1851

Data privacy is a pressing concern for businesses worldwide, and the franchising sector is no exception. With the increasing number of state and international laws governing data privacy, franchises must navigate a&nbsp;<a href="https://1851franchise.com/emerging-legal-challenges-in-franchising-2725846">complex legal landscape</a> to ensure compliance and protect customer data.&nbsp;Understanding Data Privacy LawsData privacy laws vary significantly across jurisdictions, but they generally fall into several categories: consumer privacy, biometric laws, sector-specific privacy laws, deceptive practices laws and laws related to recording or eavesdropping.“Currently, comprehensive consumer privacy laws are in effect in California, Colorado, Connecticut, Virginia and Utah, with more states like Florida, Montana, Oregon and Texas joining soon,” said&nbsp;<a href="https://www.linkedin.com/in/renatosmith?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">Renato Smith</a>, a partner at&nbsp;<a href="https://www.barclaydamon.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">Barclay Damon LLP</a>. “These laws require businesses to post privacy notices at the points of personal information collection and provide details on data usage and consumer rights.”One of the most stringent and oft-cited laws is the&nbsp;<a href="https://oag.ca.gov/privacy/ccpa?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">California Consumer Privacy Act (CCPA)</a>, which sets a high bar for compliance. “Under the law, businesses must navigate whether they control the franchisee and whether they share common branding. If not, sharing data with franchisees could be considered a ‘sale’ under CCPA,” said&nbsp;<a href="https://www.lathropgpm.com/Tedrick-Housh?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">Tedrick Housh</a>, a partner at&nbsp;<a href="https://www.lathropgpm.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">Lathrop GPM LLP</a>. This distinction is crucial, as non-compliance can lead to significant liabilities.Challenges for FranchisesFranchises face unique challenges in managing data privacy. The&nbsp;<a href="https://1851franchise.com/trust-in-franchising-2726050">franchisor-franchisee relationship</a> complicates data management, as both parties often share and collect customer data. Housh emphasizes the importance of understanding data flows, for example: “Be aware of your data flows. Knowing what data you collect and how it’s used is crucial for protection.”Biometric data presents additional complexities. Laws in states like&nbsp;<a href="https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3004&amp%3BChapterID=57&utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">Illinois (BIPA)</a> and&nbsp;<a href="https://statutes.capitol.texas.gov/Docs/BC/htm/BC.503.htm?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">Texas (CUBI)</a> require businesses to obtain prior consent for collecting biometric information. According to Smith, “These laws generally require businesses to obtain prior consent, provide opt-out opportunities and post data retention policies.”Legal and Operational ImpactsData privacy laws can also impact daily operations significantly. Franchises must invest time and resources in due diligence, risk assessments and legal consultations to comply with various regulations.&nbsp;“Performing due diligence and configuring solutions to align with privacy laws requires significant time and labor,” said Smith. “It can be challenging for franchisees to manage this while keeping up with business operations.”Moreover, non-compliance can have severe repercussions. “Franchisees face substantial risks of privacy violations,” said Housh. “A prominent fast-food chain faced potential damages of over&nbsp;<a href="https://www.americanbar.org/groups/business_law/resources/business-law-today/2023-may/illinois-supreme-court-finds-white-castle-could-face-up-to-17b-in-damages/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">$17 billion</a> for violating Illinois’ BIPA.”&nbsp;Such risks also extend to&nbsp;<a href="https://1851franchise.com/chapter-16-maintaining-legal-and-ethical-standards-in-your-franchise-system-2722765">reputational damage and legal liabilities</a>, affecting both franchisees and franchisors.The Role of Technology and Vendor ManagementTechnology also plays a crucial role in managing data privacy, but it introduces new challenges as well. “Be very observant with what your marketing team is doing and where they are getting their data,” said Housh. “Ensure you have consent for data collection, especially for emails and texts.”Franchises must also carefully vet&nbsp;<a href="https://1851franchise.com/supplier">technology vendors</a>. Ensuring that vendors comply with privacy laws and align with the franchise’s data protection policies is critical. “These agreements should include warranties, data security measures, cyber insurance and indemnification for data breaches,” said Smith.&nbsp;Best Practices for ComplianceTo mitigate all of these risks, franchises should adopt best practices for&nbsp;<a href="https://1851franchise.com/how-to-make-sure-your-franchise-development-site-is-legally-compliant-2710124">data privacy compliance</a>.&nbsp;“Have an incident response plan and practice simulations to prepare for data breaches,” said Housh. “Ensure all stakeholders — from the C-suite to IT — know their roles in such events.”Smith advises franchises to consider hiring a Data Privacy Officer (DPO) and allocating resources for in-house technology experts and legal counsel. “Develop and implement a&nbsp;<a href="https://www.irs.gov/pub/irs-pdf/p5708.pdf?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-impact-data-privacy-laws-will-have-on-franchising-2726828" target="_blank" rel="nofollow">Written Information Security Program (WISP)</a> that addresses data security, incident response and risk assessment,” he said.Additionally, both franchisors and franchisees should stay informed about evolving privacy laws and adjust their practices accordingly. Regularly updating privacy policies and ensuring transparent communication with customers about data collection and usage are essential steps.By understanding the legal landscape, adopting best practices and staying vigilant about technological and vendor relationships, franchises can protect customer data and mitigate risks. As the&nbsp;<a href="https://1851franchise.com/franchises-to-face-increased-legal-pressure-under-proposed-nlrb-rule-2719677">regulatory environment continues to evolve</a>, staying informed and proactive will be key to maintaining compliance and safeguarding brand reputation.For more information on franchising legal matters, check out these related 1851 Franchise stories:<ul><li><a href="https://1851franchise.com/important-legal-considerations-in-franchise-agreements-and-contracts-2725774">Important Legal Considerations in Franchise Agreements</a></li><li><a href="https://1851franchise.com/chapter-16-maintaining-legal-and-ethical-standards-in-your-franchise-system-2722765">Maintaining Legal and Ethical Standards in Your Franchise System</a></li><li><a href="https://1851franchise.com/emerging-legal-challenges-in-franchising-2725846">Emerging Legal Challenges in Franchising</a></li></ul>

Navigating Data Privacy Laws in Franchising | Expert Legal Insights

1851 Franchise

Two expert franchise lawyers share their insights on how franchisors and franchisees can navigate complex regulations and implement robust data management practices.

The Impact Data Privacy Laws Will Have On Franchising

the-impact-data-privacy-laws-will-have-on-franchising

Comfort Keepers

Comfort Keepers - Midyear Press Release 2025 - 1851 Franchise

Comfort Keepers® Hits Mid-Year Stride With Strong Franchise Growth and Rising Demand for In-Home Care

comfort-keepers-franchise-midyear-momentum-2025

petbar

petbar - Garrett Dewan - Why I'm Investing - 1851 Franchise

Why Garrett Dewan Is Choosing To Reinvest in petbar

petbar-franchise-austin-garrett-dewan-multi-unit

Paris Baguette

NJBIZ: Paris Baguette Ramps Up Expansion With New Franchises, Facility and 2030 Growth Target

njbiz-paris-baguette-ramps-up-expansion-with-new-franchises-facility-and-2030-growth-target

Busy Bee Jumpers

Top 10 Reasons To Buy a Busy Bee Jumpers Franchise in 2025

top-10-reasons-to-buy-a-busy-bee-jumpers-franchise-in-2025

Home Halo

home-halo-former-athletes-frachisees-image

Why Former College Athletes Can Make Winning Home Halo Franchise Owners

former-college-athletes-home-halo-franchise

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Wendy's CEO Kirk Tanner Steps Down - Breaking News - 1851 Franchise

Wendy’s CEO Kirk Tanner Steps Down Amid Challenges, Leaving Franchisees Facing Uncertainty

wendys-ceo-transition-kirk-tanner-franchisee-uncertainty

"Come in, We're OPEN" sign against abstract background

Small Business Optimism Dips, Raising Concerns for Franchise Owners

small-business-optimism-dips-raising-concerns-for-franchise-owners

Photo of Roof Scientist truck and trailer

Roof Scientist Expands Into Northern Indianapolis as Entrepreneur Dale Speckman Launches New Business in Fishers

roof-scientist-expands-into-northern-indianapolis

Image of Donald Trump pointing with red stripes in the background

August 1 Tariff Deadline Is Said to Have ‘No Extensions’: What This Could Mean for Franchises

august-1-tariff-deadline-franchise-impact

What June’s Jobs Report Means for the Franchise Industry

what-junes-jobs-report-means-for-the-franchise-industry

The Ultimate Guide to Selling Franchises: How To Create a Strong Incentive

how-to-build-strong-incentives-to-attract-prospective-franchisees

Amanda Evans - Stellar Service Brands - Franchise Marketing Leaders 2025 - 1851 Franchise

Top 25 Franchise Marketing Leaders: Amanda Evans — Senior Vice President of Marketing, Stellar Service Brands

stellar-service-brands-marketing-leader-amanda-evans

Photo of a large group of people standing in a circle, placing hands together in center

Franchise Opportunities for Minorities: Expanding the Franchise Network

franchise-opportunities-for-minorities

Coffee & Analytics graphic with photo of Nick Powills

Franchise Growth Is Messy. Lead Gen Is Uncomfortable. Let’s Fix It.

franchise-lead-generation-insights

From Prescriptions to Pastries: Kari Khandelwal Creates a Comforting Community Bakery 

From Prescriptions to Pastries: Kari Khandelwal Creates a Comforting Community Bakery in Overland Park, Kansas

paris-baguette-franchise-overland-park-khandelwal

Kansas Couple Revitalizes Local Childcare With Children’s Lighthouse

From Corporate Careers to Community Roots: Kansas Couple Revitalizes Local Childcare With Children’s Lighthouse

kansas-couple-opens-childrens-lighthouse-gardner-olathe

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

hooters-franchise-model-company-owned-closures

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

The Impact Data Privacy Laws Will Have On Franchising

MORE STORIES LIKE THIS