Turning an Existing Business into a Franchise: Pre-opening Training Standards and Retraining

When turning an existing business into a franchise, simply adapting the way experienced employees train new starters is not enough. Franchisees are independent businesses, and attending training costs them both time and money. To build trust across the franchise network, define the skills participants must acquire, how successful completion will be assessed and what happens if they do not meet the standards—all before you begin recruiting franchisees.

1. Set separate learning outcomes for each role

Start not with the training timetable, but with this question: who needs to be able to do what by opening day? Franchise owners, outlet managers and frontline staff have different responsibilities and need different skills. Rather than putting everyone through the same lectures, set learning outcomes for each role.

For example:

• Franchise owners: understand income and expenditure, arrange adequate staffing and identify matters that must be reported to the franchisor.
• Outlet managers: carry out daily opening preparations, guide staff and take the appropriate initial action when something goes wrong.
• Frontline staff: deliver their assigned products or services using the prescribed procedures and report matters beyond their authority to the manager.

Vague objectives such as ‘understand business management’ or ‘master customer service’ leave completion decisions dependent on an instructor’s impressions. Replace them with observable actions, such as ‘identify a cash shortfall from daily records and explain the checks required’.

If the model does not require the franchise owner to be on site regularly, you must also decide what training the outlet manager needs to complete. Setting training requirements for replacement managers will help ensure that skills are maintained beyond opening day.

2. Assess attendance and competence separately

An attendance record shows that a participant had the opportunity to learn the required material. It does not necessarily show that they have acquired the skills needed to operate an outlet. State attendance requirements separately from completion requirements.

Use knowledge checks to assess understanding, practical assessments to test tasks and case-based exercises to assess judgement. In practical assessments, look beyond the finished product to preparation, checks during the task and clearing up afterwards. Being able to handle a routine order does not necessarily mean someone can deal with equipment faults or changes to an order.

Assessment forms should include at least:

• The behaviour being assessed and why it matters
• What constitutes a pass
• The assessment method and assessor
• The assessment date, result and feedback given to the participant
• Any areas requiring reassessment

For critical safety or legal compliance requirements, an overall score that allows strengths elsewhere to compensate for a failure may be inappropriate. Consider assessing these individually as mandatory pass requirements. On the other hand, treating minor skill gaps in the same way can lead to unnecessary delays to opening. Distinguish between requirements according to their importance.

Any internal qualification introduced by the franchisor does not replace legally required qualifications or licences. A completion certificate should specify the scope of the skills assessed and avoid wording that guarantees outlet profitability or freedom from future accidents.

3. Pilot the training and check assessment consistency at company-owned outlets

Before recruiting franchisees, trial the training and assessments with employees at company-owned outlets who have limited experience of the business. The aim is not merely to check that all the content is covered, but to establish whether beginners can understand it and reach the required standard.

An explanation that seems simple to an experienced employee may assume knowledge a beginner does not have. Record the topics that prompt repeated questions, the points where instructors need to add explanations and the exercises that take longer than planned. Do not automatically attribute difficulties to a participant’s lack of ability; consider whether the materials or opportunities to practise are inadequate.

Check for variation in assessment too. Have several instructors assess the same practical performance and, if their conclusions differ, compare their reasons. Replacing subjective criteria such as ‘works efficiently’ with ‘completes the task using the prescribed procedure without omitting required checks’ makes decisions easier to explain.

Use the pilot results to plan both the standard timetable and capacity for additional coaching. A retraining scheme is of little use if there are no instructors or facilities available to deliver it. The schedules presented during recruitment should reflect what the franchisor can actually provide.

4. Define retraining costs and what happens if someone does not pass

Retraining need not mean repeating the entire course. Consider offering training focused on the skills that need improvement. Based on the initial assessment, tell participants which elements they must retake, when reassessment will take place and who will conduct it.

Separate costs included in the training fee from those charged or incurred separately. Course fees, learning materials, consumables, travel, accommodation and participants’ employment costs may be borne by different parties and paid to different recipients. Be ready to explain in advance when additional costs arise and how they are calculated.

In particular, distinguish retraining caused by a participant’s absence or insufficient competence from additional training needed because of instructor availability or inadequate materials on the franchisor’s side. Rather than making franchisees pay in every case, set out how costs will be treated according to the cause.

Outlet rent and recruitment costs may also arise before training is completed. Set out the following arrangements for cases where a participant cannot complete training before the planned opening date:

• How to apply for reassessment and when it can take place
• Whether another outlet manager can attend training instead
• Who decides whether to postpone opening and how that decision is communicated
• How costs arising from a postponement will be handled
• What happens under the contract if the participant ultimately cannot meet the completion requirements

Avoid arrangements that allow the franchisor to defer a decision indefinitely because training remains incomplete. Provide a point of contact for reassessment requests and challenges to results, and make assessment records available for review.

5. Make training terms clear before the contract is signed

Japan has no single comprehensive statute governing all franchise agreements. The Civil Code applies to contractual relationships, while the Antimonopoly Act applies to dealings between franchisors and franchisees. In addition, franchisors whose operations qualify as a ‘specified chain business’ under the Act on the Promotion of Small and Medium-sized Retail Business must, under Article 11 of that Act, provide prescribed information in writing and explain it before entering into a contract.

The Japan Fair Trade Commission’s guidelines on franchise systems under the Antimonopoly Act state that appropriate disclosure of information needed by prospective franchisees to make an informed decision is desirable. Specify the content, delivery methods and costs of training and management support, as these are important factors in deciding whether to join.

The franchise agreement or training terms should clearly identify who must attend, attendance obligations, completion standards, costs, retraining arrangements and the consequences of not completing training. A clause stating only that ‘the franchisee shall bear the cost of any training the franchisor deems necessary’ does not allow a prospective franchisee to anticipate their financial commitments. Even broad consent obtained when the contract is signed does not justify using a superior bargaining position to impose unfair disadvantages.

Practical takeaway: Before recruiting franchisees, prepare role-specific learning outcomes, a standard assessment form and a schedule of retraining terms and costs. Readiness means more than being able to deliver training: the franchisor should also be able to explain fairly and clearly what happens if someone does not meet the completion standards.