Mind the Gap: Closing the Divide Between Franchisors and Consumers

Franchisors risk losing ground unless technology and experience investments evolve in step with consumer behavior and desire, according to a report from LT, a franchise-focused marketing and digital experience agency.

“The gap is really about misalignment,” Nick Dan-Bergman, CMO of LT, told Modern Restaurant Management (MRM) magazine. “Consumers have evolved. They expect digital convenience, personalized experiences, and consistency across every touchpoint. Meanwhile, many franchisors are still investing in traditional marketing channels and brand-building tactics that don’t reflect how people actually discover or engage with businesses today.”

Dan-Bergman said this gap is widening because consumer tools, including AI-driven search, social media, and loyalty apps, are advancing quickly, and many franchise systems just haven’t kept up with that pace of change.

Many franchisors are still investing in traditional marketing channels and brand-building tactics that don’t reflect how people actually discover or engage with businesses today.

“The Gaps That May Be Killing Your Franchise: Changing Consumer Expectations & Where to Invest” draws on input from 83 franchisor leaders and more than 1,000 consumers. 

Among the key findings: consumers expect consistency, and 63 percent will pay more for it. Across industries, the majority of consumers are willing to spend extra for consistent experiences, and trust plays a major role in driving repeat business, yet only a third of franchisors feel confident delivering it.

Dan-Bergman said consistency is incredibly hard to pull off, especially when you're working with a decentralized business model as franchisors do, but, with 63 percent of consumers saying they’re willing to pay more for consistency, it’s even more critical to get it right. 

“The reality is, there are a few major players in the franchise space who have the resources to maintain consistency across every touchpoint. But for most franchisors, it’s a challenge. You’ve got dozens, sometimes hundreds of different owners, all with varying levels of buy-in and execution.”

Striking a balance between national consistency and local flexibility is where a lot of franchisors are still figuring things out, Dan-Bergman noted. The report found 76 percent of consumers say they trust businesses they perceive as local even if they’re not, while only 34 percent believe franchises offer better customer service than local businesses.

“While most franchise systems have a ‘playbook,’ they’re not always checking whether franchisees are sticking to it. And at the same time, they’re trying to be local and personal (because that’s what consumers want) without losing the cohesion that makes a brand feel trustworthy.”

To foster a stronger local identity, Dan-Bergman suggests brands practice a blend of community outreach and digital tools. 

“Let your franchisees be part of the community and make sure your brand messaging reflects that. Sponsor the local kids’ teams. Invite teams in after the game. Show up at community events and be part of the local conversation. People want to buy from businesses that feel local, even if they know it’s part of a larger brand.  And at the same time, use the tools at your disposal to make your marketing feel hyperlocal and hyper-relevant. Geo-fenced targeting, neighborhood-specific messaging, and tailored offers based on habits and local events can all make a significant difference.”

Other findings include:

• Social platforms are now primary discovery engines: 50 percent of consumers have used Instagram, TikTok, YouTube or Reddit to search for local businesses. And that number increases significantly with younger audiences (77 percent of Gen Z & 65 percent of Millennials).

• Only 39 percent of franchisors plan to adopt AI tools in the next two years, even as customers demand more personalization, speed and are using these tools to search.

By not investing in AI tools, brands run the risk of falling behind, Dan-Bergman said, adding that 28 percent of consumers already use AI to discover new brands and among Gen Z it’s 55 percent. 

“Brands that are embracing AI are already gaining ground, and it’s not just the big players. In fact, AI is helping smaller and midsize franchises do more with less. It’s not just about marketing; it’s operations, admin tasks, and customer service. AI can free up teams and franchisees to focus on what actually builds the business.”

AI is helping smaller and midsize franchises do more with less. It’s not just about marketing; it’s operations, admin tasks, and customer service.

From a marketing perspective alone, the shift is massive, Dan-Bergman stressed. 

“Not long ago, you’d hire an agency to build a few campaigns for a few audiences, and it cost a fortune. Now, AI tools can help you generate highly personalized messaging at a fraction of that cost. You can tailor offers based on location, habits, and preferences, and do it at scale. Note that only 39 percent of franchisors plan to adopt AI in the next two years. That’s a huge opportunity for challenger brands to punch above their weight.”

To better understand their guests, franchisors need to listen to them in more intentional ways such as conducting regular surveys, watching how people behave on digital platforms, listening to what franchisees are hearing at the ground level, and paying attention to unfiltered feedback online, Dan-Bergman said. 

“The answers are out there – you just have to ask the right questions and be willing to act on the insights. For example, 76 percent of consumers say they’ll recommend a brand based on a great digital experience, which is a signal hiding in plain sight for franchisors who are listening.”

To effectively close the gap between franchisors and evolving consumer expectations, a two-pronged approach is essential, advised Dan-Bergman. 

“Short term, it’s about tightening up the basics… Making sure the digital experience is clean, consistent and convenient, and giving franchisees tools that actually work in their market. Long term, it’s about building a system that’s adaptable. That might mean investing in AI, personalizing your marketing, and making operational changes that align with what your customers actually value. For example, affluent consumers especially prioritize time-saving digital features like streamlined booking and frictionless loyalty tools. It’s a shift from top-down control to collaborative, data-informed decision-making.”

Failing to address these gaps can have long-term implications for a brand, Dan-Bergman warned.”

“You risk becoming irrelevant. If your experience doesn’t match up with what consumers expect, they’ll go somewhere else and won’t be likely to come back. But it’s not just about customers. Franchisees will also start to feel the impact, and that affects growth, retention, and overall brand strength. Closing this gap isn’t optional – it’s foundational to long-term success.”