A number of judgments handed down in recent months and years have found that a franchisor's failure to provide each franchisee with an operating manual constitutes a legal breach of the franchisor's obligations to its franchisees.
Examples include the Quebec Superior Court's April 20 decision in Duchesneau v. Gestion Milsa inc. (which you can consult by clicking here), and the Quebec Court's September 1 decision in Morales v. Ménage-Poly inc.
In each of these cases, the court found that the franchisor had breached his obligations to his franchisee, notably by failing to provide a proper "operations manual".
This raises the following question: Is it compulsory for franchisors to have an operations manual, and to provide it to their franchisees?
With great respect for the few court decisions that seem to indicate that this is the case, I'm of the opinion that it isn't, unless, of course, the franchisor has made this commitment in his franchise agreement.
In my humble opinion, the operations manual is the tool by which the franchisor transmits his know-how and his standards, rules and policies to his franchisees. More precisely, it is the reference tool traditionally used for these purposes since the beginning of modern franchising.
However, what's really important, indeed fundamental, is that the franchisor has genuine, experienced know-how and the tools to pass this know-how on to each franchisee, rather than a specific means (such as an operating manual) to enable this transmission.
When it comes to standards, rules and policies, what's essential is that the franchisor's standards, rules and policies are clearly communicated in a timely manner to each franchisee, but, again, not the means by which the franchisor achieves this communication.
Moreover, in certain fields of activity, such as the professional services sector, other tools (such as guides, reference documents and training modules) may be much more appropriate than an operations manual, both as a means of transmitting the franchisor's know-how and as a means of communicating the rules, standards and policies of a franchise network.
With today's technological tools at our disposal, there are many other ways - some of them much more user-friendly and educational than the operating manual alone - to communicate the franchisor's know-how to franchisees, as well as the network's rules, standards and policies, in a timely manner.
Examples include presentations or modules (audio or video) stored and regularly updated on a computer platform that franchisees can access at any time, or a library of guides (written, audio and video), each dealing with a theme or subject relating to the operation of the franchised business, which franchisees can access at any time when they feel the need.
Once again, the key is not the means of transmission or communication, but the existence of genuine, experienced know-how held by the franchisor, and the tools enabling the franchisee to access it and benefit from it to run his business successfully.
However, and this is where the problem often lies(as it did in the two judgments I referred to above), is in the drafting of the franchise agreement.
For example, if the franchisor does not yet have a complete operating manual, or if he intends to use means other than an operating manual to transmit his know-how and communicate his network's rules, standards and policies to his franchisees, his franchise agreement will have to reflect this situation and the method of transmission preferred by the franchisor.
All too often, new franchisors and their lawyers or notaries use model franchise agreements, or sample franchise agreements drafted for others, to prepare and draft their franchise agreement.
In drafting their franchise agreements in this way, franchisors regularly enter into obligations (such as providing an operating manual) which they have not fully understood, or which they are unable to fully comply with in the manner stipulated in their franchise agreement.
Situations such as these are great gifts for franchisees' lawyers who want to reproach their franchisor or get out of their franchise agreement. It is very difficult for a franchisor to explain to a judge that he cannot, or does not intend to, respect one or more of the clauses of an agreement that he himself has drafted or had drafted by his own legal advisors.
It can't be stressed enough: every franchise agreement must be designed and drafted "to measure" according to the specific characteristics and operating mode of each franchise network, and it's always perilous to try to use a model franchise agreement that doesn't truly reflect your company and its operations!
