Harmonyze is developing AI agents to assist franchisors in analyzing unstructured data, enhancing decision-making and operational efficiency
Franchising offers a growth path beyond acquisitions or organic expansion, with over 800,000 U.S. franchises rising yearly, per Statista
However, franchising a business, which involves licensing a business model and brand to an external operator, necessitates significant documentation, legal compliance, and contracts, further complicating an already complex business model.
Harmonize, a Brooklyn-based company, has recently secured a $2 million pre-seed round headed by Bowery Capital to enhance the capabilities of its AI agents. The company aims to assist franchisors in managing all operations through AI.
The startup’s custom AI agents are in a private cloud database between the franchisor and the franchisees.
These agents can communicate with one another and complete more than 200 duties, such as verifying that a franchise has paid a product vendor accurately or that the franchise is current on insurance renewals.
Franchising is a highly regulated industry, ensuring that franchisors and their franchisees remain compliant. Another significant advantage is that they are not required to allocate as much time to administrative duties.
Gary Liskovich, CEO, a former product manager at startup EvolutionIQ and SmartAsset, and Jonny Greenspan, CTO, a retired engineer at companies such as Salesforce, who were childhood companions, established the company in 2023.
Liskovich disclosed to TechCrunch that they had experimented with developing a legal product. However, they ultimately opted for franchising due to the market’s latent potential and a personal connection: Greenspan’s father owned a Totonno’s Pizza franchise location.
“Franchising is a term widely recognized, but most individuals have not conducted a thorough investigation; it comprises 10% of U.S. businesses,” Liskovich stated.
“We began investigating the franchising sector; it contains an immense quantity of unstructured data that we are confident AI can unlock and transform into a usable form.”
Liskovich stated that Harmonyze has experienced robust demand from franchisors since exiting covert mode in early 2024.
He further stated that Harmonyze is initially opting to collaborate with a limited number of customers to continue gathering feedback and refining the product and its capabilities despite the high demand.
Liskovich stated that the organization intends to allocate most capital from the pre-seed round to recruitment to continue the product’s development. Focal.VC and numerous franchise industry professionals participated in the round.
Harmonize elected to concentrate on the franchisor, as opposed to the franchisee, because the franchisor manages a significantly greater volume of unstructured data, which results in issues more conducive to AI solutions, according to Liskovich.
He also anticipates that Harmonyze will be capable of assisting franchisors in identifying intelligent business practices among affiliates that can be implemented universally.
“Franchisees are renowned for their innovation and are individuals who are modifying the system,” Liskovich stated. “A franchisee was the source of [McDonald’s] Filet-O-Fish, which was highly renowned.”
That is the point at which we wish to commence our assessment: In which areas are your most successful franchisees implementing innovation? And utilizing that information to increase the profitability of all parties.”
Liskovich believes that the startup’s success thus far can be attributed to its emphasis on developing vertical SaaS for franchisors as a whole rather than sectors within franchising. These sectors may encompass a variety of companies, such as McDonald’s, Orangetheory Fitness, and UPS stores.
He stated that the internal structure of these companies is mainly consistent even though there are various categories of franchised businesses.
Given the sector’s consistent growth and scale, it is surprising that there is not much competition in the franchise space.
Harmonize concentrates on franchisors who oversee a substantial network of franchisees instead of proprietors who only collaborate with a small number.
Liskovich anticipates that the startup will develop technology to collaborate with these smaller companies; however, the market in its target area is sufficiently expansive to sustain its operations for the time being.
“We are enthusiastic about the franchise market’s expansion,” Liskovich stated. “It is not only substantial, but it is expanding at an unprecedented pace.” That opportunity is expanding.
