Blog Posts
May 9, 2024

The Future of Franchising: How AI Will Help Businesses Make Better Decisions

The Future of Franchising: How AI Will Help Businesses Make Better Decisions

Artificial Intelligence and Machine Learning are two of the most talked about, and yet least understood technologies in business today. It seems like every other day a new article or white paper is touting the amazing things these technologies can do for businesses. But what does that mean for you and your franchise? In this blog post, we'll explore how AI and ML are being used by businesses today, and how you can apply these strategies to your franchise.

History of AI & Machine Learning

John McCarthy, Courtesy of

The term "Artificial Intelligence" was first coined in 1956, by computer scientist John McCarthy. AI is the process of programming a computer to make decisions for itself. This can be done through several methods, including rule-based systems, decision trees, genetic algorithms, artificial neural networks, and fuzzy logic systems.

Machine Learning is a subset of AI that deals with the ability of computers to learn from data, without being explicitly programmed. This means that instead of writing code to tell the computer what to do, you can feed it data and it will learn from that data how to perform a task.

There are two main types of machine learning: supervised and unsupervised. Supervised learning is where the computer is given a set of training data, and it is then able to learn and generalize from that data. Unsupervised learning is where the computer is given data but not told what to do with it; it will have to learn from the data itself what patterns exist and how to group the data.

How Do Businesses Utilize AI & ML?

1. Automating tasks: By automating repetitive tasks, businesses can free up employees to work on more strategic tasks. Yelp turned to machine learning to automate their user-submitted photo classifications by subject, a task that would normally be extremely mundane and repetitive, requiring an army of button-pushers.1

2. Improving customer service: AI can be used to provide better customer service by automating tasks such as answering Frequently Asked Questions, and by providing employees with the data they need to provide better service. Facebook has famously implemented an AI chatbot army that is virtually indistinguishable from chatting with a live human.1

3. Enhancing products and services: AI can be used to enhance products and services by personalizing them for each customer, and by adding new features and functionality. Think of the almost-frightening increase in the capabilities of voice recognition software over the last 10 years.

4. Making better decisions: AI can help businesses make better decisions by providing decision support tools such as predictive analytics. Predictive analytics uses historical data to predict the likelihood of a future outcome. This helps provide businesses with real-time answers to problems, both new and old. Some examples of this could be customer sentiment analysis, thus determining a customer's churn risk. Another example could be a method to predict the risk/reward ratio of a new sales or marketing strategy based on past initiatives.

Franchise Opportunities

Many businesses are indeed beginning to utilize AI and Machine Learning with great success. Franchises are in a unique position to take advantage of AI and ML because of the way they are structured. A franchise is a network of businesses that operate under the same brand, using the same business model. This repetitive structure allows machine learning algorithms to aggregate data quickly across all locations, and more quickly develop insights and observe correlations.

For example, if a franchise is using AI to improve its customer service, the machine learning algorithms can analyze franchises that have high customer retention, compare those to franchise locations that suffer poor customer retention, and draw correlations to the key differences that separate the high-performing locations from the low-performing ones. This allows franchises to more easily learn what drives success for their business.

As AI and ML are still in their early stages, most franchises have not yet adopted a strategy that incorporates these new technologies, but the opportunities for businesses are already evident. Transitiv has already helped solve half of the problem of first consolidating and understanding a franchise's data, and is in a great position to move towards incorporating Machine Learning into their FIT product to produce predictive recommendations across the business. Think of being able to understand not only which franchisees are performing best, but exactly how they can improve their performance to drive revenue.

As these technologies mature, we will only see more and more applications for them in businesses, including franchises.

What do you think of the future of AI and ML in business? Let us know your thoughts in the comments below!


  1. Shewan, L. (2021, February 12). How artificial intelligence is being used in business today. Forbes. Retrieved March 01, 2021, from // -business -today

Christian Pillat

Christian Pillat

Franchisee, multi-time founder with deep experience & companies in Marketing, E-Commerce, and Franchise verticals.