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Franchise System Specifications

Written by: John Power

Article Overview: Franchisors want each franchisee to operate indentically, as much as possible. The franchise specifications are used to establish that uniformity.

Franchise System Specifications

Franchise Agreements usually contain wording like or similar to "Franchisee shall maintain at all times during the term of this Franchise Agreement and any renewals hereof, at Franchisee's expense, the Premises and all fixtures, furnishings, signs and inventory therein, in conformity and compliance with Franchisor's standards and specifications as prescribed in the Confidential Operations Manual or otherwise in writing." What are these standards and specifications? They are very specific details that you provide the franchisee about establishing and operating the business. Some of these details are outlined in the FDD and Franchise Agreement, i.e. computer hardware/software requirements. Some are outlined in the Confidential Operations Manual, including specific menus and food preparation methods for restaurants, approved sources, specific service and repair equipment for trade or construction type franchises, specific processes, methods and procedures to use, specific clothing required for employees, the forms used in the business, etc.

But additional information and detail needs to be provided to insure uniformity. At the time the franchisee prepares to open their office/business/store/restaurant, you will need to provide them with a detailed list of equipment, furnishings, color schemes, inventory, sources, sign requirements, layout design, etc., so that they set up the franchised business just as you require. This can be provided as a printed list, as notes and details on a blueprint (if they construct or remodel a building), as a secured-access document on your web site, or as an electronic document.

Here are a few examples that might be in the Specifications:

For a restaurant: The size, type, and brand of refrigerators, freezers, cookers, drink dispensers, etc. The physical requirements for the restaurant layout, kitchen, and front entry. The décor and interior and exterior signage requirements. The seating requirements, including number, size, arrangement, color, and source.

For a retail store: The size, type, and number of displays and counters. The inventory assortment and depth requirements. The color, décor scheme, signage (interior and exterior), etc. The method of pricing merchandise and use of promotional signs on displays.

For a service or trade type business: The type of vehicle required, advertising on the vehicle, the type and quantity of tools necessary, the clothing worn by employees, the work orders, storage requirements, materials used, etc.

For a home office based business: The type of telephone access, number of lines, type of Internet access (high speed or dial up) type of fax machine and phone connection (dedicated or roll-over line), the type of computer, computer software (may be previously specified in the FDD), the number of desks, and other office equipment. Also, whether you require the office to be in a separate room and any restrictions on employees working at the home.

If the franchisee will be remodeling or constructing a building, you may give them a set of blueprints that you used for your last company location with the requirement to match all the specifications and requirements shown on the plans. You may require them to hire the architect that your recommend (or approve) to adapt the plans to the actual location. You may yet want to provide a supplemental list of requirements and specifications in addition to those shown on the plans.

You can, and should, be very specific about all of these matters. Think about the major fast-food chains, and how they define what the restaurant looks like, right down to the cups and napkins. You will want to develop that amount of detail so that there is consistency between franchise units.

Are there limits to what can be specified and required? We do not believe that there are, but keep in mind that the franchisee must remain an independent operator and the decisions you make should be to provide uniformity and consistency across your franchise group, as a way to build your brand, and not to exert undue control on the day-to-day operation of the franchised business.

If the cost of all the equipment, décor, improvements, signs, etc. that you specify exceeds the amount estimated in Item 7 of your FDD, the Estimated Initial Investment, it will be necessary to go back and correct the FDD so that it realistically represents the actual cost of opening the business.

By carefully specifying the appearance and operational details of the franchised business you will be able to establish uniformity and be sure that each customer has a similar or even identical experience when they visit your franchised locations.

More information can be found at: www.biltmorefranchise.com

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Article Tags: access document, business store, color schemes, computer hardware software, construction type, drink dispensers, electronic document, exterior signage, fdd, food preparation methods, franchise agreement, franchise agreements, franchisee, franchisor, layout design, refrigerators freezers, restaurant layout, signage requirements, software requirements, specific service



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