New Tech Could Serve Up Change For Franchises

The traditional experience of restaurant dining has shifted in recent years, due to the emergence of third-party delivery and app-based ordering, which was crucial during the ongoing pandemic. But franchise dining was already trending in this direction prior to 2020 to accommodate customer activity, thanks to emerging technology and reimagined service.

A McDonald’s location tests new artificial intelligence to set a new course for drive-thru and takeout. Let’s explore its potential and how it might inspire franchisors to look to the future of their franchise systems

Innovations In Takeout

In December 2022, McDonald’s provided a glimpse of future restaurant takeout and drive-thru service with a franchised unit in Fort Worth, Texas. 

The newly-remodeled location is almost entirely operated by robotics and automation. Though employees work inside the location (mostly preparing the food), there is little person-to-person interaction. The design of the franchise actually perpetuates a dialogue-free experience. Customers can order ahead for pick up or place an order to go at a kiosk but there is little-to-no seating. 

Furthermore, the pickup window at the drive-thru is completely robotic. The visceral experience of picking up a meal from the location without uttering a word or interacting with a person has been viewed millions of times on TikTok and other social outlets.

Obviously this one location will not change the food service industry overnight. But it underscores how the industry is evolving, and how – with the guidance of their NY franchise lawyers – franchisors and franchisees may want to allow for these types of changes in their franchise agreements. 

Franchisors and Strategic Planning

The Fort Worth McDonald’s unit appears to be right-sized for its operation. By circumventing foot traffic almost entirely, more space is available for more drive-thru lanes, a concept which is part of the overall strategy for the location and a broader McDonald’s plan for the future. McDonald’s has stated that this process will maximize efficiencies, quicken the takeout process and ensure more accurate orders. This one franchisee’s operations reflect McDonald’s “Accelerating the Arches” growth strategy.

To move forward with this sort of change in product delivery, franchisors must ensure that their franchise agreements allow for innovation. Following a proof-of-concept that could vastly improve your franchise model or system, consider whether your franchise agreements allow for “not yet known” technological advancements and modern-day developments. This could include developments with:

  • Autonomous vehicles and fleets.
  • Blockchain technology for internal processes.
  • Cryptocurrency payments.
  • Cloud security.
  • Virtual reality capabilities.
  • 3-D printing.

Franchisors will need to update their franchise disclosure documents (FDD) as they adapt to these changes. For example, Item 7 should reflect costs associated with new technology and Item 8 will have to be revised to account for required suppliers for new equipment as well as possible changes to insurance requirements.

As I noted in 2022, while addressing the American Bar Association’s 45th Annual Forum on Franchising: No matter what side of the equation they are on, franchisors and franchisees benefit from having a franchise agreement progressive enough to address the future of the unknown and practical enough to thoroughly enumerate each parties’ rights and obligations, especially when the unknown becomes reality.

Practical Benefits

Despite the unknown factors, there is plenty of upside risk to incorporating this technology, such as:

  • Increased efficiency. 
  • Lower costs, due to fewer employees and smaller operating space.
  • An ability to attract a new and possibly wider customer base. 

These benefits should be communicated as a critical business solution to franchisees, as well as how they may factor into the franchise system’s overall strategy. 

Contact Lusthaus Law

Our franchise lawyers in New York can help you increase opportunity and limit risk so that you can focus on building your franchise system.

If you are a successful company considering expanding through franchising or you operate an existing franchise brand, contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.


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