advice Marketing
Social media and the law
The use of social media, such as Facebook or Twitter, by individuals for business and personal reasons is widespread and continues to increase. For the fi¬rst time ever, social media has become the single biggest activity online in the UK, according to a new report from Experian Hitwise.
During January 2011 social networks accounted for 12.4 per cent of all UK Internet visits. Across the 9,000 social networks monitored by Experian Hitwise there were more than 2.4 billion visits from UK Internet users during the month - more than in any other month on record.
Franchisees from franchise businesses of all types, whether small and concentrated in a region of the UK or whether nationwide, are waking up to the benefits from such media for marketing their business.
However, improper and inappropriate use by franchisees carries risks for the franchisor, its franchisees generally, the franchised business and the brand, including:
- Potential unauthorised disclosure of the franchisor's confidential and proprietary information
- Potential unauthorised disclosure of client details
- Reproducing material in breach of intellectual property rights
- Discriminatory or defamatory comments/postings
- A franchisee adding business contact to social networking accounts (providing an easy way for them to keep contacts should they end the franchise agreement).
Setting up a practical and enforceable social media policy allows the franchisor to minimise risk associated with franchisee use of social media by proactively defining acceptable and unacceptable uses in the context of the commercial franchisor/franchisee relationship.
Whether the use of social media by the franchisee should be permitted will depend on the type of business and the attitude of the franchisor. Franchisors should consider whether their franchisees' use of social media will be encouraged, discouraged or tolerated.
Potential solutions are as follows:
- Social media policy - incorporated into the franchise agreement and therefore agreed by the franchisee
- Guidelines - issued by the franchisor for the use of social media
- Control and maintain ownership of social network accounts by only allowing franchisees to sign up using a franchisor email address
- Taking action for abuse on social network sites, for example, terminating the franchise agreement.
Many existing franchises will have insufficient protection in their franchise documentation to protect them from the risks of social media. The operations manual setting out the standards, procedures and requirements for running the franchise business and operating the system could be revised and this is usually either incorporated by reference in the franchise agreement or it is an obligation on the franchisee to comply with the operations manual, such that a material or persistent failure to comply with the operations manual is grounds for termination of the franchise agreement. Better enforceability will be obtained by including appropriate provisions in the franchise agreement itself and the time of franchise renewal is a good opportunity.
Suggested provisions are as follows:
- Obligation not to participate in or register with any internet group, website or similar medium which has as its aim (whether stated or not) or its effect the denigration of the franchisor, the goodwill, the trade name or the system
- Obligation not to open an account or profile on a social networking site in relation to the franchisee's business without the franchisor's prior written consent, which may be given subject to conditions which may include the grant to the franchisor of administrator rights and the franchisor will comply with the provisions of the operations manual in respect of such social networking sites
- Comply with any conditions and standards requirements on use of the internet or other electronic distribution channels that the franchisor may impose to ensure the goodwill is maintained.
These will work with the usual provisions found in franchise agreements including, for example, the obligation not to bring the trade name or the system into disrepute, an obligation not to make any representation or statement regarding products or services offered by the franchisee's business except as provided for in the operations manual or as otherwise expressly permitted by the franchisor in writing and a right to terminate for breach of the above provisions. The operations manual can then include an appropriate social media policy balancing the risks with the level of flexibility for the franchisee appropriate to the particular business.
