By Tereza Murray, Leading Franchise & Business Consultant and CEO of Tereza Murray Franchising (TMF)
With Artificial Intelligence (AI) moving beyond big tech, I’m seeing small and medium-sized businesses adopting the technology in increasing numbers. As the trend accelerates, it’s vital that franchisors learn how to harness AI’s benefits, without risking compliance, brand integrity or business value.
After 20 years of experience working as both a consultant and franchisor, I’ve seen just how easy it is to get swept up in the hype. But the priority must always be protecting brand value, compliance, and long-term business success.
Legal expertise is irreplaceable
My biggest concern is business owners using AI tools without proper legal oversight, particularly for critical documents.
As AI tools become more accessible, business owners are eager to explore their potential. The smart ones are asking: How can I use this tech to streamline admin without compromising compliance, IP, or brand integrity?
While platforms like ChatGPT are transforming how we manage admin and content creation, franchisors are at risk of mistakenly using AI to generate legal documents such as franchise agreements and operations manuals which could have serious consequences.
In one of my podcast episodes, I spoke with Olivia Hitchens, principal partner at Artemide Law and legal advisor to the Australian Retailers Association, to unpack to legal implications of AI in franchising. She made it clear that AI cannot replace qualified legal guidance, especially in a heavily regulated sector like franchising.
From a franchising perspective, Olivia explained that AI can help you populate an instruction sheet for your lawyer or assist with formatting, but she strongly recommended against relying on AI to draft a franchise agreement, negotiate special conditions, or handle disclosure.
This is because the risks are simply too high, and the penalties are steep. If your documents don’t comply with the Code, a franchisee can walk away. They can unwind the agreement entirely, and your business will wear the cost.
Use AI for speed, not strategy
Let me be clear, I absolutely use AI in my own business and I encourage franchisors to explore its capabilities. But the key is knowing where to draw the line.
AI can streamline repetitive tasks like drafting social media policies, email templates or onboarding documents, and it can also help legal teams work more efficiently. But outsourcing core legal work to AI is risky and tends to be non-compliant.
This is because ChatGPT is time-locked, so it doesn’t have access to the latest laws.
Olivia shared a cautionary tale about a client who used ChatGPT to write their privacy policy. The platform pulled outdated legislation and ignored GDPR, a critical oversight since the client was exporting to Europe. The result was a legally useless policy that left the brand exposed.
The same goes for franchise agreements. AI might produce something that looks legitimate, with the right headings, but it will lack the substance. Even if you spend hours refining it, it will still be missing critical concepts.
Don’t risk your brand’s value
It comes down to recognising that franchise agreements and operations manuals are not just paperwork, they’re vital assets that influence your brand value and business success. Errors or inconsistencies can lead to non-compliance with the Franchise Code, trigger penalties, and tank valuation in a sale or investment.
Even with creative content, like a slogan or design, you don’t know whether the AI-generated output is infringing on someone’s IP.
Olivia explained that she once had a client who used AI to generate a fabric print for a product and it was lifted straight from a Gucci design. This is a reminder that a template won’t protect your IP. It won’t reflect your operating model, and it won’t hold up under legal scrutiny.
Tips for safe and effective AI use by franchisors
Despite these errors, AI can be valuable, if used wisely. Here are my top three tips to help franchisors use AI effectively, while protecting your brand and ensuring compliance:
- Use AI for repetitive admin:
AI is ideal for drafting time-consuming documents like social media policies, onboarding materials, or internal training guides. Let it take care of first drafts and formatting, just make sure every output is reviewed and tailored to suit your business.
In my experience, AI is also a great tool for streamlining communication whether that might be templated customer service emails or automated staff FAQs. These small changes free up capacity for more high-value strategic work, without risking your legal standing.
- Never use AI for legally binding documents:
Legal documents, particularly franchise agreements, leases, or disclosure statements, must be drafted or reviewed by a qualified lawyer. No exceptions.
Even the most advanced AI platforms are time-locked and may rely on outdated legislation. They also can’t offer tailored advice, adapt to your unique business model, or foresee the commercial implications of specific clauses. Legal shortcuts today could cost you millions tomorrow.
- Implement a company-wide AI policy:
Your team is likely already using AI, whether you’ve approved it or not. Get ahead of the risk by developing a clear AI policy that outlines when and how AI can be used across your business.
I recommend including protocols for fact-checking, legal review, brand alignment, and data privacy. AI is a powerful resource, but like any tool, it needs clear guidelines to ensure it’s used responsibly and effectively.
Ultimately, there’s no such thing as a ‘standard’ franchise model, meaning AI can never replicate what makes your brand unique. At TMF, our job is to help you replicate your business and operating system, which is why every manual must be 100% tailored to you. That’s something AI simply can’t deliver.
That said, the future of franchising isn’t about rejecting AI. It’s about using it intelligently, with strategic thinking, legal oversight, and brand protection at the core. Because when it comes to safeguarding your business, taking a shortcut could cost you everything.
ABOUT TEREZA MURRAY
Tereza Murray is a leading Franchise and Business Consultant with over 20 years of experience in the franchising industry as both a consultant and franchisor, along with a track record of success running some of Australia and New Zealand’s most well-known brands (franchised and independent). With a background spanning over 30 years in business development across B2B and B2C, Tereza works with businesses ranging from start-ups to established companies ready for serious growth.