Artificial Intelligence is everywhere these days, for better or worse. Many people fear the end is near, but others embrace AI and understand that it still takes people to make it all work. There was a proliferation of AI advancements in 2023 that have touched almost every aspect of our lives, and it won't be going away.
Franchising is no different. The industry has been highly competitive for a long time. Recently, some franchisors have turned to AI to give them an edge in many areas of operation, including recruitment, data analysis, marketing, and even training.
A LinkedIn article states, "Despite initial challenges, the trend toward AI in franchising is on the rise, with companies dedicated to refining these systems for improved accuracy and enhanced customer experience." The same article refers to AI as a
game changer capable of bringing transformative changes to the industry across the board.
Let's examine how AI can benefit franchisors and franchisees to help build a better franchise experience for everybody.
Recruitment
People are at the heart of every franchise. Some franchisors are looking to AI to help find the right people to operate their franchises by using AI algorithms to analyze various data types to more efficiently identify suitable candidates based on specific criteria. This allows franchisors to identify and implement those candidates who best fit the franchise's needs.
The benefit to the franchisor is better franchise performance and a higher success rate because it can decrease the turnover rate of franchisees. It isn't one-sided. Using AI in recruitment offers value to franchisors and franchisees, which makes a stronger brand. It also streamlines and automates the process, decreasing the time it takes to start a new franchisee. This saves not only time but money as well.
The consistency of the franchise can also improve overall with the consistency of the individual franchise owners, which benefits the franchise's reputation and helps protect the integrity of the business. Franchisees reap the benefits of an improved franchise reputation, so it's a win/win situation for all parties involved.
Data Analysis
Franchisors can use AI to help with the heavy lifting of data analysis and insights, including customer needs and preferences, market viability, market trends, competitor activities, and customer feedback to provide insights for strategic decision-making.
For instance, AI can analyze customer data to help franchisors better understand consumer preferences, behaviors, and trends. The information can then be used to develop marketing strategies and build better experiences for the customer. AI will eventually reach a level of accuracy that will change how franchises operate on every level.
Supply Chain and Inventory Management
Using AI in franchising goes beyond data analysis. Supply chain optimization and inventory management can also be fine-tuned. AI can help predict demand, find ways to improve delivery routes, and reduce other costs associated with logistics. This more efficient supply chain saves money, optimizes how products are delivered to individual units, and provides more flexibility in meeting demand with supply.
AI can manage inventory by looking at historical data, current demand, and other factors, giving franchisors the insight necessary to minimize excess inventory and stockouts. This will not only help cut costs but also significantly reduce waste.
Finding Balance and Meeting Challenges
Other areas where AI will be tested include training and productivity, where AI can strengthen the onboarding process and assist in ongoing franchise training. AI can also be used to build optimal schedules to promote better productivity.
AI will be used (and already is to some extent) to monitor social media outlets for mention of the franchise and then provide appropriate human-like responses instantaneously, ensuring online comments and queries are addressed "personally."
AI can help franchises stay compliant with regulations and manage, minimize, or even eliminate risks by identifying potential legal and financial issues before they become a problem.
This sounds promising, but there will be challenges to overcome before AI can be fully trusted to take the wheel. AI feeds off human input, which dictates what it spits out at us, so franchisors have to be confident their AI system is accurate and unbiased.
The balance between human interaction and AI technology is also an integral part of effectively using AI in technology, especially in the recruitment process. Here there is a risk that potential franchisees could resent a franchisor that relies too heavily on AI.
Franchisors will have to determine their needs and decide when, and how much, AI interaction is right for their franchise.
According to Entrepreneur,
cost is another important factor to consider. The magazine states, "AI can be expensive, especially if rolled out in a large franchise system: it's important to ensure associated programs streamline processes, not simply add layers of data that aren't useful in the long run."
The number of franchises using AI technology is rising, with more franchises than ever taking advantage of the quickly growing technology in one way or another. AI will be a big part of the future of the franchise industry, and the time to explore it is now.
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