Buying a franchise: check the right to amend the operations manual

When you buy a franchise, you join a network with shared ways of working. But the rules governing day-to-day operations are not always set out in the franchise agreement itself. They may appear in an operations manual that the franchisor updates. Before signing, you therefore need to understand both the current rules and who can change them during the term of the agreement.

Identify which documents govern the business

Start by looking for references to an operations manual, other manuals, franchise concept rules and head office instructions. If the agreement requires you to follow these documents, they can have a significant bearing on your obligations, even if they sit in an online portal rather than forming signed schedules to the agreement.

Ask to review the current version before signing. If the material contains trade secrets, you can discuss signing a confidentiality agreement for the review. Do not settle for a verbal summary of rules that will later govern your business.

Draw up a document register covering:

• each document’s name, version number and date,
• which parts of the business it governs,
• whether it is binding or advisory,
• who has authority to approve changes,
• which document takes precedence if two provisions conflict.

The final point is particularly important. If the franchise agreement gives you a degree of flexibility but the manual prescribes a narrower way of working, that conflict needs to be resolved. Ask for a clear order of precedence between the agreement, its schedules and the manual.

Distinguish operational instructions from changes to contractual terms

A franchise network needs to be able to develop its working practices. New safety procedures or clearer customer service instructions are not the same as shifting key rights and obligations between the parties. Examine how far the franchisor’s right to make changes actually extends.

Look for wording such as “the manual in force from time to time”, or provisions allowing the franchisor to change the concept at its own discretion. These are not necessarily unreasonable in themselves, but they make it important to establish the limits of that right.

Ask the franchisor to explain how the following situations would be handled:

• A recommended working method becomes compulsory.
• Opening hours are extended across all outlets.
• Reporting becomes daily rather than monthly.
• A task previously handled centrally is transferred to local outlets.

In each case, ask whether the change can be made through the manual or requires a separate agreement. Also check whether you can propose an equivalent local solution.

Assess the implications for working time and responsibilities, not just direct costs. An additional check may create more administration and change how work is supervised. Ask for examples of previous updates to understand how the right to make changes is used in practice. Past practice is no guarantee of future decisions, however.

Understand your rights under Swedish law

Sweden has specific legislation in this area: the Act (2006:484) on Franchisors’ Duty to Provide Information. It requires franchisors to provide clear written information about the agreement’s implications and relevant circumstances in good time before the agreement is entered into.

This information must include the terms governing changes to the franchise agreement. If the agreement refers to a manual that the franchisor can amend, it is therefore important to have the amendment mechanism explained before signing. Ask which documents the right to make changes covers and what limits apply.

However, this disclosure legislation does not provide comprehensive protection against unfavourable terms. It does not, in itself, give you a general right to veto updates or to receive compensation when a procedure changes. Any such rights need to be assessed in light of the agreement and other applicable rules.

General contract law, including the Swedish Contracts Act, also matters. Unreasonable contractual terms may, in certain circumstances, be modified or set aside under section 36 of that Act, but this is no reliable substitute for clear terms from the outset. Have a lawyer with franchise expertise assess any broad unilateral right to make changes before you accept it.

Negotiate a workable change process

Aim to agree a written process that makes changes predictable without preventing necessary development. Distinguish between routine updates and urgent measures, for example where new legal requirements call for rapid adjustments.

Ask for the process to specify how changes will be communicated, when they take effect and how previous versions will be retained. A notification should show what has changed and exactly what you need to do. Simply placing a new file in a portal makes it difficult to keep track of your obligations.

Also discuss opportunities to provide feedback, request a transition period and apply for documented local exceptions. A franchisee council can give franchisees a voice within the network, but consultation is not the same as a right to approve or block a decision. Check what role the council actually has.

Practical takeaway: Do not sign based solely on the current manual. Also establish which rules can be changed, how changes will be communicated and what opportunities you have to influence their implementation.