Franchise Lawyer Blog

Social Media

We are back after a brief hiatus that was caused by a complete renovation of our website and blogging capacity. We are moving forward and plan to continue in our efforts to stay on top of legal and business developments in the franchising space.

We’ll start with social media, since that’s what many of our clients are asking us about. Everyone is using social media, but what kind of controls or policies need to be in place? How does the attorney help in this process?

We have previously written about social media in franchising in our March 4th post.

When we talk about social media, we are including blogging, microblogging (which includes Twitter), social networks (Facebook, MySpace and LinkedIn), sharing (YouTube and Flickr) and collaborative efforts such as Wikipedia. Let’s start with franchisors.

It is crucial that a franchisor have a media policy and that it be implemented throughout the franchisor’s documentation. The franchise disclosure document should reference social media policies in Item 9 (Franchisee’s obligations) and could be discussed in Item 11 in a section on advertising.

The franchise agreement should provide specific detail of the policy requirements. As those policies develop, the franchise practitioner can assist the franchisor in maintaining current policies via additions and enhancements to the franchisor’s operations manual.

Depending upon the applicable local law, the franchise practitioner should incorporate into the franchise agreement specific reference to local laws and regulations governing social media use and provide a non-exclusive list of prohibited actions, such as those relating to (i) privacy; (ii) discrimination; (iii) intellectual property; (iv) defaming competitors; or (v) harassing employees.

The franchise agreement should also contain specific instructions regarding the non-disclosure of confidential information through social media. Franchisors may want to provide exclusive specific postings for their franchisee’s social media outlets as a means of controlling use.

The franchise agreement should require approval of all material. Given the instantaneous use of social media, this right may be more practically applied as an ongoing right to review and remove content. However, prior consent should be required for all dissemination of information that involves the use of the franchisor’s name or brand. The franchise agreement should include requirements for disclaimers on all social media pages that the content does not reflect the position of the franchisor or the brand. The franchise agreement should also contain specific restrictions against dissemination of any information that could be construed as earnings claims.

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