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What are the Key Sources of Disruption in Franchising?

Since we live in the digital age, it’s no surprise most of the disruptors in the franchise industry today are tied to technology.

Franchisors need to decide how to meet the challenges caused by disruptors. If you embrace the innovation, you can turn the disruption into differentiation for your franchise brand. Differentiators make brands stand out from the others to attract both consumers and potential franchisees. Your other option is to dismiss the disruptor or hope it goes away soon which may be detrimental to your business in the long-term.


But, before you decide how to handle disruption, take a look at how the new technology is influencing our lives. You may want to consider embracing it for your brand if the public shows significant demand or if it will positively impact business operations.

Here are four key sources of disruption in franchising today and how they’re being leveraged as differentiation:

Artificial Intelligence

Artificial intelligence (AI) are programs that behave like and perform functions that are typically associated with human intelligence. Human behaviors demonstrated by AI include creativity, knowledge representation, learning, manipulation, motion, perception, planning, problem-solving, reasoning and social intelligence. Since humans are unpredictable and our emotions can be influenced by a variety of forces, AI is more reliable when it comes to performing tasks flawlessly.

Many companies have found AI useful for performing customer service functions, which can certainly be utilized by many franchise concepts. One example is chatbots, which imitate human conversation online. Chatbots are commonly used to handle customer inquiries on company websites.

Machine Learning

Machine learning is a form of AI in which systems learn from data collected, identify patterns and make decisions with little human intervention. The insights gained from data enable businesses to work more efficiently, which can be used as a differentiator over competitors.

Retail concepts have harnessed the power of machine learning on their websites. When a retail brand’s customer makes a purchase on its website, their data is collected and analyzed. The website then can recommend other items for the customer to buy, thus personalizing the buy experience. For the retailer, the data can also be used to develop and implement a marketing campaign, price optimization and supply planning.


Machine learning is also used by home care franchise concepts. Home care franchises have begun tapping into the wearable devices worn by clients to monitor their condition in real-time. The devices can alert caregivers to deteriorating conditions and collect data, which can be used for determining care plans. The brands that can use this technology most effectively can boast better outcomes for their clients.


Simply put, e-learning is interactive learning online. Learners – whether college students, franchisees or employees – typically can interact with the instructor in real-time or at a time that is convenient for them.


E-learning has streamlined training for many franchise brands, which gets new franchise owners up and running quickly and cuts costs associated with in-person training for both franchisor and franchisee. Instead of traveling to a training center or store designated for training, employees can take training sessions online from virtually anywhere as long as they have a smartphone, laptop, desktop or any device that allows them to watch and participate. E-learning can also get employees trained sooner than in-person training sessions, which means franchisees can generate revenue quicker.

Industry Convergence

Industry convergence is when concepts from different industries develop a service together to be utilized across their industries. Arguably the best-known example of industry convergence is third-party delivery apps.

Consumers can order just about anything to be delivered from their phones, but food is the most popular. Third-party delivery apps allow consumers to place food orders from their favorite restaurants without visiting that restaurant’s website, as long as that restaurant has a partnership with the aggregator. Drivers for the aggregator pick up the order from the restaurant and deliver it to the customer.


This provided an abundance of convenience for consumers but presented pros and cons for food franchises. Third-party delivery apps eliminated the need for restaurants to hire their own delivery drivers and allowed them to expand their reach. They could sell food to people who have never been to the restaurant before and satisfy consumer demand for convenience. The downside, though, is commission fees for the service are relatively high. However, there are more third-party delivery services today than there were originally, which created competition among them. Restaurants can do their due diligence to select the third-party delivery service that’s best for them.

Take it or Leave it

Disruption is a normal part of business. If you don’t adapt to it, your franchise brand can suffer as competitors seize upon a new opportunity. If you choose to leverage the power of disruption, you can develop differentiation that will attract both consumers and potential franchisees.

With 30 years of franchising experience and more than 800 franchise owners representing over 1,250 locations for five brands, Winmark Franchise Partners can help emerging and established franchisors develop plans for leveraging disruption and creating their own. Contact us here or at (844) 234-8520.