Unemployable with Jeff Dudan

Episode: Franchise Tech Strategy: When to Build, When to Buy (AI Changes Everything)
Date: February 20, 2026
Host: Jeff Dudan, Homefront Brands
Guest: (Unnamed representative from FranConnect)

Overview

This episode explores the critical decision franchise businesses face: should they build their own technology solutions or buy off-the-shelf products? With the rise of artificial intelligence, this decision is becoming both more nuanced and urgent. Host Jeff Dudan and his guest from FranConnect dive into how AI has fundamentally changed the financial and strategic calculus, the impact on development lifecycles, and what franchisors should consider in 2026 and beyond. The discussion also highlights trends in franchise entrepreneurship, the “last mile problem” of custom development, and the evolving SaaS landscape.

Key Discussion Points and Insights

1. The Build vs. Buy Dilemma in Franchising

[00:01–02:40]

• Resource Allocation:
  • It’s not just about money—a franchisor’s “mind share” (focus and strategic bandwidth) is also limited.
  • Quote:
    “Anything that you build yourself means you have to spend resources in thinking about what you want to build.” — Guest [00:20]
• Strategic Fit:
  • Build when something is “uniquely yours” and has very high ROI.
  • Buy when it’s a standard function or when building would distract from core business objectives.
• Ongoing Ownership Risks:
  • If a key internal developer leaves, the organization can be left in the lurch.

2. The AI Shortcut—A Double-Edged Sword

[02:40–04:41]

• Speed vs. Sustainability:
  • AI makes rapid prototyping (e.g., building simple internal tools) easier than ever.
  • “Vibe coding” with platforms like Replit can spin up apps fast—but these are often riddled with unseen flaws.
• The “Last Mile” Problem:
  • “Shortcuts” in AI-built code often introduce hidden technical debt—security loopholes or missing features.
• Quote:
  “There are many examples of where AI allows you to take these shortcuts... you don’t see it until much later. That’s why I call this the last mile problem.” — Guest [04:19]

3. Benefits of Buying, Especially in Compliance & Security

[04:42–05:15]

• Purchased platforms are typically certified (SOC1, SOC2) and vetted for security, whereas custom one-off internal builds rarely achieve the same.
• Quote:
  “When you buy stuff, remember the vendor has gone through certification, SOC1, SOC2, like all of these things that are really hard to bypass just because you wanted to move that into production.” — Guest [04:44]

4. The “Frankenstein Effect” and Platform Convergence due to AI

[05:16–07:41]

• Expanding Capabilities:
  • Formerly single-function apps rapidly add features, making platforms more robust.
  • The market is moving from fragmented, single-modality tools to platforms integrating many functions.
• Monetization Strategy:
  • Best-in-class SaaS companies use AI as a value-add, not a nickel-and-diming tactic.
  • Memorable Quote:
    “What good companies do... they're going to use AI as a utility to improve their product and not continuously try to upcharge their clients... because it's going to be table stakes in three months or six months.” — Jeff Dudan, recounting Sean Clark of Go High Level [06:52]

5. Changing Economics of Development and Operation with AI

[07:42–09:51]

• Development costs are dropping rapidly due to AI, but operational costs (AI inference and compute) are unpredictable and rising.
• Marginal costs per SaaS customer used to be very low and predictable; now, with AI-heavy products, they are variable and harder to estimate.
• Expect SaaS pricing to shift from flat fees toward usage-based pricing.

6. Franchise Industry Outlook (2026 and Beyond)

[09:52–12:00]

• Acceleration of Franchising:
  • Entrepreneurship, especially in service-based franchising, is growing faster than ever.
  • Scaling is easier in service brands—not limited by physical locations.
• AI Makes “Business Shopping” Smarter:
  • Prospective franchisees will use AI and data (like FDDs, reviews, NPS) to research and benchmark brands.
• Winners and Losers:
  • Well-run, transparent, high-engagement franchise brands with happy franchisees will benefit most.
  • The democratization of information via AI means only the best operators will thrive.
• Quote:
  “The winners will be the ones that are operating successful brands.” — Guest [12:00]

Notable Quotes & Memorable Moments

• The Build-or-Buy Framework:
  “For most organizations, given finite time, finite resources, it makes sense to buy some things and it makes sense for you to build certain things... if it's uniquely yours.” — Guest [01:44]
• On AI-Generated Technical Debt:
  “I have put a security thing deliberately in there to just get this thing to work... I had to rebuild it all over again.” — Guest [03:51]
• Platform Growth and Bundle:
  “All of a sudden... single-modality softwares had all the features of the other ones... because once they knew how to build something, now they had programmers...[and] started building more robust apps.” — Jeff Dudan [06:07]
• On SaaS Pricing and Future Models:
  “I think a lot of AI companies will probably have to move to some usage-based model because... development is really, is going to be very low. It'd be table stakes.” — Guest [09:25]

Timestamps for Key Segments

| Time | Segment | |--------------|----------------------------------------------------------------------------------| | 00:01–02:40 | Build vs. Buy overview, resource limitations, and strategic trade-offs | | 02:41–04:41 | Speed of AI-powered development & introduction of the “last mile problem” | | 04:42–05:15 | Value of vendor certifications and compliance | | 05:16–07:41 | SaaS product convergence, platformization, and the “Frankenstein effect” | | 07:42–09:51 | AI changes in dev/operational costs & emergence of usage-based SaaS pricing | | 09:52–12:00 | Franchise industry trends, AI’s role in due diligence, winners & losers |

Conclusion: Actionable Takeaways for Franchisors

• Do an honest ROI and risk assessment before choosing the build-or-buy path.
• Know that AI can make prototyping fast, but shortcuts are costly in the long run.
• Prioritize platforms and partners that invest in security, compliance, and integration.
• Use AI to enhance relationships and intelligence, not just to chase shiny new tools.
• In the end, transparency, performance, and franchisee satisfaction will matter most as AI democratizes access to data and raises the bar for all.

This conversation is an essential listen for franchise operators considering their technology strategy in an era of rapid AI evolution and industry convergence.