Franchise Development Teams Share Thoughts on Early Adoption of AI

Franchise Update Media recently released its 2026 Annual Franchise Development Report.

We have been researching franchise lead generation and franchise recruitment processes for more than a decade. An annual in-depth online survey queries franchise development professionals about a number of issues related to their lead generation and recruitment strategies. The results are presented each year in the Annual Franchise Development Report (AFDR).

The AFDR report is a valuable resource that can provide crucial insights into franchise development, lead generation, and recruitment best practices. It’s the kind of information that can help brands assess what they are doing right and what needs improvement.

The project seeks to identify what’s new and innovative in franchise lead generation, recognize the methods and approaches yielding the best results, and gain insights into franchisors’ perspectives on current and future business performance.

Survey participants were franchisors who completed an in-depth questionnaire online. Responses were aggregated and analyzed to produce a detailed view into the recruitment and development practices, budgets, spending allocations, and strategies of a wide cross-section of franchisors. The data, along with accompanying commentary and analysis, provided the basis for the 2026 AFDR.

The in-depth report draws on insights from dozens of organizations that are actively expanding their franchise systems. Carefully researched and data-rich, it highlights the latest trends and sheds light on how brands are generating leads and closing franchise sales today. The AFDR reflects input from companies representing tens of thousands of franchise units across dozens of industry categories.

Franchise Update Media creates this report annually and shares its findings with franchise development teams to give them an edge in their lead generation and recruitment efforts.

Increased use of AI in franchise development

Regardless of industry, nearly every company today is exploring AI, learning how it can enhance their business, and integrating it into their operations. That is certainly the case in franchising, as well. In the latest AFDR, we asked respondents several questions about how and to what extent they are using AI, the challenges they have experienced, and their teams’ capabilities in leveraging the technology. Their responses reflect an overall increase in the use of AI in franchise development, with more progress to be made in the coming years.

The first question we posed to franchisors was the most basic, but it may also be the most telling. When asked if they are using AI in any capacity for franchise development, 52 percent of the respondents said yes. That was a dramatic increase from the 2025 AFDR, when only 23 percent of the respondents answered affirmatively to the same question.

From the 2026 AFDR

From the 2025 AFDR

Although there has been a sharp increase in the use of AI among franchise development teams, it should be noted that it is a gradual process. Of the group that said they are using AI to enhance franchise recruitment, 39 percent said they are doing it at a moderate level. Only 11 percent said they are significantly implementing AI, while two percent said they were unsure. When breaking down the responses further, here are the specific franchise categories that are most significantly implementing AI in their recruitment:

• Franchises with 2,501 to 5,000 units – 50 percent
• Franchises with an investment level of $50,001 to $100,00 – 40 percent
• Franchises in the retail (non-food) sector – 20 percent

Knowing that the gradual adoption of AI is a work in progress, we asked franchisors about any challenges or limitations they have encountered while implementing the technology for their franchise’s customer experience. More than a quarter of the respondents (27 percent) said they lacked skilled personnel to manage the AI capabilities. Twenty percent indicated they had concerns about data privacy and security.

When analyzing the responses by general business sector, each of those within the Retail (non-food) category had concerns about privacy and security, while all from the Retail Food category had reservations about the high cost of AI implementation. The range of responses varied when analyzing the data by size of the franchise. Below is a look at the responses from franchises based on unit size.

In the survey, we asked franchisors about the confidence they have in their team’s ability to effectively use AI tools. Fifty-four percent said they were somewhat confident, while 26 percent said they were very confident, and 20 percent indicated they were not confident at all. Their responses seem to reflect the overall sentiment of how companies are in the early stages of exploring and using AI without feeling they have mastered the process.

For more information about the 2026 AFDR and how you can purchase the report, please scan the QR code below or click afdr/franchiseupdate.com.