Conflicts Between Franchise Agreements and Operating Manuals: A Canadian Perspective
By Ben Hanuka Principal, Law Works P.C. | December 06, 2015
The vast majority of franchise systems, including hotel systems, depend on operating standards, procedures and policies. These requirements are typically contained in a franchise operating manual that is separate from a franchise agreement.
Particularly in established hotel franchise systems, operating manuals tend to be comprehensive and often complex documents. They may contain extensive requirements with respect to virtually every aspect of the operation of the hotel, from the brand and quality assurance, to the use of technology.
These provisions are typically contained in a manual, rather than in the contract. By their nature, operating standards, procedures and policies are subject to ongoing modification and amendments as the franchise system evolves. In addition, most of these provisions are purely operational, rather than legal, and do not generally relate to the contractual intent of the parties.
Most standard franchise agreements in circulation, including hotel franchise agreements, contain extensive provisions incorporating by reference the requirements of the operating manual, as well as the ongoing revisions in the manual which the franchisor may make from time to time.
The franchise agreement typically incorporates the operating manual by reference through provisions relating to the definition of terms such as the 'system', 'operating standards', 'products' or 'services', and many other related definitions and provisions.