Jan 21, 2022 - Blog, Franchise Articles by |

The Franchise Times recently published an article discussing Checkers’ rollout of artificial intelligence (AI) voice ordering at its 267 company-owned locations. According to the article, Checkers franchisees “are clamoring for the tool,” and the article suggests that expanding to franchised locations will be the next step after the rollout at the corporate level. So, does this mean that 2022 will be the year of AI in franchising? Franchise attorney and 30-year industry veteran Jeffrey M. Goldstein shares his thoughts.

AI is Coming to the World of Franchising

There is no question that AI is coming to the world of franchising. Tech companies are using AI to automate and improve all types of business processes, from inventory management to point-of-sale interactions with customers. These companies are marketing their technologies to franchisors, and franchisors—seeking to stay relevant and cater to customer demand—are going to adopt them.

It is likely that many franchisees will start seeing AI introduced into their systems in 2022. It is happening already; and, while AI has been a buzzword in the business world for several years now, some of the capabilities forecast in the past are now coming to fruition. Some franchisors will seek to be early adopters, and this means that their franchisees will be early adopters as well—whether they want to be or not.

Franchisors Can Compel Their Franchisees to Adopt AI

With this in mind, it is important for franchisees to understand that their franchisors will almost certainly be able to compel them to adopt AI technologies. This is true even if adopting a technology (i) is expensive, and (ii) represents a major shift in the way they do business.

According to the Franchise Times, Checkers’ AI voice ordering system requires the installation of new custom hardware, eliminates employment positions, and requires at least one employee to monitor the AI system’s interactions with customers in real-time. Franchise agreements almost universally require franchisees to adopt updates at their own expense, and franchisees must consistently comply with their franchisor’s Operations Manual, “as updated from time to time.”

Inevitably, there will be problems. Hardware failures, software bugs, hackers seeking to steal customers’ credit card information, and dissatisfied customers who want to talk to a real person will all pose risks for franchisees who are forced to adopt AI technologies. While franchisors (or, more likely, their designated AI technology vendors) may ultimately bear some legal responsibility if something goes really wrong, this will do little to provide immediate relief to franchisees who see their sales decline.

In short, AI is coming to franchising, and franchisees need to be ready. Unfortunately, as a practical matter, there is little they can do to prepare in advance.

Contact National Franchise Attorney Jeffrey M. Goldstein

Jeffrey M. Goldstein is a national franchise attorney who represents prospective and current franchisees. If you have questions about your legal rights or obligations as a franchisee, you can call 202-293-3947 or contact us online to schedule a confidential consultation.

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