Consulting on Menu and Service Changes Before Franchising: How to Assess Local Proposals

When you turn an existing business into a franchise, you will encounter questions such as: “Can we sell a different menu item just in this area?” For service businesses, the issues may involve service duration, the order in which services are delivered, or additional products. Decisions that the owner once made on the spot are difficult to apply consistently to requests from multiple outlets. Setting criteria for receiving, reviewing, trialling and ending changes while preparing your first franchise agreement can help preserve both consistency and local adaptability across the franchise network.

1. Distinguish the Legal Meaning and Scope of Prior Consultation

Franchising in South Korea is governed by the Fair Transactions in Franchise Business Act. Article 2 identifies the sale of goods or services according to specified quality standards or operating methods, alongside support, training and control by the franchisor, as elements of a franchise business. What is sold, and how it is sold, therefore forms part of the foundations of the franchise relationship, rather than simply being a matter of convenience at outlet level.

Article 6 of the same Act requires franchisees to consult the franchisor in advance when changing the goods or services they offer or their business activities. However, this provision alone should not be interpreted as granting an unrestricted right to approve every change or an automatic power to impose sanctions. The matters requiring consultation, whether approval is necessary, and whether restrictions are justified must be assessed against both the contract and applicable legislation.

The franchisor should first divide proposed changes into specific categories. Adding a new menu item, omitting an existing service, substituting ingredients or materials, and changing portion sizes all affect what customers receive. By contrast, adjustments to display order or the way information is presented may be left to the franchisee’s discretion, provided they remain within the limits permitted by the contract and operating standards. The starting point is not to group everything under the single heading of “changes at outlet level”.

For each type of change, the review checklist should identify the relevant documents and the person responsible. Product ranges should be reviewed by the person responsible for products, safety issues by the relevant lead, and changes to contractual obligations by the person responsible for contracts. Even in a small franchise head office where one person handles everything, separating these review areas helps prevent the owner’s personal preferences from becoming the basis for decisions.

2. Set Boundaries in the Contract and Gather Evidence in the Application

The franchise agreement should distinguish between adjustments franchisees may make themselves and changes requiring prior consultation. Where separate approval is needed, specify the matters covered and the procedure. Rather than using overly broad wording such as “all matters the franchisor considers necessary”, it is more useful in practice to explain the boundaries in terms of their impact on the customer experience and brand operations.

The franchise disclosure document sets out matters including conditions governing business activities and obligations and costs borne by franchisees. If the change consultation process involves additional costs or operating restrictions, check that the relevant explanations are consistent with the agreement. Statutory procedures, including provision of the registered disclosure document, must also be followed separately. Obtaining a signature on a change application must not be used to bypass the existing contract or disclosures.

The application form need not be lengthy. However, it should collect the following information so that the reviewer can begin without needing further explanation.

• Purpose of the change: The problem to be addressed, such as customer requests, local demand or operational difficulties.
• Details of the change: How the proposal differs from current practice, what will be offered and when it will apply.
• Implementation requirements: The materials, equipment and staff needed, estimated costs, and a proposal for who will bear those costs.
• Customer impact: Changes to quality, safety, labelling, waiting times and information about refunds.
• Reversion plan: How the outlet will return to its previous way of operating after the trial, including how remaining stock will be handled.

It is also important not to ask franchisees to focus solely on increased sales. Even if revenue rises, longer working times and declining quality elsewhere in the range may leave the overall operation worse off. Ask applicants to describe likely difficulties and risks as well as the benefits of their proposal.

3. Test the Process in Company-Owned Outlets and Trial Changes Within Defined Limits

Before recruiting your first franchisee, you can test the change consultation process itself in company-owned outlets. Ask staff to submit genuine improvement proposals and check whether the business owner can assess them using the application form alone. If the same information is repeatedly missing, revise the form. If decisions remain inconsistent, revisit the review criteria first.

The purpose of a trial is to understand the effects of a change, not to manufacture a success story. For an additional menu item aimed at local demand, for example, record not only sales volumes but also preparation time, waste, delays to existing orders and difficulties explaining the offer to customers. For a change to a service package, examine delivery times, differences in results between staff members, and any gap between what customers expected and what they actually received.

The trial plan should specify the participating outlets, the products or services covered, the trial period, the measures to be monitored and the conditions for stopping. Set the duration and numerical targets to suit the business rather than imposing unsupported, one-size-fits-all benchmarks. It must be possible to halt the trial regardless of sales performance if safety issues arise or customers do not receive the service they were promised.

Positive results in a company-owned outlet do not justify immediate implementation across all franchise outlets. Feasibility will vary with floor space, available equipment, staff skills and the customer base. If further trials are carried out in franchise outlets, agree the scope of participation and allocation of costs in advance. Make it clear that participation does not amount to a promise of permanent adoption.

4. Communicate the Reasons for Decisions and the Conditions for Ending Trials

Do not simply communicate whether a proposal has been approved: explain the reasons and conditions as well. Possible outcomes include implementation within existing standards, a conditional trial, a request for further information, or a decision to put adoption on hold. Use clear document titles and explanations so that the statutory requirement for prior consultation is not confused with the franchisor’s internal decision categories.

When allowing a conditional trial, specify which outlets it covers and when it ends. Set limits on customer communications so that trial products are not promoted as permanent, network-wide menu items. If another outlet submits the same request, refer to the earlier assessment but explain any differences arising from its equipment or staffing. Avoid granting a permanent exception merely because an outlet was the first to ask.

When putting a proposal on hold, state the conditions under which it could be reconsidered. Distinguish between proposals that can be reviewed again once equipment is available or safety checks are complete, and those that conflict with the brand’s core service model. Set an internal response-time target that head office can realistically meet. The contract should clearly address whether a delayed response constitutes automatic approval.

At the end of the trial, record one of three outcomes in writing: continued operation, revision followed by another trial, or a return to the previous approach. A change is not fully closed out until remaining materials, customer bookings and promotional or information materials have also been dealt with. If it is adopted as a network-wide operating standard, separately assess any implications for the franchise agreement and disclosure document.

Action points: Before signing your first franchise agreement, prepare a change classification table, an application form, a trial plan and a decision notice. Trust across the franchise network comes not from a process that blocks franchisees’ ideas, but from one that assesses comparable proposals on a consistent basis.