How is artificial intelligence going to impact franchising? | Global Franchise
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Monday 25th September, 2023

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How is artificial intelligence going to impact franchising?


How is artificial intelligence going to impact franchising?

Artificial intelligence (AI) is not the destroyer of worlds some may have feared – it’s an evolved business tool that can drive things forward faster and smarter

Artificial intelligence (AI) is not the destroyer of worlds some may have feared – it’s an evolved business tool that can drive things forward faster and smarter

“There’s going to be ‘AI haves’ and ‘AI have-nots’, and if you are an ‘AI have-not’, then you might as well just rip out all the computers in your office and throw away your phones because that’s how impactful it will be,” said Shark Tank investor, Mark Cuban, at the world’s most influential consumer technology conference, CES 2020, in Las Vegas this year.

This isn’t just talk. The serial entrepreneur and billionaire is putting his money where his mouth is, betting big on artificial intelligence (AI) and investing in businesses that leverage it to innovate and create meaningful impact. For instance, he has invested in health tech startups such as Eon Health and Genetesis, both of which utilize AI technology.

So if you don’t want to risk becoming “a dinosaur very quickly”, here’s why artificial intelligence should be on your radar even if you are a small- or medium-sized franchisor. “Franchising is at an inflection point when it comes to adopting the latest advancements in technology,” says Gustavo (Gus) Guimarães, CEO of Qubo Technologies and Systems.

“The separation between early and late adopters of AI is starting to show up in quarterly results across various industries – both inside and outside of franchising – as companies that embrace big data grow faster and reap higher profits, while companies without a plan suffer, with some going to the wayside.”

Are robots about to take over?

Not quite. Co-founder and CEO of HubKonnect, and chairman of QSR AI Research Lab, Michael Koch explains: “People thought AI was like the Terminator, they thought it was going to be a talking robot and over the course of me going out and evangelizing over how HubKonnet uses AI to make smarter data-driven decisions, our successes and clients, businesses are now able to see that it’s really just a very evolved business tool that could drive things forward.”

When strategically implemented, AI has the potential to remove bias in the recruitment process, improve customer service, operations, and communications, and help better position a franchise as a global brand. It represents a chance to pull ahead of late adopters or competitors that are doing nothing at all while keeping pace with those that have already figured it out.

“Data holds the key to faster growth, higher profits, and more efficient operations, as well as franchise owners and employees that make more informed choices,” Gus best puts it.

To be, or not to be

It is great to be at the forefront of technological innovation but implementing AI for AI’s sake without a real-world application or doing so because competitors are without having the expertise to operate it or the data required to drive it can prove risky.

“The real question is ‘am I prepared to be a data-driven business?’,” asks Michael. “The AI brain only knows what to do based on the business’ processes, thus, understanding the business is key for the implementation of an AI platform. You can have all the data in the world but if you don’t use it, it doesn’t help your business. Take the small necessary steps to where you evolve into a data-driven organization to reap the benefits of AI.”

Carl Mazzanti, co-founder and president of eMazzanti Technologies, points out a more straightforward reason: “As when investing in any technology, what are the expected costs, reliability, and maintenance versus the projected return on the investment? It’s not magic. It’s business.”

Ben Michaelis, managing director of ThinkEngine, highlights the ‘human versus machine’ trap: “Will investment in AI technology do the role better than a human?”

“There should never be a scenario where a business views AI as an eventual replacement for workers or a cost-saving measure in that regard. It is a business tool, not a threat to jobs, or humanity,” emphasizes Gus. “One common misperception is built around the idea that AI will reduce the need for jobs and people. AI will create many more jobs than it eliminates.”

Another major concern when it comes to AI technology is privacy and the use of data. Accenture Interactive’s 2019 Consumer Pulse Survey found that a majority of consumers (69 per cent) would not do business with a brand if their data usage was invasive. Thus, it is important that responsible business practices be part of the data privacy issue. Gus emphasizes the need to program the AI to only access certain data. “Remember that the AI will only do what you program it to do. In that regard, it may be wise to proceed with caution surrounding your protected data that deals with restricted personnel or other legally sensitive materials, and ensure you understand exactly what your AI can and cannot access before you proceed,” he continues.

“There should never be a scenario where a business views AI as an eventual replacement for workers or a cost-saving measure in that regard”

However, there is a silver lining when it comes to the use of AI and data privacy. As it is constantly learning, the expression: ‘Fool me once shame on you, fool me twice shame on me’ doesn’t apply to an AI-powered system.

“The great thing about AI is that it gets smarter, it learns,” says Michael. “We are able to determine and understand behavior and improve through experience. The power of AI is improving through experience, through exposure. It can also be set to where it’s evolving and learning, which is a powerful message.”

The Magic 8 Ball solution

What if you could look into the future of your business? With AI, it’s possible through predictive analytics. Your business can make better decisions by evaluating profit and loss statements, revenue projections, the potential impact of various spending decisions and other key metrics.

And global franchise brands are catching on. Qubo recently signed a pilot agreement with homecare franchise giant Neighborly to deploy its Qbot artificial intelligence platform to assist the brand’s network of franchisees, helping to analyze data and business KPIs, drive performance, increase profitability, streamline operations and improve the overall customer experience.

“Looking to the future, staying ahead of competitors will likely require more. We believe employing AI will be key to gaining or even maintaining a competitive advantage in an increasingly informed and sophisticated marketplace,” says Mike Bidwell, president and CEO of Neighborly. “We are enthusiastically pursuing predictive analytics as a tool to optimize our opportunities to enhance our franchisees’ growth and success.”

Although in its early stages of the partnership, the Qbot AI platform is gathering data. Gus says: “[It is] learning more every minute of each day. Some of the AI applications that we are putting into place include the areas of franchise sales and development, marketing, franchisee sales efficiency, predictive analytics for franchisees, and demand elasticity (the impact on revenue from a change in price).

“Qbot is also providing advanced data comparisons, fraud detection, and forecast analysis, which allows franchisees to run through a series of “what if ” questions based on forecast data to predict future business trends.”

AI at the center of marketing, sales and customer service

Sales and marketing teams are looking to AI not just to automate routine processes, but are using it to empower people to work faster and smarter. The International Data Corporation states that spending on AI systems is expected to reach nearly $80bn by 2022, up from an estimated $35bn in 2019.

For instance, ThinkEngine utilizes an AI platform that can process a piece of written content like a blog article or website page and then produce a 30- to 60-second video in under 10 seconds. “This time, resource and cost-saving to clients is making a drastic difference to their social media engagement and most importantly, their revenue,” says Ben Michaelis, managing director of ThinkEngine.

A Demand Metric survey found that 80 per cent of marketers believe personalized content is more effective. This means that individual franchise owners can use AI to create local marketing strategies by tapping into more system-wide data that is available across their franchise network. For instance, HubKonnect’s software factors in millions of data points to create an in-depth trading area analysis for each individual location. After specifying the location, business objectives, and time period, HubKonnect combines in-depth local store marketing with AI to analyze trading area opportunities and instantly generates a plan tailored to drive sales for that particular franchise.

“Franchising is at an inflection point when it comes to adopting the latest advancements in technology”

Michael takes a real-life example of a large QRS that HubKonnect A/B tested: one location running on its AI platform and the other not. He explains: “What we found is that over the 12-month period, the store that ran on HubKonnect increased its sales by an average of five per cent, based on transactions, versus the one that did not. This shows that in the same environment, having more pointed marketing tactics can help a store thrive.”

Lead qualification with AIfocused automation or chatbots is another area. A key focus is through custom workflow integrations – this enables firms to better filter lead quality based on any criteria. This clever processing allows sales and marketing teams to work better together to get the appropriate lead quality. In addition, it supports sales teams to follow up on leads which are considered ‘hot’ immediately to give a better opportunity to close a sale.

A key area that franchise brands have benefited from AI already is customer service. Apart from using conversational virtual agents to retain a franchise’s identity and keep things on message, they can also be used to analyze data from customer conversations to understand what works and what doesn’t.

Being in the business since the early 2000s, MINDBODY has successfully leveraged AI in customer service in the fitness and wellness sector, working with Orangetheory Fitness, F45, CorePower Yoga, and GymGuyz to name a few. “Having perhaps the richest data set in the fitness industry, relating to consumer bookings, we are able to provide personalized recommendations to the millions of active consumers on the MINDBODY app,” says Sunil Rajasekar, CTO of MINDBODY. “Recommendations come in many forms, such as types of fitness classes and routines, and even recommending several fitness classes during your ideal workout times.”

AI-empowered recruitment

In many franchise businesses, where HR teams tend to be small or exist without clearly defined areas of responsibility, using AI can greatly impact the bottom line in more ways than one, not to mention relieve the strain put on the team as the business grows. This pressure can lead to snap decision-making, which can have long-lasting detrimental effects.

Daniel Pitchford, co-founder of AI Business, says: “AI can help by analyzing time-consuming tasks like reviewing CVs and cover letters – using automated systems to check documents at a much faster rate than a small team.”

AI technologies like KeenCorp and Humanyze can be especially useful for global franchisors where franchisees and the head office are geographically spread out. This type of software is a “gamechanger” when it comes to keeping up morale. “They assess language and communication within businesses and analyze what’s affecting performance. They can pinpoint where enthusiasm may slowly be seeping away and give HR teams time to act before things may escalate,” explains Daniel.

Dr Alan Bourne, a chartered psychologist and founder of AI-based assessment company Sova, highlights a long-term benefit of using AI in the recruitment process. He says: “By using an end-to-end assessment system, AI can offer much more long term cost benefits in the form of identifying, tracking and, if necessary, amending the attributes that make for a ‘star hire’, which will ultimately bring about the biggest cost benefits by boosting the success and future-proofing of the business. This is particularly key to the franchise sector, as it enables data and insight to be shared and integrated with the long-term strategy of the business.”

Another challenge that AI can mitigate in the recruitment process is bias, provided that the system has been safeguarded from the algorithm designer’s own bias and the training data used.

As workforce diversity is a major driver of business success, it is important that organizations ensure their recruitment processes are fair, data-led and transparent to attract the best talent. AI can automatically fine-tune algorithms to ensure discrimination is reduced and fairness maximized.

“In order to protect against bias in AI recruitment,” says Dr Alan, “it is essential that a real person is placed front and center of the process so that humanity, laws, regulations and ethics are considered with as much importance as technological capabilities. The opportunities to do this are vast, whether it be using an internal human resource, an advisory board or using AI to audit other forms of AI being applied to the business.”

So, the question is not whether you should use AI, as it is already an integral part of many facets of business today, including with applications that use Microsoft, Google and other services. The real question is, where can you use a targeted AI platform to improve operations and get the most out of your data?


• AI is not magic; be prepared to put in the initial work required to get the system up and running

• Familiarize yourself and your team with AI technology

• Identify places where you are already using AI

• Work with professionals in the AI field to help widen your understanding

• Research the areas where AI would improve your franchise operation

• Work across the relevant departments of your business to ensure a smooth implementation

• Communicate regularly with your franchisor or franchisees during the implementation phase

• Set up a system to regularly monitor the data and pull insights from the AI platform

• Think of it as a business assistant; the more data you give to the AI platform, the better the results


Front desk staff working in the beauty and spa industry often wear multiple hats, causing them to drift away from the phone. According to MINDBODY data, roughly 25 per cent of all calls are missed, and half of those are in the middle of the day. In addition, the preferred scheduling method to book appointments or treatments is through the phone. MINDBODY’s automated text-based AI system, Bowtie, reaches out to missed callers, answers their questions, books their appointments and even collects billing information.


Named Frank, Deliveroo uses machine learning to scope out the most efficient way of distributing orders, using predictive analytics based on the location of restaurants, riders, and customers. The food delivery giant claims Frank has reduced delivery times in the U.K. by 20 per cent.


Hilton Worldwide and IBM announced a pilot collaboration on an AI concierge called Connie. Connie is powered by IBM’s Watson AI and uses the Way Blazer travel database to interact with guests during their check-in, assist with visitor requests, as well as personalize a guest’s experience by helping them plan their trip.

– Words by Amanda Peters

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