FRANCHISE APPLICATION

AND FRANCHISE
PACKAGE
APPLICATION PROCESS
 STEP 1
 The application process starts with an inquiry from a prospective franchisee about a particular franchise
restaurant. Franchise availability is normally advertised by the franchisor.
 Typical information packages contain the following information:
 A letter from the franchise sales administrator, director of franchise development, or other
representative of the corporation
 A short history of the restaurant franchise.
 The information in the packet then goes on to provide the following:
 A description of the type of menu offered by the franchisor for use in restaurant. This may vary from a listing to a
detailed description.
 Availability of areas for franchisees is also described. Well-established franchises normally do not
have many available territorial choices.
 A description of the training offered by the franchisor to the franchisees.
 A description of other services offered by the franchisors, such as:
APPLICATION PROCESS
 STEP 1 (cont..)
 A description of other services offered by the franchisors, such as:
 Site selection
 n Feasibility study
 n Operations and field services
 n Purchasing
 n Marketing
 n Research and product development
 n Building and equipment
 n Opening assistance
 n Accounting
 n Controls
 n Operational support
APPLICATION PROCESS
 STEP 1 (cont..)
 A summary of costs required at the initial stages, which normally
include:
 n License fee(s)
 n Approximate total cost of equipment and signs
 n Construction costs
 n Real estate costs
 n Working capital
 n Site improvement costs
 n Training costs
 n Leases
 n Leasehold improvement costs
APPLICATION PROCESS
 STEP 1 (cont..)
 The code of ethics for franchisors published by the International Franchise
Association is also included in some franchise packages, particularly by those
who are members of the association. The code of ethics focuses on the
franchisor’s obligation to franchisees in all dealings.
 An application form. Normally this is a preliminary application form used for
screening by the franchisor. Confidential information that is pertinent to
franchising is solicited through this application form. In addition to
demographic information, this application form requires completed personal
financial statements. A summary of assets and liabilities is required from the
prospective franchisee. A signed statement by the applicant is required, and
rights to check credit history and verifications of the financial history are
secured.
APPLICATION PROCESS

 STEP 2
 If further interested, the prospective franchisee, after reviewing the entire
application package, submits a basic franchisee application form. Submitting
this application does not obligate either the applicant to accept or the
franchisor to offer a franchise.
 This application is reviewed either by the regional licensing manager or an
assigned officer in the franchising department of that particular franchise
system.
 The application form is used for preliminary screening and provides for a
review of the potential of a franchisee to meet all the requirements of the
franchise operation.
APPLICATION PROCESS

 STEP 3
 In the presence of continuing mutual interest, a representative calls all
promising candidates individually to make arrangements to furnish legally
required information and, possibly, arrange for an interview.
 This interview is designed to include a discussion of the philosophy and
goals of the franchisor in addition to assessment of the franchisee’s
background information, financial status, and genuine interest in the
franchise.
 It provides for a frank and open exchange of information and assessment
of the potential of a long-term relationship between the two parties.
APPLICATION PROCESS

 STEP 4
 If there is mutual approval and the franchisee meets the minimum financial
criteria for net worth and liquidity, he or she may be invited to the corporate
headquarters or area offices to continue discussion with the staff.
 At this point a completed review of the franchise program is conducted.
Several personal interviews with individuals in different areas may be
arranged.
 At the end of these meetings, normally the decision of approval or disapproval
is conveyed to the prospective franchisees.

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APPLICATION PROCESS
 STEP 5
 If approved, further discussion concerning the geographic location of the
restaurant, site development, lease requirements, leasehold development, and
renting or buying options takes place.
 The prospective franchisee may be assessed on practical capability, which is
normally done by on-the-job training. Usually this is provided at a local restaurant
of the franchise and is brief.
 Ifthe prospective franchisee already has experience in that particular franchise,
the training requirement may be waived or reduced in duration.
 This on-the-job training allows both the franchisor and the franchisee to evaluate
operations in the restaurant environment and provides the prospective franchisee
with a closer look at the concept and operation of the franchise.

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APPLICATION PROCESS
 STEP 6
 After a location is secured by the franchisee by lease, rent, or purchase, and
approved by the franchisor, the franchisee and/or representative(s) undergoes an
intensive training program in operational methods.
 This formal training provides the complete knowledge and hands-on experience
related to operations and management of the franchise. The type and duration of
this training varies with the franchise.
 After training, the prospective franchisee is ready to sign formal documents and
start construction or operation of the franchise restaurant. If a franchise is not
available at the time or at the location desired, an approved franchisee may have
to undergo a waiting period, which may be lengthy for popular franchises.

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RECRUITING FRANCHISEES
 One of the toughest jobs for a franchisor is recruiting franchisees who will match with the goals, culture, and
philosophy of the entire franchise system. Normally a successful franchise is flooded with prospective
franchisee applications. There is a need for franchisors to develop a sound recruitment system that
generates a line of prospective franchisees that align closely with most of the franchisor’s requirement.
 Franchisors have two options:
 One option is to select at random franchisees who apply, hoping that they would eventually fi t into the
system. This is a very risky proposition, which may prove very costly. This is normally done either by
new and inexperienced franchisors or those who are more interested in collecting franchise fees rather
than the long-term success of the business.
 The second option is to have a very well-synchronized system of recruitment. This may take time and
patience; however, the chances of success are much greater than in the earlier option.
 The franchisors should develop carefully criteria for the profile of a possible successful franchisee who
would fit into the system. For this the type of franchise system, its very culture has to be taken into account.
This may be based on primary characteristics such as capability to understand the concept and actually buy
into the philosophy of the franchise concept.
 Other factors include the capability to withstand the rigor required for operational efficiency, expansion, and
running a restaurant operation.
OPERATIONS PACKAGES
 Operation packages sent to prospective franchisees before they sign a franchise agreement are
normally recruiting tools, providing general information necessary for the franchisee. After
completion of the franchise agreement, a set of confidential franchise packages, consisting of
several manuals, are provided by the franchisor. These manuals are basic tools focusing on all
aspect of the franchise. The success of the entire franchise operation depends on understanding
and using these manuals. These must therefore be carefully prepared by the franchisors and
written at a level that can be easily comprehended and followed.

OPERATING MANUAL
 The operating manual is the most referred-to key manual of a franchise restaurant. Because it
outlines all operational aspect of the franchise, the manual is extremely confidential. All major
functions within the restaurant are addressed in this manual, which must be clearly written and
convey all information in a sequential and systematic manner.
Advantages of Manuals

 Manuals clearly explain how each department and function work within the franchise
system.

 Manuals show franchisees how to be effective, proficient, and successful in running the
franchisor’s business
 Manuals are good marketing tools and also help in developing customer relationship
and showing how to make and keep loyal customers.
 Manuals teach skills and techniques that are employed in the running of the franchise
system.
 Manuals train franchisees and their employees operational matters which are unique to
the system, as well as teach the effectiveness and success of franchising as a method
of doing business.
A common outline of an operations manual of a franchised restaurant is shown below

 Section 1: Introduction
 This section should describe the company mission and values. What is the mission of the
franchise; what are the values; and what is the future vision for the franchise. This should
also include how the concept was developed and what are the responsibilities of
franchisors and franchisees.
 Section 2: General Rules
 This section should focus on procedures and policies. The basic information related with
quality, control, and customer relations.
 Section 3: Menus and Menu Plans
 For restaurant franchises this is a very important component of the operation manual. What
is the main concept of the menu should be described, and how menu changes will take
place still sticking to the concept should be described.
 Section 4: Equipment Use and Care
 Based on the menu the types of equipment needed, how they will be placed, used, and
kept performing efficiently should be described. Equipment cleaning and maintenance
steps should be outlined.
A common outline of an operations manual of a franchised restaurant (cont..)

 Section 5: Food Purchasing

 The methods used for purchasing and how to purchase listed should be spelled out. Regulatory
agencies and laws to follow to maintain quality should be listed.
 Section 6: Receiving and Storage
 Foods and supplies purchased have to be placed according to the franchise concept. Mechanism of
receiving and storage varies with the franchise and franchise concept. All procedures should be listed
for receiving, inspecting and storing.
 Section 7: Sanitation Requirements
 Food safety and hygiene principles should be listed. Safe handling of food and providing food safety for
consumers are important aspects for the very survival of restaurant franchises.
 Section 8: Food Preparation
 In restaurant franchises, food preparation is very important. All controls such as time and temperature
controls are critical. All important operations have to be included in this section of the manual.
 Section 9: Delivery and Service of Foods
 Dealing with consumers, service procedures, and all aspects of food and service delivery should be
included in this section.
A common outline of an operations manual of a franchised restaurant (cont..)

 Section 10: Financial Aspects

 Financial aspects such as food and labor costs, balance sheets, and profi t and loss statement including forms and
method of documentation are included in this section.

 Section 11: Management

 Management policies and procedures, including recruitment, performance employees, motivation, and all matters
related to human resources, are to be included in this section.

 Section 12: Restaurant Operation

 Day-to-day operation such as opening and closing of registers and handling customer feedback rules are to be
included in this section.

 Section 13: Marketing

 Advertising policies and procedures are important since most of the franchisors require advertising and promotion
fees. Marketing procedures, advertisement, and promotion guidelines should be listed in this section.

 Section 14: Maintenance

 Maintenance of the facilities and sanitation rules are to be listed including all heating, ventilation, and air conditioning
requirement for the customers as well as employees.
The manual is an essential component of the services provided by the franchisor.
Franchisees consider the manual a reflection of the services provided by the
franchisor. It contains all information useful for day-to-day operations of a
restaurant.
COMPONENTS OF A TRAINING MANUAL
1. Hands-on training programs are designed to provide practical experience in the day-to-day
operation of the franchise.
2. Formal training programs are more comprehensive and involve intensive training of the
franchisees. All functions of the restaurant’s operation and management are included. Formal
training sites and training methods are used.
3. Ongoing training programs are provided on a continual basis to the staff of the franchisee, often
on site or at corporate headquarters.

Training manuals for this purpose primarily include the operational aspects of the
restaurant. This training can be provided by the franchisee or his or her
representative.
Marketing Manual
 The marketing manual describes the marketing philosophy of the franchisor and
outlines the procedures for marketing products and services

Advertising Manual
 Advertising, promotion, signage, and public relations are all outlined in the advertising manual.
 Promotional materials and policies of the franchisors are described.
 Plans to advertise using different media are explained.
 The manual also contains illustrations of materials and examples from past promotions.
 This manual is updated continually to provide current advertising and promotional information.
 Included in the manual are promotional activities that can be conducted for the local community and
organizations such as scout troops and sports teams.
FIELD SUPPORT MANUAL
 The field support manual is a listing and description of field support services provided by the franchisor.
 Support services help to maintain healthy franchisor–franchisee relationships.
 The manual should identify and outline all services, with names, addresses, and phone numbers of
those who should be contacted for help.
 Services include inspection, recordkeeping, quality control standards, and other controls.
 Possible approaches to major problems and ways to get feedback from the franchisor are listed in the
manual. Field support staff and representatives also maintain contact with the franchisees.

QUALITY CONTROL MANUAL

 Controlling quality is a major emphasis of any franchisor.
 Quality pertains both to the food and services offered.
 The quality control manual contains a description of the quality control measures a franchisor requires
to maintain standards, technical controls, maintenance services, leftover control, and handling of
consumer complaints.
 Evaluation procedures and forms used by the inspection staff to assess quality control are also
included in this manual. Sometimes these forms are included in another manual referred to as the site
inspection manual.