AI and the Next Decade of Franchising (2026–2036)

AI is not a “tech trend” anymore. It is a structural change to how work gets done. And franchising, as an industry, is unusually exposed because so much of the value proposition has historically been: repeatable process + standardized labor + centralized support.

Generative AI’s biggest economic value is expected to concentrate in customer operations, marketing and sales, software engineering, and R&D. Franchising lives in the first two categories.

That creates an uncomfortable but necessary question:

If the franchisor’s “support” and the franchisee’s “operations” become increasingly automated, what exactly are franchisees paying for, and what exactly is being promised?

This Reality Report lays out what we can reasonably expect between now and 2036, and where the legal/compliance pressure points are likely to show up first.

The big picture: AI will not “kill franchising,” but it will expose it

In my opinion, AI will separate franchising into two broad camps:

Camp A: Brands with real, defensible value

They have at least one of the following:

• true brand equity consumers actively seek out

• strong unit economics that still work after royalties, ad funds, and fees

• operational excellence that improves outcomes for franchisees

• proprietary advantage (supply chain, IP, data, systems) that is not easily replicated

• leadership that stays aligned with franchisee success

Camp B: Brands that were always mostly a packaged playbook

They rely on:

• “support” that is vague, inconsistent, or not measurable

• heavy salesmanship

• a business model where the franchisor wins even if the franchisee struggles

• operational tasks that AI now performs cheaply and instantly

AI will not treat these camps equally. It will widen the gap.

What AI will change first in franchising

Franchise “support” gets automated fast (and franchisees will notice)

Expect rapid adoption of:

• AI customer response and call handling

• automated scheduling and dispatch

• AI-generated local marketing and ads

• AI training modules and knowledge bases

• automated QA and brand compliance monitoring

• predictive analytics dashboards (labor, inventory, demand)

The IFA has been openly pushing AI use in operations and service brands, and publishing practical guidance for marketing, operations, and deployment.

Reality Check: If franchisees start feeling like they’re paying legacy royalty rates for what amounts to software and templated support, the “value-for-royalty” debate gets louder.

Labor-heavy concepts will try to buy their way out of labor

AI will be used to reduce staff burden even where robots do not fully replace people:

• AI ordering (voice/drive-thru)

• kitchen workflow optimization

• inventory automation

• staffing forecasts

• customer recovery scripts and coaching

Robotics will still be uneven, but it’s coming in targeted “high ROI” pockets. For example, Miso’s Flippy has continued to evolve and has been deployed in a limited number of restaurant locations, with partners focused on installation and maintenance scaling.

Reality Check: Robotics is not a magic wand. It is capital-intensive, maintenance-dependent, and obsolescence-prone. That means the winners are not “robot franchises.” The winners are economics + uptime + support + transparency.

Franchise development gets more automated (and more dangerous)

AI will transform lead generation and sales operations:

• automated nurturing and “always-on” follow-up

• AI-driven qualification and profiling

• scripted objection handling

• faster creation of sales collateral

This will increase speed and volume. It can also increase misrepresentation risk if not tightly controlled.

Reasonable expectation: By 2030, a lot of franchise sales funnels will be “AI-assisted,” meaning fewer humans touching more prospects faster. That is a compliance minefield if the brand is sloppy.

The next decade in franchising: 2026–2036 timeline

2026–2028: The “automation layer” era

Most established franchisors will bolt AI onto existing systems:

• AI chat/voice for customer ops

• AI ad creation and local marketing kits

• AI recruiting tools

• AI training libraries

FranData survey commentary shows franchisors prioritizing technology to address labor and performance challenges, with many executives planning tech-driven revenue/cost improvements.

What this means: Franchisors will market AI as “support,” even when it is mostly automation. Franchisees will start asking which parts are truly new value versus repackaged software.

2028–2031: The “unit economics reckoning”

This is when the tension becomes visible:

• If a concept’s margins are thin, AI won’t save it

• If labor costs are the issue, automation helps, but only where ROI is real

• If the business is basically “process + admin,” AI commoditizes it

Reasonable expectation: Some service categories will see consolidation or quiet brand death because customers can get comparable outcomes through AI tools and fewer intermediaries.

2031–2036: The “platform or perish” split

By this period, the brands that thrive will look more like platforms:

• integrated operating systems

• data advantage across the network

• measurable performance improvements

• transparent unit-level benchmarks

• compliance-forward tech governance

Brands that survive by hype, not outcomes, will face:

• franchisee revolts (non-renewals, associations, disputes)

• elevated regulator interest

• increased litigation over earnings implications and misleading sales practices

The compliance fault lines: where AI creates legal risk

Here are the pressure points I would watch most closely.

Earnings implications and “AI implied performance”

Even without explicit Item 19 representations, AI marketing can imply:

• reduced labor costs

• higher conversion rates

• better margins

• faster ramp-up

• less skill required

If a franchisor is selling “AI-enabled success,” but franchisees cannot replicate those results, or the results depend on conditions not disclosed, that’s where disputes begin.

Reality Check: “We use AI” is not a performance claim. “AI makes you profitable faster” starts walking into dangerous territory.

Technology mandates, fees, and stacking

Expect more franchise agreements to mandate:

• specific AI tools

• upgrades

• vendor lock-in

• data sharing

If a franchisor stacks:

• royalties (percentage of gross sales)

• ad fund contributions

• tech fees

• required vendor markups

…while also shifting labor to AI, franchisees will question whether the franchisor is double-dipping.

Data control and ownership

AI runs on data:

• customer data

• conversion data

• pricing and promo performance

• operational metrics

Who owns it?
Who can export it?
What happens if the franchisee exits?
Does the franchisor retain it?

These provisions will matter more every year.

Liability when automation fails

As AI/automation touches customer interactions and operations:

• incorrect customer communications

• discriminatory ad targeting

• privacy violations

• safety incidents tied to robotics

• misquotes, missed appointments, billing errors

Liability allocation clauses will expand, and disputes will increase if the franchisor mandates tools but disclaims responsibility.

Who is most at risk: franchise categories likely to struggle

In my opinion, the most vulnerable models share a theme: they sell repeatable administrative work as a business.

Higher risk

• marketing services and lead-gen “franchises”

• basic bookkeeping/admin service franchises

• call-center dependent concepts

• tutoring/test-prep models that can be mimicked by adaptive AI learning

• “middleman” service brands where the franchisor mainly resells vendors

More resilient (but not immune)

• home services with real skilled labor and strong local reputation

• concepts with true experiential differentiation (hospitality, specialty food, in-person experience)

• regulated services where compliance and licensure create barriers

• brands with authentic consumer pull and strong unit economics

Important: “More resilient” does not mean “safe.” It means they have something AI cannot easily replace: human judgment, physical execution, trust, and experience.

Will AI create new franchise categories?

Yes, but fewer than people think.

AI also reduces the historical need to franchise, because centralized platforms can serve massive markets without local owners. That means many AI-native companies will choose:

• direct-to-consumer models

• licensing

• SaaS subscriptions

• partnerships

Still, we will likely see franchise growth in:

• robotics installation/maintenance ecosystems

• specialized compliance and cybersecurity services

• AI-augmented home services (diagnostics, quoting, dispatch, AR support)

• hybrid “human + AI” professional service models

But the test will always be the same: unit economics + transparency + defensible value.

What franchisees should do now: an AI-era due diligence checklist

If I were advising a buyer on what to ask in 2026 and beyond, it would look like this:

1. Show me what AI actually does.
   Not buzzwords. Demo it. What tasks are automated?

2. What does AI reduce: labor, time, error, cost?
   Give measurable benchmarks.

3. What breaks when the tech goes down?
   What is the offline operating plan?

4. What fees are tech-related, and which can increase?
   Identify stacked fees and escalation clauses.

5. Who owns the data, and can I export it?
   If you cannot take your own customer and performance data, that’s a control issue.

6. Are any sales claims “AI implied performance”?
   If they’re hinting at profitability tied to AI, press hard for substantiation.

What responsible franchisors should do now

If a franchisor wants to be on the right side of the next decade, they should:

• define AI governance: what tools are approved, what data is used, who audits outcomes

• train sales teams on “AI claims” risk (including implied earnings claims)

• disclose technology dependencies in plain language

• justify fees with measurable value

• publish performance benchmarks ethically (and stop hiding behind ambiguity)

IFA guidance itself has been encouraging franchisors to adopt AI thoughtfully across functions like ops, HR, legal, and marketing; the brands that do this responsibly will outlast the brands that treat AI like a sales pitch.

Final Reality Check

What we can reasonably expect by 2036:

• AI becomes a baseline expectation inside franchise systems, like email and CRMs became years ago.

• A meaningful number of “process-only” franchises struggle because AI commoditizes their value.

• The best brands use AI to improve franchisee outcomes and document it transparently.

• The worst brands use AI to scale sales volume faster than compliance can keep up, and disputes rise.

• Franchise agreements and FDD narratives increasingly revolve around technology mandates, data rights, and fee justification.

• “AI-proof” is marketing. Economics-proof is what matters.

The information provided in this article is for educational purposes and general public-interest reporting. It does not offer legal, financial, or investment advice. Franchise purchasers should consult qualified professionals before making decisions. Franchise Reality Check™ analyzes publicly available documents, including Franchise Disclosure Documents (FDDs), state regulatory filings, and court records. Under Oklahoma Statutes and applicable federal law, analysis of publicly filed franchise documents, commentary on matters of public concern, and reporting on franchise industry practices are protected forms of speech.