-opening manual
9. What site inspection category contains items by which to rate neatness and cleanliness of
customer and employee work areas?
a. Maintenance category b. Appearance category

c. Facility category d. Management category
10. What site inspection category lists items for inspection that are internal and external to
the business facility?
a. Maintenance category b. Appearance category
c. Facility category d. Management category
Answer key:
1. B
2. A
3. C
4. D
5. A
6. B
7. C
8. D
9. A
10. B

Franchising Module

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Franchising Module

Hochgeladen von

Copyright:

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Republic of the Philippines

State Universities and Colleges

Ferrer, Reyan E. Julieta G. Infante, Ph. D.

Training Development Program

3. What manual often referred to as the Bible of the franchise system?

5. What kind of manual describes the franchisor’s marketing philosophy?

a. Maintenance category b. Appearance category

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