For many businesses, growth strategies often involve mergers, acquisitions, or organic expansion. However, franchising presents another lucrative path. The U.S. has over 800,000 franchise businesses, with that number continuing to rise. However, franchising—a model where a business licenses its brand and operations to external operators—requires extensive legal compliance, contracts, and documentation, making it a complex endeavor.
Brooklyn-based startup Harmonyze aims to streamline this process using AI and has just secured a $2 million pre-seed funding round led by Bowery Capital. The company plans to use the funds to enhance its AI agents designed to assist franchisors in managing their franchise operations more effectively.
AI-Powered Franchise Management
Harmonyze’s AI agents operate within a private cloud database between franchisors and franchisees, performing over 200 tasks to ensure compliance and efficiency. These tasks include verifying that franchisees have correctly paid vendors or ensuring insurance renewals are up to date. By automating these administrative functions, Harmonyze helps franchisors reduce time spent on regulatory compliance and administrative tasks, crucial in the heavily regulated franchising industry.
The company was founded in 2023 by Gary Liskovich, a former product manager, and Jonny Greenspan, a former engineer. The founders initially explored the legal space but pivoted to franchising due to its untapped potential and personal connections—Greenspan’s father owned a Totonno’s pizza franchise.
“Franchising represents 10% of U.S. businesses, yet it’s a space filled with unstructured data that AI can significantly optimize,” said Liskovich. “We saw an opportunity to turn this unstructured data into actionable insights.”
Early Traction and Market Strategy
Since exiting stealth mode in early 2024, Harmonyze has seen robust demand from franchisors. Despite this demand, the company is focusing on a select group of customers initially to refine its product based on feedback. Liskovich notes that most of the pre-seed funding will go toward hiring talent to further develop the product.
Harmonyze has chosen to focus on franchisors rather than franchisees, recognizing that franchisors handle significantly more unstructured data, making their problems more amenable to AI solutions. The startup aims to help franchisors identify and replicate successful practices from franchisees across their networks.
“Franchisees are often innovators—like the franchisee who invented the Filet-O-Fish at McDonald’s,” Liskovich added. “We want to help franchisors identify these innovations and spread them across their networks to boost overall profitability.”
Future Plans and Market Outlook
Harmonyze’s current target market includes franchisors overseeing large networks of franchisees, rather than smaller franchise operations. However, the company sees potential in eventually developing technology for smaller players as well.
Liskovich believes that Harmonyze’s success lies in its focus on vertical SaaS for the franchising sector rather than specializing in individual niches within franchising. The company’s strategy is based on the understanding that, despite the diversity of franchised businesses—from McDonald’s to Orangetheory Fitness to UPS stores—the internal structures of these companies are largely similar.
Looking ahead, Liskovich is optimistic about Harmonyze’s growth prospects given the expansion of the franchising market. “The franchise sector is not only large but growing at an incredible rate,” he said. “We see a significant opportunity ahead.”
As the franchise market continues to expand, Harmonyze is poised to play a critical role in helping franchisors navigate the complexities of managing large, distributed networks with the aid of advanced AI tools.
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