Artificial Intelligence and Franchising cover image

Artificial Intelligence and Franchising


Every ten years a new technology emerges alongside a group of strong advocates who boldly claim that it is going to change the world and radically shift the way we do business. However, the hype often leads to disappointment when adopting or scaling this new tech is revealed to be too challenging.

Artificial Intelligence (AI) is one of the most talked about buzzwords in the business world today. 

Many would link this to the release of ChatGPT in November 2022. The generative AI captivated and unsettled the general public due to its uncanny ability to create detailed written answers on essentially any topic, extremely quickly.

While the direct commercial applications of a generative AI like ChatGPT may not be immediately apparent for franchise systems – there is a growing awareness within the franchising community that companies who successfully incorporate complex analytics and data-driven intelligence into their business have an advantage over competitors which do not invest in these capabilities. 

AI represents an opportunity for franchise systems to streamline operations, improve their customer experience, and drive growth. It can also help franchisors and franchisees make better informed decisions. 

Some areas where AI and machine learning can help franchise systems include:

  •  predictive analytics

  •  more efficient operations 

  •  increased marketing effectiveness

One franchise which is notable for embarking on a significant digital modernisation journey to improve their internal processes and systems is Bakers Delight.

The company moved in 2021 to adopt an AI-driven platform which would enable data to be captured and analysed more efficiently. 

Through predictive analytics, Bakers Delight can more readily identify the likelihood of future outcomes based on present and historical data – thereby enabling them to make more informed decisions.

Furthermore, with greater access to easy-to-understand data on the local level, franchisees can better manage their inventory, or gain insights into customer behaviour. 

Another Australian company which is leveraging AI is Step One, a direct-to-consumer online men's underwear retailer. They have been using generative AI to turbocharge their marketing. Specifically, they have regularly used ChatGPT to develop dozens of iterations of copy for social media advertisements – with analytics providing real time feedback on the best performing version.

The benefits of this marketing approach to a franchise system are clear. 

Through these examples we can see how AI can be leveraged to improve commercial outcomes and reduce costs, however many businesses wishing to embrace this new technology are confronted with a deceptively simple question – ‘where do we start?’

First, your business needs to evaluate its current opportunities and problems. Once these are clearly understood, decision-makers must determine if AI can aid in problem solving or in seizing opportunities. AI should be used to support your business strategy, not be your business strategy.

Second, internal stakeholders must be consulted so they can join your digital transformation journey. Long-term success with AI is driven by people, not technology. 

Creating an organisational culture that celebrates failure as learning, promotes the acquisition of new skills, and fosters collaboration is essential. These will help create a mindset which views the embrace of new technology, such as AI, as an opportunity and not a hindrance. 

Bringing franchisees on this change journey is critical. According to the Franchise Relationships Institute, the average tenure of a franchisee is roughly six years – while the average tenure of franchisor staff is only around three and a half years. As a result of this, franchisees can sometimes be wary of new initiatives from their franchisor. 

This business tension must be navigated successfully if the full benefits of adopting AI are to be realised in your franchise network. 

Once a decision to leverage AI has been made and stakeholders have bought in to the new direction, your business moves to the third step – implementation.

True value does not come from just using a new technology. It comes from using new technology to reimagine and improve existing processes. Using new capabilities granted by AI, your business should seek to solve existing problems or to seize new opportunities. 

Simply creating an AI-enabled twin of your existing processes will not drive significantly improved outcomes. 

As the peak body for the $172 billion franchise business segment, which employs more than 565,000 people, the Franchise Council of Australia seeks to represent not only franchised small businesses, but successful businesses.

A key part of this is ensuring that franchise systems are equipped with knowledge and skills that help ensure they are well positioned for the long-haul.

AI technology is here to stay and franchise systems should actively consider leveraging this increasingly invaluable business tool.

The Franchise Council of Australia is the peak industry body for the $172 billion Australian franchise sector. We represent franchisors, franchisees, business advisers and small-business owners who collectively employ more than 565,000 Australians.

For more information visit Franchise Council of Australia website