Social media in franchising - a double edged sword

With 62% of Australian internet users interacting on social media networks, it is no wonder that savvy marketers have caught on with the trend and this medium has now become a key tool in many business marketing strategies. The social media buzz can be justified by the platform’s enormous scope to not only reach but engage with customers and build brand awareness on a large scale. To top it off it’s simple, cost efficient and, when done right, very effective in gaining new leads and customers.

But as important and powerful as social media has become in business, it can be a real double-edged sword. If misused or poorly monitored it can create more harm than good and can even lead to legal implications. This dark side of social media can be even more imposing in the franchising sector where there is the added risk of franchisees using the platform to communicate with their own local audiences.

What are the legal risks in social media?
Two of the most common legal issues which are encountered in social media are misleading or deceptive conduct and defamation.

Misleading or deceptive conduct is activity, or inactivity, which creates a misleading “overall impression” among the intended audience. Conduct can include any form of spoken or written communication such as statements, quotations, advertisements and website material; however it also extends to include silence or lack of response that leads to a false impression. For example a restaurateur selling their restaurant and, when asked for the reason for sale, not mentioning that it is because a competitive restaurant is opening nearby can be deemed misleading or deceptive conduct.

Defamation refers to material – spoken, written or pictorial – which is communicated or published about another (living) person which is defamatory because it:

  • Injures their reputation by exposing them to hatred, contempt or ridicule;
  • Causes people to shun or avoid them; or
  • Lowers their estimation in the right thinking members of society.

This issue can particularly be seen in social media where people create nicknames to feel anonymous. Just because you appear to be anonymous, it does not give you liberty to make such statements without repercussions.

Not your post? Still your problem
Not only is internal posting on social media from staff and/or franchisees important to monitor for the above issues, but responsibility also extends to comments made by others on your pages, including customers or clients. Businesses and their directors are responsible to ensure that none of the content displayed on their social media is misleading or deceptive.

For example, if a customer posts a misleading testimonial on a business page claiming benefits of a product that are false, that business can be deemed as the “publisher” and are therefore liable if they know of the post and decide not to remove it.

Comments posted on personal accounts, not just business social media pages, also create risk. Posts can be considered to be made in the course of “trade or commerce” (and therefore, triggering potential liability for misleading or deceptive conduct) if they are connected with your business or that of others. It is important for franchisors to not only scrutinise their own personal comments, but ensure that staff and franchisees are aware of the possible implications also.

Beware of the re-tweet
Anyone running a social media marketing campaign knows that re-tweeting and sharing of content can be a great thing. It shows you are actually engaging your audience and generates one of the biggest perks of this format – reaching a wider audience. In regards to misleading or defamatory content however, an increased audience can mean an escalated problem.

A phenomenon unique to social media is the possibility for a publication to go “viral”. This is where posted content gets continuously viewed and shared to a greater audience than it was originally published to. Despite the initial intention or intended audience of the post, the republishing or viral effect can spread the offending posts/statements/comments and expose you to increased liability (both in terms of claims and potential damages).

On the other side of the issue, if a business or individual republishes content, even in the form of a retweet,  this can still lead to defamation claims despite them not being the original author.

How can franchisors guard against the risks of social media?
Many franchisors choose to keep their social media at a national level only, and don’t allow their franchisees to host their own pages. Whilst this can be a great strategy for monitoring and compliance, it does eliminate the opportunity for franchisees to engage with their local customer base through this powerful medium and can also be a big task to manage from the top end.

If you are a franchisor and you do wish to allow your franchisees to operate individual social media sites it is important that you have the right training, support and guidelines in place to avoid being liable for issues such as defamation or misleading or deceptive conduct.

Below are some strategies to help franchisors mitigate the social media risks within their organisation:

1. Create a clear social media policy and include it in the operations manual and the franchise agreement. A social media policy should contain things such as:

  • A standardised naming convention and mandatory use, eg @franchise_location
  • Approval of specific social media platforms, eg Facebook yes, Twitter no.
  • A defined list of prohibited actions – with scope to expand – such as harassment, discrimination, breach of copyright etc.
  • Proclamation of ownership to the Franchisor of all social media accounts related to the franchise system. This may include the right of the franchisor to remove, or have the franchisee remove, any content posted by franchisee that violates the social media policy.
  • An enforced disclaimer for each franchisee account stating that “Views and content of this page are those of the franchisee and don’t reflect the position of the franchisor”

2. Think through practical aspects and clearly define them within the social media policy:

  • Who handles complaints – individual franchisees or corporate headquarters?
  • Who monitors social media content?
  • How often is social media posted? What type of content is appropriate or most effective?
  • Who handles customer enquiries? Will these be divided between local business related questions and corporate office questions?

3. Before anyone posts to social media:

  • Make sure adequate research has been conducted, even if you think your opinion is correct/justly held
  • Consider any possible implications or risks of the post
  • Enforce a franchisor approval process if necessary

4. Address spam, inappropriate or misleading comments immediately

5. Be transparent in your dealings with annoying comments or criticisms

  • Do not delete negative comments
  • Be tolerant and calm – do not respond with an emotionally fuelled offensive
  • React to false statements in a positive way – if you can send a positive response backed up by facts it can to add to customer satisfaction and promote good PR

Proceed with caution
Social media marketing has become as important in business as having a website or printing business cards. It is an undeniably powerful tool for franchises to grow their brand awareness, customer bases and businesses.
Whilst social media is likely to continue to prosper as a key marketing strategy, it is important for businesses to consider the content they are producing and the possible implications this could have – not only on your brand reputation but from a legal perspective. A few key notes to remember are:

  • Understand the legal risks
  • Think twice before you post
  • Monitor carefully the content posted both internally and externally to your pages
  • Have a written social media policy and guidelines

Happy tweeting!

Peter McLaughlin
redchip lawyers
P (07) 38525055

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Robert Toth - Wisewould Mahony

Robert TothRobert Toth is a Franchise Partner at Wisewould Mahony Lawyers and an accredited Business Law Specialist with over 25 years experience as a business lawyer and consultant acting for Australian Franchisors looking to expand overseas and International Franchisors establishing business in Australia & New Zealand.

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Corinne Attard - Holman Webb Lawyers

Corinne AttardCorinne is a franchising and retail specialist with more than 25 years franchising and retail industry experience including extensive in-house experience as general counsel with responsibility for over 350 franchised stores. Corinne's approach is outcome oriented and risk management based and combines practical business advice with legal solutions. She acts for primarily retailers, franchisors, master franchisees and multi-unit franchisees.

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Greg Hipwell - Norton Rose

Greg HipwellGreg has extensive experience advising companies that distribute goods and services through a network or who exploit brands, technology or intellectual property. He has specific experience in trade practices law, particularly in relation to pricing, supply and market conduct issues and the Franchising Code of Conduct.

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Bruce McGregor - Herbert Geer Lawyers

Bruce McGregor - Herbert Geer LawyersBruce is a Partner of Herbert Geer Lawyers and is the national head of the Property - Franchising and Leasing team. He has practiced for over 20 years. Bruce provides franchising advice and guidance in Australia and New Zealand, acting for a number of well known prominent state, national and overseas franchisors, franchisees and master franchisees

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Peter McLaughlin - redchip lawyers

Peter McLaughlinPeter is a partner of redchip lawyers and heads the franchising and distribution team. He has over 15 years franchising and commercial law experience. He has presented papers on franchising at legal education seminars and workshops, and at public information nights regarding franchising, property and business related issues.

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Judith Miller - DLA Piper Australia

Judith MillerJudith Miller is a partner in the Sydney office of DLA Piper Australia and heads the Sydney franchise practice. Her franchising expertise includes advising local and international businesses on the establishment of regional and national franchise systems, and providing strategic advice to established operations.

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