Generalized operads, also called generalized multicategories and T-monoids,
are defined as monads within a Kleisli bicategory. With or without emphasizing
their monoidal nature, generalized operads have been considered by numerous
authors in different contexts, with examples including symmetric
multicategories, topological spaces, globular operads and Lawvere theories. In
this paper we study functoriality of the Kleisli construction, and
correspondingly that of generalized operads. Motivated by this problem we
develop a lax version of the formal theory of monads, and study its connection
to bicategorical structures.