How Will Artificial Intelligence Help Franchisors?
Franchising is an accelerated growth strategy that has been successfully deployed time-and-time again. At its core, successfully executing this strategy is all about harnessing the power of know-how.
The rise of Artificial Intelligence (“AI”) provides a revolutionary tool for franchisors and franchisees to utilize and leverage vast amounts of knowledge and expertise.
While all business owners can benefit from leveraging technology, they don’t always have the means or ability to execute. Franchising and AI go hand-in-hand.
Franchisors are uniquely positioned to leverage machine learning technology to obtain a competitive advantage and increase their own bottom line while maximizing unit level performance for their franchisees.
Utilizing the right AI tools can change how franchisees and franchisors make key decisions and operate their business from launch to maturity. Some of the most important areas where AI can take your franchise to the next level include: site selection, training and support, and system performance.
Franchising and AI: Start with Territory and Site Selection
Location is everything. Mapping territories and selecting sites is a critical factor when it comes to creating a successful franchise system.
Many factors should be taken into account when building territories and approving sites, and there is no one-size-fits-all approach. Franchisors and franchisees need to identify their customers and know how to reach them most efficiently and effectively.
Franchisors have used mapping softwares for decades, which have been augmented over the years by data sets enabling users to analyze population trends, demographics, and economic data across different regions.
Raw data is often available from the U.S. Census Bureau, other government entities, and from private sources. This raw data can help franchisors and franchisees make informed decisions; however, users must have the ability to analyze and process the information.
Historically, reviewing data involved careful deliberation and manual review of maps with data overlaid, all subject to limitations and human error. Now, applications can couple mapping tools with the power, capability, and speed of artificial intelligence.
These AI augmented tools enable franchisors to take raw data, apply user-selected metrics, and almost instantly identify ideal locations in a selected location or across the entire United States.
Simply put, AI has the power to help companies know where to grow.
Franchising and AI: Training and Support
Everyone absorbs information and learns differently. In the franchise context, uniformity is essential and franchisees rely on franchisors for training and support.
With machine learning technology, an AI tool can be trained on your own data and in a closed source environment. Leveraging this technology can help franchisors securely generate training and support resources for their franchisees. For example, AI tools are widely available for creating training courses, video, infographics, and other materials.
While not all tools are created equal, AI tools generally excel at taking data and expressing the included information in multiple formats. This allows franchisors to more easily present information in a manner their franchisees are most likely to understand. These tools can help emerging franchisors build a framework to work from and help seasoned franchisors continue to develop their resources.
Additionally, the power of artificial intelligence can transform the chatbot experience and should be considered as another tool in every franchisor’s arsenol. AI chatbots have the ability to carry on human-like conversation using natural language understanding or natural language processing and machine learning.
Franchisors should consider developing an AI chatbot trained on their operations manual, policies and procedures, and the instruction manual for every approved product utilized by franchisees. Leveraging the power of a closed circuit AI chatbot can serve as a cost-effective solution to deliver quick support to franchisees on many front line issues.
Franchising and AI: System Performance
Monitoring system performance allows franchisors to proactively identify and address potential issues before they significantly impact the system. This provides a better customer experience, optimizes resources, and improves brand image.
Artificial intelligence is another tool to add to the toolkit.
While there are many applications, one of the most impressive is combining image recognition with automated analysis to deliver real time and dynamic sales data analysis. Tools like this are used to help suppliers and retailers of various types, and they would serve franchisors well.
Imagine you are a franchisor providing franchisees with planograms and inventory metrics. With the power of the right AI tool, you can easily monitor items like range compliance, planogram compliance, pricing, and sell through rate. You can also view performance, compare outlet performance, see what’s different, and receive automated root cause analysis. Simply take a photograph and get results in a few minutes.
The technology is impressive, and it’s only getting better. For many applications, the possibilities are near limitless if you have the right AI tool trained on your product or system dataset.
Using AI tools like this can provide many benefits and result in systemwide improvements. How will you leverage AI to take your franchise system to the next level?
Meet the Author
Derek A. Colvin
Derek is a graduate of Penn State Law and Old Dominion University. He started his legal career in 2009 as a prosecuting attorney before entering private practice.
Derek currently serves business clients as a partner at Waldrop & Colvin, the law department for your business. His practice focuses on SMB client legal services and franchise law.
Derek is laser-focused on delivering efficient and effective solutions for business legal needs. As a seasoned litigator and experienced business attorney set on thinking critically and communicating effectively, Derek is well-suited to advise and protect your business.
Derek often serves as outside general counsel providing transactional support for business owners. He represents SMB independent owners, as well as franchisors, and franchisees as a franchise attorney.
Primary Practice Areas: Franchising | Franchise Law (Franchisor Legal Support & Franchisee Legal Support), SMB Mergers & Acquisitions, Entity Formation and Governance, Lease Negotiations, Trademark Registration, Dispute Resolution and Civil Litigation & Outside General Counsel Support
