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

HomeTeam Inspection Service

Good Day Columbus: Home Insurance Expert Reveals Why Central Ohio Premiums Are Rising and How to Combat Costs

rising-home-insurance-costs-ohio

CapitalSpring

Primetime Fitness Expands Crunch Portfolio With CapitalSpring’s Backing

primetime-fitness-expands-crunch-portfolio-with-capitalsprings-backing

Children's Lighthouse

How Children’s Lighthouse Franchisees Scale to Multiple Locations

how-childrens-lighthouse-franchisees-scale-to-multiple-locations

Express Employment Professionals

Betting on Himself: How Chris Brown Built an Express Employment Professionals Franchise From the Ground Up

betting-on-himself-how-chris-brown-built-an-express-employment-professionals-franchise-from-the-ground-up

Comfort Keepers

Comfort Keepers® Named One of America’s Best Home-Care Providers

comfort-keepers-named-one-of-americas-best-home-care-providers

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

Potbelly to be Acquired by RaceTrac in $566 Million Deal 

racetrac-acquires-potbelly-in-566-million-deal

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

health-care-hiring-slowdown-in-home-care-franchise-opportunities

Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

caribou-coffee-names-scott-kennedy-ceo-eyes-continued-growth

McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

mcdonalds-launches-extra-value-meals

Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

smoothie-king-food-menu-power-eats

DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

devhub-meet-the-supplier

What It Really Feels Like To Franchise Your Business

what-it-really-feels-like-to-franchise-your-business

Mike Revak - Chief Business Officer - Sky Zone - Franchise Marketing Leaders - 1851 Franchise

Top 25 Franchise Marketing Leaders: Mike Revak — President and Chief Business Officer, Sky Zone

top-25-franchise-marketing-leaders-mike-revak-chief-business-officer-sky-zone

Top 25 Franchise Marketing Leaders: Cathy Chavenet — Chief Marketing Officer, Paris Baguette

top-25-franchise-marketing-leaders-cathy-chavenet-chief-marketing-officer-paris-baguette

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

Multi-Unit Wendy’s Operator Signs 12-Unit Deal With Layne’s Chicken Fingers

ricki-oberoi-laynes-chicken-fingers-growth

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

1851 Franchise Deep Dive graphic with Sparkle Squad logo

Sparkle Squad Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-sparkle-squad-franchise-costs-fees-profit-and-data

Design with school-aged child standing on pencil with text "Education Franchises" and "<$500K"

Top Education Franchises Under $500K To Explore in 2025

top-education-franchises-under-500k

The Impact Data Privacy Laws Will Have On Franchising

MORE STORIES LIKE THIS