FDS (Southern) - Intellectual Property Rights

FDS operating manual services have figured strongly in FDS Southern's services to franchisors - and none of their experience has suggested that good manuals are anything but vital to the future success of a franchised network.

Gordon and Gary comment : Ask FDS (Southern) what constitutes a sound franchise and they can answer that easily - a total, proven business system that can be communicated effectively to others seeking to invest in replicating it. At the heart of it all is 'know-how' - the sum total of the franchisor's knowledge, innovations, methodologies and experience contributing to the profitable operation of his business.

When you buy a licence to operate a franchise, you are buying into that know-how and the proven system that puts the know-how behind the business system into practice. Our task is to ensure that our new franchisor clients develop a system that makes it as easy as possible for franchisees to replicate their proven methodology. That's what the franchisee wants to buy and that's what the franchisors are responsible for delivering.

So prior to franchising any business, a critical question we have to ask is 'how developed and tested is the business system?' It is not enough to have devised an excellent product or service. This cannot be marketed by franchisees until there is a properly documented operating system which can be replicated as a proven methodology.

FDS Southern's operation manual specialist comments : What distinguishes a franchise from a simple licence is system totality, incorporating intellectual property rights, training and support. A vital part of this is documenting every aspect of the business in manual form - which becomes a reference book on how to operate the business, down to the finest detail. It has to be a fail-safe guide for franchisees, so that they could, if necessary, resolve problems for themselves. One problem we have discovered is that know-how and expertise often exists purely in the minds of the management. To them, running the business is second nature and common sense, almost instinctive. The idea of following a documented game plan seems pointless to them. For a new franchisee, however, operating the business is a completely new experience, so the only way he or she can learn is by studying and applying the operational principles behind it - that which is instinctively done by the management after years of operation.

New franchisors must therefore be willing to go back to basics in order to extract and record its components in a logical order. Many will find this a valuable experience in itself, for many die-hard practices may be recognised as due for improvement or replacement - and overall, it will give them a clearer analytical insight into their own businesses.

The prospective franchisee is inspired to invest in know-how only if it is seen to exist in the form of an attractive and well documented manual. It is a document which holds all the franchisor's business secrets. That is what inspires franchisees to invest in the concept - for there is clearly a practical system behind it.

This valuable manual material must have the benefit of full copyright protection and only be communicated to others on the basis of a confidentiality agreement, and this would form part of the franchise agreement, in which a franchisee would be licensed to use the system for a specific period of time.
The contents of the manual should be informative, instructive and detailed, capable of leaving the franchisees in no doubt as to what is required of them. The franchise contract should then require the franchisees to operate their business as per the requirements of the manual in its updated form.

The franchisor's methodology is his most prized possession and it should be recorded in the manual. As consultants, we are very much involved in providing help and guidance to companies in the production of their operations manual. However, the manual can only be as good as the methodology which exists in the company. In that sense, the contents must be owned by the company and convey their business system in the precise manner in which they require the franchisee to operate it. The provision of a high quality operations manual so that the franchisee 'does it by the book' is an absolutely vital element in the proper marketing of the franchise and its subsequent successful operation on the part of the franchisee as he or she contributes to network profitability.