Legal aspects of social media for franchisors and franchisees, including application of laws relating to social media, social marketing, privacy policy, defamation, anti-spam, Web site terms of use, data protection, texting, robo-calling, DMCA take-down copyrights, to franchising

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Franchising and Social Media:
Look Before You Tweet
Copyright 2010 -2014
Gary R. Duvall
Dorsey & Whitney LLP
duvall.gary@dorsey.com
Check me out at LinkedIn.com

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What is Social Media (SM)?
• Community-Based – access-limited (not just
permission based blogs, email and text marketing)
• Privacy controlled by users (not just wikis or You-
Tube)
• Interactive – exclusively user-generated content
(unlike online traditional media)
• Growth rate high – half of Internet users are on
Facebook – which has 5 times the user time of any
other Web site.
* Like reality TV is to traditional TV – spontaneous,
unrehearsed, changeable.

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Franchising Use of Socia.Media
Examples of Social Media:
Facebook,
Twitter,
Linked In
Yelp
Group On

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Social Media Benefits for Business,
including Franchising:
1. SEO – higher search engine
rankings
2. Build traffic to main Web site
(coordinate with online/offline marketing).
3. Going viral – creates evangelists
4. Join the conversation – answer
detractors

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Franchisee Social Media Risks
1. No Time to Update – Serving Left Overs
2. Following Franchisor Policies – e.g trademark
use, look and feel
3. Consistency of Message
Conclusion: Prohibit in the franchise agreement
Franchisee use of SM except as directed by Franchisor,
and
a. Zees should be follower on Zor’s customer page
b. Zees must not use marks on personal SM sites

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SM Legal Issue #1:
Franchise Agreement
1. Agreement: Must Follow Zor’s policies re Social
Media, Email, Text, and all communications.
2. Policies: Everything that is in current email,
Intranet, Internet policies, and more, because it is
interactive, not static, updated often real-time. E.g.
* Zor owns marks, copyrighted photos, art;
* Posters release privacy and copyright rights;
* No defamatory, abusive, illegal content, etc.
* Copyright agent for take-down notices under DMCA
* Disclaimers of liability and warranties.

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SM Legal Issue #2: Privacy
Feb 2010 Google started its Buzz SM site. Automatically
added Contacts as Friends. Revoked one week later.
(Email Contacts included Ex-spouse, enemies (non-
friends), business contacts on personal sites and vice
versa.
Jan 2010 Google threatens to withdraw from China due
to China-based attack apparently successfully “outing”
political dissidents, as well as stealing code, using
Facebook Friends pages of employees of Google.

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SM Legal Issue #3: Privacy
Fall 2009 FTC v. Sears. Sears starts Online Community
and sends asks its customers to download an
application. Privacy disclosure is general, “we can
collect and use your information.” In fact the application
tracks every key stroke, passwords, sites visited, etc.
FTC Order: Fine, must disclose “our app tracks you,
etc.”, requires that customers opt-in, and more.
Has changed SM, because default settings will be
private, not “share with everyone”, and many companies
have changed, e.g. Facebook, Internet Exporer’s new
“Suggest a site” service Feb 2010.

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SM Legal Issue #4: Privacy
Many franchisor’s Privacy policies are inadequate. US
FTC requires that if you collect data, you must disclose it.
So does Facebook TOU, but most company Pages and
Groups do not have privacy policies.
Franchisors with active SM generally have two Facebook
sites (Pages), one for franchise prospects, one for
customers (see 1-800-Flowers, McDonalds, Wireless
Zone). Part of this is because there are different legal
concerns, e.g. children’s and medical privacy issues with
customers, financial privacy laws with prospect pages.

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“For . . . IP Content (like photos and videos). . .you
grant us a non-exclusive, transferable, sub-
licensable, royalty free, world-wide license to use
any IP Content that you post on or in connection
with Facebook. . . . This IP License ends when you
delete your IP Content or your account, unless your
content has been shared with others and they have
not deleted it.”

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SM Legal Issue #5: Facebook
TOU
Page should have its own TOU because:
1. Liability for user actions and content, e.g.
copyright infringement – give a contact person
for DMCA takedown
2. Zor owns marks, copyrighted photos, art;
(Facebook TOU gives a license to Facebook).
3. Posters release privacy and IP rights;
4. No defamatory, abusive, illegal content, etc.
5. Disclaimers of liability and warranties.

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SM Legal Issue #6: Employee
Policies
Facebook account is property of first employee
administrator, i.e. the first Administrator cannot
be deleted. (Groups (celebrities) administrator’s
names are even shown as the owner, as
opposed to Pages (business-fans) and Profiles
(personal-friends).
Therefore, need an agreement with the
employee, signed in advance to relinquish the
account upon employer request and upon
termination.

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SM Legal Issue #7: Integrate
with other Contracts & Terms
1. Franchise Agreement
2. Intranet and Extranet Agreement
3. Miscellaneous IP-related agreements, e.g. photo release,
model release, copyright work-for-hire assignment, software
license terms
4. Web site Internet use agreements
5. Terms of Use of Web site (e.g. sections on links to SM
page, user-generated content, etc.)
6. Privacy and data protection policies
7. Data Protection and privacy related to gift cards and loyalty
cards
8. Email and text message marketing policies for franchisees

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SM Legal Issue #8: Related
Laws – E.g. Anti-spam
Legislation
Papa John’s Litigation. Franchisee used a marketer to make
robo-calls, texts and emails to customers who had given emails
and other personal data on Facebook, Twitter and other
promotions. Because permission wasn’t explicit, under the law
there is a fine of $500 per robo-call or text. A class action was
filed against the franchisor and the franchisee.

15. DORSEY & WHITNEY LLP
Thank You
Gary R. Duvall
Partner and Chair, Franchise & Distribution Group
Dorsey & Whitney LLP
206.903.8700
duvall.gary@dorsey.com