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5 Tips for Franchises for Better Privacy Compliance

The franchisor-franchisee relationship involves several complexities in relation to collection and sharing of data. While the parent companies may follow certain measures to ensure compliance, they often fail to consider the risks arising from franchise operators. On the other hand, franchise operators assume they don’t have to employ privacy and security controls that are on par with that of a corporate entity.

Though comparatively smaller in scale, franchise operators do end up collecting and storing a considerable amount of consumer and employee information to manage their business operations. But the management and protection of this data is often left unconsidered. While the parent companies don’t get directly involved due to the fear of liability, it is important to understand how vulnerabilities arising from franchises could negatively impact the brand’s reputation and business.

Here are 5 points that franchise owners and operators need to consider for privacy compliance:

1. Seek legal and professional help: The intricacies around the numerous privacy laws could be difficult to understand and navigate around. Companies should consult with legal and privacy professionals to understand the potential risks and what measures to employ. The company’s privacy policy should be carefully drafted with these factors in mind to stay away from legal troubles. Franchise operators should seek consultation while setting up the business and ensure they are compliance-ready before beginning operations.

2. Be Prepared: Even after making all the efforts to keep risks at bay, there could still be some incidents that franchise owners and operators need to be prepared for. It is important to have an insurance and an incident response plan for dealing with a breach, theft or other similar event. Violation of certain privacy laws could require you to pay millions in damages and having an insurance cover will be beneficial in such a scenario. When it comes to responding to a breach/theft, having a solid incident response plan can help prepare the employees in taking the right steps at the right moment. For instance, the GDPR has a 72-hour breach reporting requirement. Apart from reporting the incident, it is equally important to be aware of the next course of action to contain the damage.

3. Renew franchise agreements: The company’s franchise agreement and operations manual should discuss liability regarding compliance with the state privacy, biometric and consumer protections laws. Franchisors should decide whether they want to be an active participant in assisting the franchisees with compliance or explicitly deny responsibility for it. And in the latter case, the agreement should state that the franchisor is indemnified for any damages due to claims arising out of a misuse or theft of data. But rejecting responsibility for franchisee’s compliance can still cause reputational harm to the brand in case of a breach or violation. A smart step would be to make recommendations to franchisees to help them with compliance and minimize risks.

4. Map the Data: It is imperative for companies to obtain consent before collecting data from consumers and ensure the data is not being used in violation of any of the applicable laws. The first step is to know what type of data your company collects and the laws applicable to such data. For instance, if your business collects personally identifiable information, then you need to ensure that the company is in compliance with the state’s privacy, biometric or consumer protection laws. Regulations like the CCPA and GDPR require companies to address data subject access requests (DSARs) for deletion, opt-outs, summary of information collected, etc. Employing a data mapping system will allow you to keep track of the data you have and fulfill data subject requests in compliance with the local regulations. Evaluating the data lifecycle exposes the areas of risk, and points out the policies and procedures that need to be revised.

5. Develop a Privacy Program: After gaining perspective of the type of data your business collects, an effective policy around data and privacy should be developed and implemented across the company. The program should also include but not limited to standard procedures and employee training for managing data, remote access use policies, vendor-related policies, etc. After successful implementation, the program should also be subjected to periodic audits to ensure it is being followed effectively.


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