This week I am continuing to provide some takeaways from a few of the many sessions I attended at the International Franchise Association’s Annual Convention in Las Vegas earlier this month. Google Head of Data Measurement and Analytics for WPP Agencies, Nadia Carta (“Carta”), led a super session on how franchisors and franchisees can easily integrate artificial intelligence and use it to optimize performance at both the unit level and systemwide. We often hear about “AI” and how it is a game-changer for franchise systems, but this session drilled down exactly how franchise systems are using it to improve operations. Here are just a few of the examples provided during the session:
- Saving Money. UPS recently used AI save 10 million gallons of fuel and $400 million a year with efficient routing by suggesting new eco-friendly routes.
- Assisting with Marketing Campaigns. AI can assist in creating new marketing, advertising, and promotional campaigns. However, Carta emphasized the importance of drafting high-quality prompts so you can get the best ROI from the responses. Carta recommends using the “ABOSS” method of including an Actor, Background, Objective, Stipulations and Style. For example, instead of simply asking AI to create a brief for promoting a new product line, you would instead ask it to (1) act as the franchisor (actor), (2) who is looking to open new locations (background), (3) generate a process to select new franchisees (objective), (4) to do something innovative and creative to drive brand preference (stipulations), and (5) format the response with headers and bullet points (style). Get granular and detailed.
- Improving Sales. AI can analyze photographs of a store layout and make suggestions on rearranging the displays to encourage impulse purchases. It can also take photographs of desirable locations and suggest how you can incorporate certain elements of a space to foster new ideas and refresh your concept.
- Providing Competitive Intelligence. Many franchise systems use AI to generate lists of competitors. AI prompts can request information such as pricing, target audience, market share and strengths and even have it presented in a tabular format for easy analysis and review.
AI continues to be a top focus of franchise systems as they continue evaluating how to effectively implement AI initiatives in a way that is effective but also compliant with evolving laws, regulations, and best practices for risk mitigation. For example, by the end of this year, Wendy’s quick service burger brand plans to expand the use of its voice-activated drive-thru ordering from 100 to 500 of its locations. Wendy’s is finding the AI ordering systems result in higher sales and improved labor efficiency.
As with any new technology, however, there are risks so collaboration between the business and legal teams is key. There is currently no federal law governing the use of artificial intelligence, but some states have enacted statutes to ensure businesses do not engage in unlawful discrimination when using AI. Other states have enacted laws regulating the use of deepfakes, AI in political advertisements, and requirements to watermark AI created content. Existing privacy laws and certain intellectual property laws also impact the use of AI. Franchise lawyers should stay up to date on the limitations of AI, including any developments in laws restricting use in certain scenarios.