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

Sola Salons

Sola Salons Eyes Southern Connecticut for Strategic Franchise Expansion

sola-salons-eyes-southern-connecticut-for-strategic-franchise-expansion

Woodhouse Spas

Photo of exterior of Woodhouse Spa location with people walking around outside

Woodhouse Spas: A Recession-Resistant Franchise Opportunity With Unmatched Support

woodhouse-spas-recession-resistant-franchise-opportunity

Sylvan Learning

Pasadena Weekly: Sylvan Learning Pasadena Offers Free Tutoring for Students Impacted by Local Fires

sylvan-learning-pasadena-free-tutoring-fire-support

BIGGBY COFFEE

BIGGBY® COFFEE Names Erin Kaylor as President, Reinforcing People-First Vision

BIGGBY® COFFEE Names Erin Kaylor as President, Reinforcing People-First Vision and Growth-Focused Future

biggby-coffee-names-erin-kaylor-president

Workout Anytime

Design with Workout Anytime logo and photo of Larry Brayman

Workout Anytime Welcomes Larry Brayman as Chief Marketing Officer, Strengthening Leadership Team Amid Growth Surge

workout-anytime-larry-brayman-cmo

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 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

The Future of Franchising: Trends and Predictions for 2025 and Beyond

the-future-of-franchising-trends-and-predictions-for-2025-and-beyond

Restaurant Business: Crumbl Cools Its Expansion, Refocuses on Profitability

restaurant-business-crumbl-cools-its-expansion-refocuses-on-profitability

Franchise Face-Lifts: Why Major Restaurant Brands Are Betting Big on Remodels

franchise-face-lifts-why-major-restaurant-brands-are-betting-big-on-remodels

How New Tariffs Are Causing Price Hikes and Surcharges for U.S. Businesses and Franchises - 1851

Tariffs Prompt Price Hikes, Surcharges as Businesses (and Franchises) Brace for Rising Costs 

tariffs-prompt-price-hikes-surcharges

Pizza Hut - EYM Group - Chapter 11 Bankruptcy - 77 Pizza Hut Locations Sold - 1851 Franchise

77 Pizza Hut Locations Sold After Franchisee Bankruptcy Filing

pizza-hut-franchisee-bankruptcy-eym-group

Photo of powerlifter, wearing red singlet and white socks, preparing to deadlift

The 5 Business and Life Lessons I Learned from Powerlifting

the-5-business-and-life-lessons-i-learned-from-powerlifting

franchise supplier award design with Locate AI logo and 1851 Franchise badge

Franchise Real Estate Services | Locate AI — Emerging Leaders in Franchise Support

locate-ai-emerging-leaders-in-franchise-support

Consulting and Development | Big Sky Franchise Team — Emerging Leaders in Franchise Support

Big Sky Franchise Team: Expert Consulting for Scalable Growth

consulting-and-development-big-sky-franchise-team-emerging-leaders-in-franchise-support

Emerging Leaders in Franchise Support: 1851 Supplier Highlights

Emerging Leaders in Franchise Support: List of Franchise Suppliers

emerging-leaders-in-franchise-support

Franchisee spotlight image with Randy and Sandy Craft, Children's Lighthouse logo on blue background

The Crafts’ Successful Journey from New Parents to Children’s Lighthouse Franchisees

the-crafts-successful-journey-from-new-parents-to-childrens-lighthouse-franchisees

Franchise Success Stories: Inspiring Tales from the Front Lines

franchise-success-stories

Image of building outline hovering over person's hand

How To Choose the Right Franchise: A Step-by-Step Guide to Success

how-to-choose-the-right-franchise-step-by-step

Most Profitable Restaurant Franchises To Own in 2025 - 1851 Franchise

The Most Profitable Restaurant Franchises to Own in 2025

most-profitable-restaurant-franchises-to-own

Amateur Bodybuilder and Business Partner Bring Passion for Fitness to World Gym Franchise in Fulton, New York

amateur-bodybuilder-and-business-partner-bring-passion-for-fitness-to-world-gym-franchise-in-fulton-new-york

DonutNV Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-donutnv-franchise-costs-fees-profit-and-data

The Impact Data Privacy Laws Will Have On Franchising

MORE STORIES LIKE THIS