Most franchise buyers are using AI the wrong way. AI can be a powerful tool for franchise research, FDD breakdowns, Item 19 analysis, Item 20 review, competitive research, and buy-or-pass decision making. But if you&#x27;re using AI to simply tell you what to do, you&#x27;re missing the point. In this episode, Eric breaks down how he uses AI to evaluate franchise brands, research financial performance representations, identify red flags, compare franchise opportunities, and prepare for smarter conversations with franchisors and franchisees. You&#x27;ll hear how AI can help buyers understand franchise economics, territory concerns, private equity ownership, royalty structures, franchisee sentiment, and hidden P&amp;L issues — while still remembering that AI does not replace real due diligence or franchisee validation. If you&#x27;re thinking about buying a franchise, researching franchise opportunities, or trying to understand how to use AI in your franchise due diligence process, this episode will help you look deeper before making a decision. Timestamps: 0:00 — Why Most Franchise Buyers Use AI Wrong 2:27 — Franchise Buyer Behavior Is Changing 5:32 — Buyers Can Research More Than Ever Before 6:30 — How I Build AI Franchise Reports 9:29 — Why Item 20 Matters 10:51 — The Top Franchise Red Flags 15:24 — What Item 19 Actually Discloses 18:43 — AI Should Help You Understand, Not Decide 19:32 — Buy or Pass? Looking at Both Sides 28:17 — AI Does Not Replace Real Due Diligence Connect with Erik Van Horn: 🌐 Website - https://franchisesecrets.com/ 📷 Instagram - https://www.instagram.com/erikvanhorn/ 👍 Facebook - https://www.facebook.com/erik.v.horn/ 💼 LinkedIn - https://www.linkedin.com/in/evanhorn/ Best Franchise Starter Playlist: https://youtube.com/playlist?list=PLEEithd54kMlgRgsBAo4LWNCMSOthnK0r&amp;si=TD1z25-ie2d23rGm https://youtube.com/playlist?list=PLEEithd54kMle5_OUXiuLbc_UPBtz1vTE&amp;si=uCOgDya1VnnCarDf https://youtube.com/playlist?list=PLEEithd54kMk2Kw07KwZGWgF8UTx9N5_T&amp;si=ZldjBOqFanGE-JUL #Franchise #FranchiseBusiness #BuyingAFranchise

Most Franchise Buyers Are Using AI Wrong

Franchise Secrets Podcast

# Full Transcript

**Podcast:** Franchise Secrets Podcast

## Participants

- **Erik Van Horn** (Franchise Secrets)

## Transcript

And I think this is where a lot of people get it wrong with AI. They are just absolutely looking for it to tell them what to do versus like using AI to help you understand and make decisions for yourself. Representing Franchise Secrets

All right, we got a solo episode today. I missed it in the office yesterday when I was supposed to record. A lot of things came up. And so I'm at the lake today recording and got a lot of different things I want to talk about. One of the things I've created, I've been using Hermes. It's like OpenAI, but it's called Hermes. And I've been having it feed me a lot of information just in franchising in general.

So it just gives me so many ideas to talk about on the podcast and to refrain myself because there's so many different angles to go. And what I'm seeing more and more as I'm digging into things, there's so much information out there that's not really making it out to the buyers and the franchisees.

And I think in the coming months and years ahead, information is going to be much more of it at the franchisees and buyers fingertips. So let's see, where should we start? Let's start with franchise development. And I've got some things for franchise buyers next. I'm going to talk about a franchise that's probably one of the best franchises out there.

I have nothing to do with it. It's not in the broker community. It's more on the mature side, pushing to a thousand units and they do very well. But I want to do some breakdowns of that particular brand. I think that would be helpful for franchisees and franchise buyers in particular.

But in franchise development in general, I'm in these conversations with consultants and brokers and emerging brands, brands that are just getting started, like even before emerging and then mature brands. And everyone has an opinion. Everyone's like, hey, leads are down. And that and or, you know, what worked before didn't work doesn't work anymore.

And I've got some thoughts on that, some things that I'm trying out, some things that I'm doing to generate leads. But I do think things are changing with lead generation for franchise awards. I think franchise buyer behavior is changing, especially with AI and what they have access to. I also wanted to get some real data points.

So how franchise development is actually doing from people out there that have a really good lens on it and they are working with a lot of different brands. And so I reached out to some different people and they'll remain nameless and anonymous because I want to be able to get some good data. Yeah. And one of the things that I heard out there is like.

Buyers, buyers of franchises in general were up about 10 percent, I think in the last thing that was last quarter, meaning the last part of last year. And then this year is about flat. So they went up and they're still flat. And this i...

Most Franchise Buyers Are Using AI Wrong

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

Most Franchise Buyers Are Using AI Wrong

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.