The FDD Blind Spot: What Top Franchise Brands Do Differently | Keith Gerson

Keith Gerson, CFE, Founder and CEO of Gerson Advisory Services and former President of FranConnect, joins host Brendon Dennewill to break down what truly separates high-performing franchise systems from those that stall out. Drawing on more than 50 years of experience and direct involvement with over 1,500 franchise brands, Keith argues that sustainable growth isn't a technology problem; it's a people, process, and data problem that gets solved through disciplined coaching and honest FDD analysis.

Keith shares striking real-world examples, from a franchisee who hit $3 million in revenue only to say he'd never been more miserable, to Debbie Fields' now-famous "singing, selling, and sampling" hiring method at Mrs. Fields Cookies. He also unpacks a proprietary study of 87 franchise brands revealing the three decisions every top-tier system gets right: tiered royalty structures, real earnings transparency, and formal multi-unit development programs.

This episode is essential listening for revenue leaders, franchise executives, and multi-unit operators looking to understand where growth actually breaks down, and how AI can support, rather than replace, the human coaching relationship at the center of franchise performance.

Read the full transcript.

What You'll Learn

• Why unit-level profitability predicts franchise success
• The FDD's hidden competitive intelligence goldmine
• Royalty structures that reward growth, not punish it
• Why your best franchisees may be the unhappiest
• The real difference between coaching and inspecting
• Inflection points every scaling franchise system hits
• Where AI actually earns its keep in franchising
• Why dashboards rarely change franchisee behavior

Resources Mentioned

• Gerson Advisory Services
• FranConnect
• Franchise Disclosure Document
• Competitive Analysis & Strategy Reports
• Franchise Sales Index Report
  

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About the Guest

Episode Transcript 

Introduction

Brendon Dennewill:  Hello and welcome back. Today I'm joined by Keith Gerson, founder and CEO of Gerson Advisory Services and one of the franchise industry's most respected strategic advisors. Keith brings more than 50 years of experience helping franchise systems improve growth, operations, and franchisee performance. Throughout his career, Keith has served as a franchisor, franchisee, executive, and advisor, holding leadership roles with organizations including FranConnect, PuroClean, Mrs. Fields, and Jack in the Box.

Having worked with more than 500 franchise brands, he brings a rare perspective on what truly separates high-performing franchise systems from those that struggle to scale, which is exactly what we like to talk about here on the show. What makes Keith's perspective especially valuable is his belief that sustainable growth isn't driven by technology alone. It comes from aligned leadership, disciplined processes, meaningful data, effective coaching, and a relentless focus on franchisee success.

Today, through Gerson Advisory Services, he helps franchisors uncover operational blind spots, improve franchisee performance, strengthen sales effectiveness, and leverage AI to become more productive without losing the human elements that drive lasting results. Keith, welcome to the RevOps Champions Podcast.

Keith Gerson, CFE: Thank you so much for having me.

Brendon Dennewill: It's not often that we get to speak to someone with fifty years in franchising, so I'm thrilled to have you here today, Keith.

Keith Gerson, CFE: Well, thank you so much.

What Separates Top-Performing Franchise Systems

Brendon Dennewill: Over these five decades, you've worked with over five hundred franchise brands in various shapes and forms. Looking across all that experience, what consistently separates franchise systems that outperform everyone else?

Keith Gerson, CFE: That's a great question. Actually, the number of brands I've had the opportunity to work with is in excess of fifteen hundred, through my role as president of FranConnect prior to starting Gerson Advisory Services. So even though I may not have worked directly with every single executive at those organizations, I had the opportunity to study all of the data and all of the best practices, because arguably FranConnect had more visibility into what was actually happening in franchise systems than any organization out there. It really was an eye-opening experience.

In my fifty-plus years in franchising, the one thing I've found consistent is that the very best systems tested their franchise systems before going live. They focused exclusively on franchise unit profitability, which tended to uplift the whole system in terms of buy-in and trust. And the best systems were focused less on data itself and more on the actionable insights that could be created from that data.

They're all great communicators too, and that's just a handful of things I've observed. But at the end of the day, you have to assume the franchise system is built to scale. If it's not, you could be the world's greatest jockey, but if you're saddled to a broken-down horse, you're not going to win any races.

People Before Technology

Brendon Dennewill:  When you and I spoke before, it was reassuring how well it aligned with the framework we use when building revenue operations systems for franchises and multi-location businesses. Our pillars are people, process, data, and technology, with technology very deliberately last and people very deliberately first. So when we spoke, we immediately agreed that technology isn't the solution, it's the last step. Why do you think so many organizations still try to solve people and process problems with software before fixing the people, process, and data issues first?

Keith Gerson, CFE: That's a powerful question. One of the things I believe is happening is that a lot of decisions are being made sitting in front of a laptop instead of CEOs and executive teams being in the field where the action is. In doing data analysis, I've found that the frequency with which franchisors are actually in the field has dropped to maybe once or twice a year, which isn't frequent enough.

The span of control used to be about ten to one for systems working on unit-level profitability, with a thirty-to-one ratio of franchise business consultants or coaches to franchisees overall. Now that number is running between fifty and one hundred to one. The frequency with which the CEO is in the field has really fallen off in most systems.

Brendon Dennewill: And if it's not the CEO, then someone else needs to be doing that, right? Obviously the CEO of a 150- or 500-unit franchise network, or even bigger, needs to delegate some of that, but still maintain a relationship with the franchisees.

Keith Gerson, CFE: Yeah, absolutely. I coined a phrase for this, an odd one: the fish thinks from the head down. I think people are starting in the wrong place. They're starting with tools instead of asking what decision they're trying to make better. At the end of the day, the bottom line is franchisees first, and growth follows.

The Franchisee's P&L as the Franchisor's Report Card

Brendon Dennewill: I like that, and I like that particular analogy even more because I used to be in the commercial fishing industry, so I'm very familiar with how fish rot and how they smell. Keith, you've said the franchisee's P&L is the franchisor's report card. How should franchisors rethink leadership and support so that franchisee profitability truly becomes the North Star?

Keith Gerson, CFE: I believe what's happening out there is that people are analyzing data in offices instead of actually being on-site to see what's happening. If you look at the Franchise Disclosure Document, the training and development section shows the table of contents of what's taught the day a franchisee joins the system.

What I'm finding is that when franchisors aren't focused on training and developing their franchise business coaches, the people in front of these franchisees don't know how to resolve the challenges and issues they're finding. I've done a lot of research and surveys on this, and franchise business consultants aren't being trained on how to coach for improved franchisee performance. They know what the standards are and how to enforce them, but they don't know how to effectively manage and follow up.

I break this down into a simple three-point approach, like parent effectiveness training. The franchisor needs just a few important compass points, a North Star that changes performance. Keep it simple, just like raising children: have a few things you're focused on, talk about them constantly, and make sure your behaviors are aligned with those standards.

I don't see that happening, because we're not effectively training our coaches on how to do strategic field visits or how to have sustainable coaching discussions with franchisees. Maybe it's just a weekly call. But you have to be there, you have to observe, and you have to ask the right questions at the right time. Most importantly, you have to get the words to come out of your franchisee's mouth, because you're not going to change behavior until the franchisee agrees they have a problem and is committed to solving it.

Brendon Dennewill: Right. It's kind of like the phrase "hope is not a strategy." As you're growing, an emerging brand's CEO can have that face time with twenty-five to thirty franchisees. But eventually, as they get to eighty, a hundred, or a hundred and twenty units, they're hoping problems don't occur because they can't have conversations with that many franchisees. And of course, that's eventually just a matter of time before some franchisees start struggling and aren't being heard.

Keith Gerson, CFE: Yeah, absolutely. There's a flywheel here, and I'll break it down simply. If your franchisees are making money, your validations improve, your compliance gets easier, your franchise sales get stronger, and your royalty growth becomes healthier.

So it's important to ask every department, because this doesn't just fall on the shoulders of a single franchise business consultant working with thirty franchisees. The real question is: how does your department's work improve franchisee performance? It's a village, and everybody plays a role. I don't want my comments on coaching for improved franchisee performance to suggest it's solely on the FBC.

Coaching vs. Inspecting

Brendon Dennewill: So let's back up. Before we get to the FDD, FBCs are the ones really holding the baby at the end of the day, because they're stretched too thin. In large part they have the best intentions, and they care more about their franchisees than anyone. We've met FBCs whose franchisees are like family to them, sending gifts on their birthdays. But when they've gone from thirty franchisees to eighty, that obviously becomes impossible. Even with the best intentions, you believe most FBCs are trained to inspect rather than coach. What's the difference, and why does coaching create stronger franchisee performance than auditing?

Keith Gerson, CFE: As a franchisor, these aren't your employees. They're capable people, or they wouldn't have been allowed into the system in the first place, though we get surprises now and then. The goals they're willing to take on have to be their own. It can't be what the franchisor wants for them; it has to be what they want for themselves.

One of the most important steps happens in the franchise sales process. That's where the relationship is first built, with the franchise development person. They pick up all these notes and cues, they know the candidate's strengths and weaknesses. Unfortunately, there's rarely a protocol in place to capture those learnings, including what motivated someone to become a franchisee in the first place, so it can be used to remind them during tough times.

At the end of the day, you have to coach toward what will help the franchisee achieve their own growth. You can't want it more than they do. I had a franchisee in a system I was president of. In his first year, in a system that was averaging about $550,000, he did $750,000. In his second year, $1.2 million. By his third year, he was knocking on $3 million. And he told me he'd never been so miserable in his life.

This was supposed to be a lifestyle business that would let him avoid being someone's employee and take quarterly vacations with his wife and son, which meant everything to him. Instead, he was saddled to a brand where he was working seven days a week. When he hit that third year, he said, "I'm making more money than I ever thought I would, and I've never been more unhappy. I'd like to sell. I'd like to get out of the system." And what were we doing? Coaching him to keep going, telling him he had so much more runway. But that's not what he wanted.

Brendon Dennewill: So it's really about being clear on their goals, which is what the best brokers in the industry help new franchisees identify: what success looks like for them apart from the financial piece.

Keith Gerson, CFE: Yes, absolutely.

The FDD as a Hidden Blind Spot

Brendon Dennewill:  We've talked about where these issues show up, and how the relationship typically starts with the Fran Dev person before the FBC takes over. But you've gone deep on the importance of FDDs, and I think anyone in franchising understands their importance. You've identified the FDD as a massive blind spot, one where so many deals are lost, and Fran Dev doesn't even know why. Why do you think that is?

Keith Gerson, CFE: There are many paths this could take us down. The FDD is the most powerful and transparent document for understanding and comparing your brand to your direct competitors, seeing what they're doing that you're not, and vice versa. It's a treasure trove of best practices.

Part of my service is offering a franchise disclosure document competitive analysis and strategy report, where I look at the total addressable market and a number of metrics franchisors often overlook, like SBA failure rates in concert with litigation and closures. All of that is telltale, and it almost always traces back to the franchisee selections made and the focus, or lack of focus, on the financial side of the business.

I completed a study of eighty-seven different franchise brands across twelve different sectors. I found that every top-tier brand made all three decisions I'm about to describe, and no top-tier brand was missing even one of them.

The first is royalty architecture. Best practice is a tiered structure that rewards growth, rather than a flat rate that essentially taxes maturity. So decision one: tiered structures that reward growth instead of flat rates that punish your best operators.

The second decision involves Item 19 disclosure: real earnings transparency, not just the bare minimum franchisors are willing to sign off on. That also builds trust. One hundred percent of top-tier brands are doing full disclosures. I'm not saying down to EBITDA, but they're sharing controllable margins, some fixed costs, and other useful figures.

The third decision is multi-unit development, built as a formal program before scaling single-unit sales. When I read FDDs and look at their training and development sections, they'll say here are the classroom hours, here are the unit-level hours, here are the additional readings. But I've never found a brand that expanded that training specifically for multi-unit development, even though that's a very different skill than running a single unit. You need a formal program built before you scale single-unit sales, not after. Two of these three decisions cost almost nothing, and the third is basically just arithmetic.

I have a report I'll be publishing shortly called "Franchise: How Performance Is Designed, Not Discovered." I'm not charging for it. It's pure thought leadership.

Brendon Dennewill: That'd be great. We'll definitely add that to the show notes once it's available. Going back to the multi-unit development piece, that seems somewhat counterintuitive, because when you talk to high-growth franchisors, most of them say they're looking for multi-unit owners. So why do you think they want multi-unit owners but keep onboarding franchisees as single-unit owners?

Multi-Unit Development and Franchisee Satisfaction

Keith Gerson, CFE: Plainly, I think they don't know any better. They may not have that experience themselves, or they're not asking their existing multi-unit franchisees what they actually need. But in my experience, the most dissatisfaction I've witnessed isn't among the least profitable franchisees in a system. It's among the most accomplished, typically the multi-unit developers.

I don't think it's apathy. I think most people have a tendency to follow the leader. When I do these FDD analysis studies, I find such striking similarity, almost like whoever defines the category, everyone tries to get as close to what that system is doing as possible. But if you want to know how to scale a system like McDonald's, you don't look at what McDonald's is doing today. You go back and look at what McDonald's was doing decades ago.

These are services I'm frequently called on to provide: developing multi-unit training programs. The three most in demand are coaching for improved franchisee performance, training and development beyond just the FBC role, and the additional roles a brand needs as it scales multi-unit operators, since the inflection points differ depending on whether a franchisee has five, ten, or twenty units.

I do want to go back to something. When I said the most successful franchisees are sometimes the most frustrated, I've heard this time and again: "We have more locations, yet you're paying us less attention." That's the tail wagging the dog. Many multi-unit franchisees are actually making more money at the bottom line than the franchisors they're with, because it's not fractional. They're keeping ninety-four percent of their revenue, whereas the franchisor might be taking six percent.

So I believe we need to assemble an advisory council made up of multi-unit franchisees to determine exactly what they want. These are the people saying, "We're paying you more than anyone else, yet you're giving us the least attention." Often what they want is training on succession planning, something that isn't typically taught to single-unit franchisees. Find out what it is, and work on developing those programs. There are great people out there who can help with that professional development. I hope that answers the question.

Brendon Dennewill: Yes, there's a lot to unpack here. What I like about how you think about it, and it's not that different from how we think about it, is that you have to focus on the most important things first: the people and the relationships. We often hear that franchisors and the network are incentivized differently than franchisees, which is why unit-level economics are so critical. If franchisees aren't successful, and if you don't know how they measure success, which isn't just profitability, but getting what they signed up for, more control over their life, more time with the people who matter most, a self-managing business, that's where the disconnect lies between Fran Dev's incentives and the franchisees' incentives. It's complicated. But if you align the people first, figure out the processes to align them, and understand how each party measures success, then finally bring in technology, whether that includes AI or not, and automation, to drive those measurements and processes and support those people.

Tiered Support and Onboarding

Keith Gerson, CFE: I agree with everything you said. I'd also add that we're expecting too much if we think our franchise business consultants can work effectively with both the smallest and the largest volume franchisees. I believe strongly in tiered support.

One role you don't hear much about is what happens in the first ninety days and the first year of onboarding. From my analysis of brands, the very best systems have what's called a "quick start" or "right start" specialist, someone assigned specifically to work with people being onboarded as franchisees. I'm talking beyond basic training and development.

It also means recognizing inflection points: when it's no longer just "chucking a truck" for a home service business, but now the operator has a half-dozen vehicles running. It becomes important to have someone who onboards multi-unit franchisees and stays with them to ensure they get the start they need, because the situation is different. At one point it's different strokes for different folks, and then it becomes different strokes for the same folks as they reach these different inflection points.

Understanding Growth Inflection Points

Brendon Dennewill:  Inflection points come up a lot on this show. In every business and industry, if you're growing, there are inflection points. If you're not growing, they're mostly tied to technology, and you're focused on generating the same revenue more profitably. But if you're scaling, like most franchise brands are trying to do, that's when you hit what we often call ceilings. Every leadership team, whether at a 30-unit, 100-unit, or 500-unit franchise, eventually sees these inflection points. What do you see as the most obvious inflection points as a brand goes from ten to thirty units, thirty to a hundred, and a hundred to three hundred?

Keith Gerson, CFE: What a wonderful question, and something people don't give a lot of thought to. When I created the franchise sales index report for FranConnect, the inflection points were broken down starting from one location to seventy-five. These are your micro-emerging or emerging brands.

We found that royalty self-sufficiency didn't occur until franchisors reached fifty to seventy-five locations. Royalty self-sufficiency means not relying on the initial franchise fee to survive. Franchisors often aren't thinking enough about the quality of franchisees they're attracting; they're focused on that initial fee, which might bring in anywhere from $25,000 to $100,000. I don't think the initial franchise fee should be treated as a profit center. What we're really striving for is the long-term royalty relationship.

The next inflection point is the mid-market, from about seventy-six locations to two hundred fifty. Unless you're a platform brand made up of multiple franchises, you're typically scaling toward a stronger focus on the bottom line and on franchisee unit-level economics. That's the important shift: mid-market brands move away from needing to sell another franchise to be profitable. You can get to profitability by helping your franchisees find their success, and that's how you find yours.

The third stage is enterprise brands, from about two hundred fifty-six locations up to thousands. They're focused on maintaining dominance, largely through technology, AI, robotics, and building their own proprietary systems to become, in a sense, impenetrable.

Every stage of growth creates different opportunities. It's like rock, paper, scissors. If you're the eight-hundred-pound gorilla, you're the rock, and you can crush the competition. But on the other end of the spectrum, emerging brands can turn on a dime. Many capitalized on that during the pandemic, achieving things faster than they could have imagined before. That was one of the blessings that came out of it, if we can call it that.

In the middle, differentiation becomes the key. If you're not Coca-Cola, defining your category, or McDonald's, also defining its category, then you're Burger King, using flame-broiling versus frying as your point of difference. Or Wendy's with "fresh, never frozen" versus burgers sitting under a heat lamp all day. That's how smaller brands can actually be effective at the mid-market range: by truly differentiating themselves. That's what Pepsi did too: "the choice of a new generation," or the Cadillac positioning versus a competitor your father drove. People are looking for that kind of differentiation. I'm rambling now, but I think you get the gist.

Breaking Through the Growth Plateau

Brendon Dennewill: No, I love that framing, because what I keep hearing, and what I'm always looking for, is this: you mentioned emerging brands reaching royalty self-sufficiency between fifty and seventy-five units, then moving into the next phase from seventy-six to two hundred fifty. Most brands don't actually make it to seventy-five units.

Many don't make it to ten, and therefore many don't make it to thirty. I'm curious about the ones who make it to thirty and think they're on their way to a hundred, but many don't even make it to forty. There's this interesting stretch between thirty and forty where they get to thirty-five, thirty-six, thirty-seven units, and everything grinds to a halt because they haven't figured out how to break through that glass ceiling of complexity, still trying to run everything with the same people, teams, and systems that got them to thirty. Is that something you've seen, and what do you think is stopping them from making the necessary changes to get from thirty to a hundred?

Keith Gerson, CFE: That cliché couldn't be more true: what got you here doesn't get you there. A lot of people believe what got them to thirty locations is the recipe for continued success, and that the same people executing those systems can get them further. But I've found that's not the case.

People convince themselves that what's making them win today will keep working, and even after they pass that inflection point, focused on selling more franchises as the key to the kingdom, they don't give enough attention to the operations side of the business. I've seen what healthy systems have in common, and I've seen where emerging brands get stuck. I've seen the difference between growth that looks good on paper and growth that actually holds up under pressure.

The positive lesson for me was that good data gives leaders better judgment. The harder lesson was that better tools don't automatically change behavior. That's where we need to focus: the behavioral side. Often franchisors, because of FOMO, fear of missing out, try to emulate what other brands are doing. They'll roll out dashboards and assume franchisees will use them just because the data is now available.

I once created a chart of all the roles and responsibilities of a franchisee, and they barely have the bandwidth to take on more. Yet we keep throwing things at them because that's what the "big boys and big girls" are doing. I don't think a franchisee wakes up excited to log into another dashboard. Look at what they're already dealing with: staffing, customers, inventory, cash flow, local marketing, and whatever problem walked through the door that day.

We tend to hand them dashboards and say, "Here's your metrics." But in my studies, the franchisees who improved weren't always the ones with the most sophisticated tools. They were the ones whose franchisors used the data to start a better coaching conversation. Human behavior is the real key to success: what are we seeing, what does it mean, what are we going to change this week, what support do you need? That's where technology becomes valuable, as long as it enables the human conversation.

Brendon Dennewill: My perspective is this, and I'd like to know yours: you talked about the mindset that what got you here won't get you there. As simple as it sounds, leadership teams with that one philosophy have already won half the battle. They're fifty percent of the way there just by having the right mindset, knowing that the people, processes, and systems that got them here won't get them where they're going. I've seen it with some incredibly successful brands. On one hand, they were growing fast, but because they had that mindset, they knew things would break at thirty, a hundred, or three hundred units. They were proactive about figuring out what would break and when, and they invested in leadership first, which then builds the people to run the new processes and systems needed to keep scaling. Do you see it differently?

Keith Gerson, CFE: I wouldn't say it's different, I'd say it's additive. Part of the problem ties into those inflection points: the avatar of who you thought you needed to recruit is different from what you actually need going forward. We all learn these lessons, and one false positive is patting ourselves on the back for how quickly we scaled our systems.

We need to sit down and ask what we're learning from the top quartile versus the bottom quartile. What do top performers have in common? That's one of the biggest shifts needed: stop bringing in people focused purely on scale and competitive advantage through more franchisees contributing royalties. We probably need more people who understand that the purpose of business is making and keeping customers at the unit level.

I want to let that sit for a moment, because if the purpose of business really is making and keeping customers, we don't just want someone totally reliant on the franchisor for marketing and lead generation. We need franchisees who know how to scale, who are part of the community, who are out there in the field.

When I was with AlphaGraphics years ago, before someone could even start training, they were required to go out into their community. This is a business-to-business franchise built around printing and design work. They'd send a brand-new, not-yet-trained franchisee out into the community with a box of cookies or donuts, collecting business cards, so that by the time they arrived for training, they could input all these prospective customers into the database and marketing could start before the unit even opened. I thought that was absolutely brilliant, and it trained people early on to understand the importance of being part of the community.

Brendon Dennewill: These simple, very human things can be so successful. And of course, once you're scaling, you have to put systems around them to keep growing.

Keith Gerson, CFE: Yes. May I add one more real-world example?

Brendon Dennewill: Please, absolutely.

Keith Gerson, CFE: I had the pleasure of creating the Mrs. Fields Cookies franchise system from its very inception. They were all company-owned and operated at first, so I worked directly with Debbie Fields. She was brilliant. She created a process to identify exactly what type of employee needed to be hired at these locations. Initially they were managers paid by Mrs. Fields, and eventually they became franchisees.

Here's how she broke it down behaviorally, in a simple system she called singing, selling, and sampling. For singing, she'd interview someone and say, "I'm feeling kind of bad today. It's my birthday and no one has said happy birthday to me. It would mean the world if you sang happy birthday to me." Eight out of ten people wouldn't do it, and that told her that person wasn't right. She wanted someone who wasn't self-conscious, who was gregarious, who could connect with people in a mall environment where you only had three to five seconds as someone walked by.

Then came selling. She'd ask, "Do you have a favorite Mrs. Fields cookie? The white chunk macadamia? Great. What do you really like about it?" She was looking for enthusiasm and a genuine, articulate reason, not just knowledge of the product.

The third part was sampling. She'd cut up white chunk macadamia cookies and have the candidate stand in front of the store offering samples to passersby. The small percentage who made it that far showed clear differences: some stood with their backs against the wall, avoiding eye contact, just thrusting out a tray. The ones she wanted were the ones walking up to people saying, "You've got to try this, you better hold onto the counter because your knees are going to go weak."

If someone could sing, sell, and connect with people in front of the store, she knew that was what made the system scale and succeed. Simple, and something anyone could apply in their own business, in their own way.

Where AI Creates the Most Business Value

Brendon Dennewill: I love that story, Keith. We don't have a lot of time left, but we can't end this conversation without talking about how AI has transformed the way we're working, and I know it's transformed the way you work specifically. You've said it's made you roughly ten times more productive. Where have you seen AI create the greatest business value, and where do you think leaders still misunderstand its role?

Keith Gerson, CFE: Great question. A lot of people have a love-hate relationship with AI, and many are using it out of fear of missing out. They haven't figured out that AI is only as useful as the problem you point it at.

I use AI a lot in my business, and part of the reason I'm so productive is that I've taken the time to learn effective prompting and how to ask the right questions. I feed it data, and I don't use just one AI system. I use several, because their capabilities differ. Gemini is great for creating marketing documentation. ChatGPT is the best overall, especially for content development. And I love Claude for complex reports.

But AI isn't going to save you. What you hope is that it helps you make a better decision, though it can just as easily help you make a bad decision faster. With clients, I spend a lot of time on the foundation first. You need clean data, consistent definitions, a clear view of what a healthy franchisee looks like, and clarity on where performance gaps are coming from. If your foundation is weak, AI won't solve the problem, it'll amplify your confusion.

There's real value in franchising for lead scoring, particularly on the franchise sales and development side, weighting the value of leads and knowing where to pay attention. Candidate qualification is really important too. And one of the most important applications, from my perspective, is franchisee performance benchmarking.

I'd tell a CEO not to ask "how do I use AI," but rather "what decision do I need to make faster, better, more consistently?" That's a better entry point. Can we identify which candidates are more likely to become successful franchisees? Can we spot franchisees at risk before performance drops too far? Can we benchmark operators more intentionally? Can we reduce administrative work so people spend more time coaching?

AI isn't replacing the coaching conversation with franchisees, it's making room for more of those conversations and helping them happen more effectively. One brand I work with asked me to help create a strategic field visit framework and more effective conversations based on what's found. The teams that win with AI won't be the ones using it to remove the human element from franchising. That shouldn't be the goal. The ones that win will use it to make human work more focused, informed, and valuable. That's the play.

The Future of AI in Franchise Revenue Operations

Brendon Dennewill: It's almost like what you said earlier about inflection points. AI is creating an inflection point that wasn't on anyone's roadmap three or four years ago, regardless of whether you're at five units or ten thousand. But the process leadership teams have to go through is the same. You have to start by having a point of view on AI, since some people have that love-hate relationship, and some are outright scared of it. And I wonder how many franchise brands are thinking about AI as a potential differentiator for them, given how important differentiation is at that mid-market inflection point.

Looking ahead, how do you see AI and revenue operations evolving for franchise networks over the next couple of years? What will the highest-performing franchise brands be doing differently?

Keith Gerson, CFE: I may have mentioned this already, but it's worth repeating: CEOs need to ask themselves how they use AI, and where they need to make better decisions faster. But the most important thing is not using AI to replace the human side of franchising. The best franchisors will use AI to make coaching conversations better, not to avoid having them.

I'm a behavioralist, and at the end of the day, the world is full of educated derelicts. It's not enough to teach people how to run a franchise; you need to know how to ask the right questions and make conversations more worthwhile, rather than burying people in more data. There's no shortage of data. The shortage is in knowing where and how to use that data to effectively drive change. I have clients who come to me struggling with exactly that: "We have these twelve best practices, but we can't get our franchisees to follow the playbook."

That's where AI can come in well, even to the extent of creating great pulse surveys asking franchisees to define what the best practices actually are. When I used to tour with regional or district managers, I'd ask franchisees, in front of their manager, "What's the most important thing you should be working on, according to your consultant?" And then, "What are you actually working on?" If there's a disparity between those two answers, or if they can't articulate it, that's the same problem: parent effectiveness training. Have a few rules, talk about them constantly, and make sure your behaviors are aligned, or you're training franchisees to see it as just another program that will fade away.

You need a cadence of reviews to measure progress. AI can really help you organize that. I used AI to help define best practices for conducting franchise reviews, along with being well-read and learning how to apply those things. AI can help you get more engagement and adoption. You don't need more tools. I mentioned to you once before that nobody needs a reciprocating saw or a hole in the wall, what they want is a bookshelf. Tools are just a means to an end.

Final Advice for Scaling Franchise Brands

Brendon Dennewill: That's really good advice. Zooming out from AI specifically, any last words of advice for a franchise brand still trying to scale more effectively?

Keith Gerson, CFE: At the end of the day, franchisors can't fix what they can't see. Often within a franchise system, people are searching for the holy grail, trying to hit a grand slam, when the real issue is usually just a series of leaks: a sales process that sounds better in the boardroom than it does to an actual prospect, an Item 19 story that's weaker than the franchisor realizes, a website that creates interest but not enough confidence, a support model that's busy but not actually improving unit economics.

Franchisors often know something isn't working, but can't quite see where the problem starts. You have to ask the right questions of the right people, and if you don't have the answers, that's okay. Most of the great answers come directly from your franchisees. The Egg McMuffin was created by a Santa Barbara McDonald's franchisee. The Apple Fritter was created by a Canadian donut franchisee.

It's also the point of having a franchise advisory council. They're not a rubber stamp; you need them to inform you about the real challenges and their recommendations. Communication is critical, and that's why great advisors, consultants, and providers like you and your organization matter. Turn to the experts. They've been there and done it. You don't have to come up with all the answers.

Inspect what you expect. Mystery shopping works, because franchisors often don't know what their own franchise sales process actually sounds like to a candidate. These are services you can do yourself or bring in outside help for. The whole point of what suppliers and providers do is help franchisors see the truth clearly enough to act on it. That's what I love about what you're doing with your podcast: getting that truth out there so people can act on it. Because otherwise, the definition of insanity is doing the same thing over and over and expecting a different outcome. So I'll end where I began: franchisees first, growth follows.

Brendon Dennewill: Excellent advice. Keith, thank you so much for joining me today.

Keith Gerson, CFE: It's my sincere pleasure, and thank you again for everything you and your team are doing to make franchising better.

Brendon Dennewill: Thanks, Keith.

Keith Gerson, CFE: All right.

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