Throughout my franchise career I can state, it's the rare exception when a prospective franchisee and their attorney requested a copy of the franchise operations manual to review. When one considers the importance of the operations manual and its many references in the franchise agreement a review should be a given.

Consider some standard language found in franchise agreements that reference the operations manual:

·        Franchisee acknowledges that the master copy of the Operations Manual maintained by Franchisor at its principal office controls in the event of a dispute over its contents.

·        Franchisee acknowledges that the franchise requires and authorizes Franchisee to offer only authorized products and services as described in the Operations Manual, which may include........

·        Franchisor reserves the right to revise the Operations Manual from time to time as it deems necessary to update operating and marketing techniques or standards and specifications in any manner, including updates contained in monthly newsletters. Franchisee shall in turn update its copy of the Operations Manual as instructed by Franchisor and conform its operations to the updated provisions.

·        Franchisee acknowledges that the master copy of the Operations Manual maintained by Franchisor at its principal office controls in the event of a dispute over its contents.

Clearly, this language provides definitive proof of just how important the operations manual is and how it can impact the franchise agreement. Part of the due diligence process for a franchise candidate needs to include:

·        Comparison of key provisions of franchise agreement to operations manual

·        Determining how often updates are made to the manual and the method of communicating updates to franchisees

·        Questioning franchisees regarding any issues, problems or disputes pertaining to updates to the manual altering the operation of the franchise or financial aspects of the franchisee

It's important that your franchise attorney participates in the process. There have been and continue to be numerous examples of franchise litigation attributed to misunderstandings on the part of franchisees and changes in the operations manual, which significantly altered the operation of the franchise.