Artificial intelligence: its impact on the franchise sector

Artificial intelligence is impacting our lives in many ways, including how franchisors and franchisees operate their businesses

Massive claims are being made for artificial intelligence (AI). It sounds like a complicated subject only of interest to big companies, but it matters for franchisors - even small and medium-sized enterprises - and franchisees.

Strategically implemented, AI has the potential to cut admin costs, increase business efficiency and improve customer service. All can make any business more competitive and its franchisees more successful - which in turn will attract more franchisees.

More UK franchises need to wake up to the potential of AI. In the meantime, prospective franchisees should ask franchises how they are planning to use it in their businesses.

Where could AI help franchisors and franchisees?

Adam Lovelock, director of franchise marketing company Coconut Creatives and a franchisee recruitment marketing expert, says there are numerous areas in which AI and associated technologies could be used to bring benefits to franchisors, franchisees and customers.

The advent of the internet has meant a big rise in casual requests for more information about individual franchises. Many enquiries are not from the kind of people who fit the franchise’s requirements, so they waste time and resources for the franchisor and the prospect.

AI could help solve that problem, Adam says. He adds: “AI is used by platforms such as Facebook to gather information about individual user’s preferences to predict what they are interested in and to send them targeted messages and advertisements. Franchise recruiters could do that too.”

Today people go online to research almost every decision, including searching for details of suitable franchises.

“By taking into account the information already gathered about a searcher, AI can suggest the kind of franchise that could suit them and accelerate the process of finding what they want and make the decision making process easier and faster,” Adam says.

Individual franchises could use information gathered about the prospect through their enquiry or application process to compare their characteristics with those of existing successful franchisees, creating a ‘decision engine’ to help augment the recruitment process.

Targeting suitable prospects this way is likely to be more scientific and successful in recruiting the ‘right’ franchisees than letting people nominate themselves based on the typical ‘who we look for’ descriptions on franchisee recruitment pages.

Obviously, neither franchisor nor franchisee will be relying solely on AI-powered automated matching for investment decision making and face-to-face discussions will still be essential before an investment is made. But targeted marketing rather than random selection would reduce the level of less than serious enquiries.

“The big franchise recruitment boards are behind on this, but AI could change all that,” Adam says.

Customer communication: rise of the AI chatbots

Enabling customers to talk to you 24/7 can give your business the edge and chatbots can help you achieve that.

Chatbots - the little boxes that pop up at the side of websites offering the chance to communicate by typing - may not always have a human on the other end of the line. Some are driven by software that can be trained by humans to ask and answer questions. This is machine learning, a form of AI that can be developed to answer a wide range of quite complex questions.

Henry Jinman is commercial director of EBI.AI, a UK lab that specialises in providing AI chatbots that use ‘natural language’.

He says: “Property franchises can install chatbots that allow people to book property viewings online using conversational AI. This is ‘supervised’ learning’, which requires human involvement to review conversations and make improvements to the bot.

“It provides a better customer experience, operates 24/7 and saves time and money for the franchisor and the franchisee network.”

Similar systems could be used in other sectors, Henry adds: “Chatbots can be trained by humans to recognise and respond to hundreds or even thousands of ways customers ask chatbots questions.

“Unsupervised learning, where the system uses its own experience to create answers to questions, is not available yet - but experiments are underway.”

What are franchises doing about introducing AI?

More than you might think. Some franchisors claim they are already using AI - or at least machine learning, which is considered to be a type of AI - and it’s not just big franchises that are using it.

Swimtime

Theo Millward, who bought the well established Swimtime swimming lessons franchise from the founders last year, is using his previous experience in designing bespoke IT systems to improve the brand’s booking system and target likely customers using AI.

“We have built a bespoke platform that allows customers to find lessons with vacancies that suit their child, local to them, and book and pay for them online,” he says. “In the past, customers have had to call local franchisees to find out if there are vacancies and to make bookings. It took about 15 minutes. Now clients can find the right lesson and book online in less than one minute.”

The system also saves time for franchisees, but it’s more sophisticated than it appears on the surface.

“The machine learning part of it searches through the available lessons in real time and dynamically adjusts its offering to suit each customer’s location and needs,” Theo says. “It presents them with a personalised set of choices and they can book and pay immediately.”

Theo is also using AI to more closely target Swimtime marketing: “We have created a series of six customer profiles based on a variety of factors, such as location and type of lessons sought. When we have a vacancy in a suitable class, the system automatically schedules Facebook ads to target customers who fit that profile. Once the class is full, the ads are automatically discontinued.”

Swimtime’s platform was built in-house at a cost of about £250,000, plus a lot of time input, and the company now employs four developers.

“Despite the cost, the return on investment is excellent and it makes the franchise a more attractive investment for potential franchisees,” Theo says.

He advises other franchisors: “Franchising as a whole needs to wise up to AI. You either get on to this or you’re gone.”

OSCAR Pet Foods

Richard Martin, managing director of OSCAR Pet Foods, whose franchisees deliver pre-ordered pet foods and accessories to customers’ doors, hopes to use AI to improve the health of customers’ dogs.

He says: “We have a database with over 30,000 records of previous customer orders, the breed of dog they have and its age. We have built a system that uses each customer’s records to anticipate when their next order is due and creates a list of customers for franchisees to call. It’s far more than the usual customer relationship management software.”

Building on this, OSCAR is creating a system that gives customers access to their data, so they can see online details of the quantities of food eaten by dogs of the same breed and age. In the future, OSCAR hopes to use dog pedometers to measure their activity levels too.

“The idea is to allow a customer to monitor the diet and activity levels of their dog and compare it to the norm online or with an app,” Richard says. “At present, 51 per cent of dogs are overweight, so this could help reduce that.”

OSCAR proves that AI is achievable for SMEs, Richard says: “We are a very small company and we are doing nothing highly technical - just using our database to generate new information. People think AI is complicated, so they don’t try to understand it, but it can be as simple as using your databases and chatbots.”

What is artificial intelligence?

Global consultancy organisation Accenture sums up artificial intelligence as: “A constellation of technologies - from machine learning to natural language processing - that allows machines to sense, comprehend, act and learn.”

It sounds very sci-fi, but in some forms you’re probably already familiar with it.

Lynnette Higgins, OSCAR pet foods franchisee

Lynette Higgins, an OSCAR Pet Foods franchisee based in Bridgnorth, Shropshire, admits: “I’m no techie, but I find our Ajax system easy to use. It’s good for customer service and means we can do business more easily and faster, so I don’t worry what kind of label it has. I don’t have to understand the ideas behind AI to use it and it’s just become part of my business life.”

Lynette, who has two dogs, enters the age, breed, condition and weight of her customers’ dogs into OSCAR’s central database using the Ajax system.

“All of us OSCAR franchisees are trained and qualified in pet nutrition, so it means that over time we can monitor the pet’s weight and health and help customers with advice about how to keep their dogs in top condition,” she says. “If we need any extra help, there’s a company vet we can call on.”

At present, Lynette gathers the information from customers by phone and text and inputs it into the database manually, but OSCAR is working on an app that will enable customers to interact with the database and gain advice for themselves.

“The app will make it faster for customers to get the information they need and will save time for me,” she says. “It will mean they can access the system any time, which is important because pets are part of the family and need care 24/7.”

Nevertheless, the app and existing live chat option on the OSCAR website will never replace the personal communication between franchisee and customer, according to Lynette.

“The app will provide a new way for customers to interact with OSCAR, but it will not suit every customer and will never completely replace the oneto- one phone chats I have with them,” she says.

“Our customers have varied and diverse lifestyles and we need to be able to interact with them 24/7 in as many ways as possible. If AI can help us achieve that, I’m happy to use it.”

Jane McCahill, Swimtime franchisee

“In the 13 years I have been a franchisee at Swimtime, the business has evolved a lot and our current technology has transformed our level of customer service, while reducing our admin,” Jane McCahill says.

“Customers no longer have to call us by phone to book swimming lessons for their children. We have targeted information available online, so that they can find out where and when lessons take place in their area and book online at any time - in the middle of the night if they want.

“It suits the customers because many of them are out at work during office hours, so now they can make lesson bookings at times to suit themselves. Bookings take two minutes and the system allows us to take customer payments in seconds.”

The system, which Jane describes as machine learning, a subset of AI, also benefits Jane and her colleagues in the office.

“We cover Gloucester, Bristol, Swindon, Cheltenham, Tewksbury and South Wales, so we generate lots of enquiries and bookings,” she says. “No longer having to deal with them by phone during office hours saves us huge amounts of time. You no longer return from a meeting to be greeted by dozens of voicemails that you have to follow up.”

Jane says the automated booking and payment system saves her business money too and gives staff more time to answer telephone queries from customers seeking more detailed information than the system currently supplies.

“I also have more time for business strategy,” she says. “We’re excited to have this system - it feels like we are on a new journey.”

The author

Linda Whitney writes about franchising for the Daily Mail, What Franchise and many other publications