CONSUMER DATA COLLECTION AND PRIVACY IN FRANCHISE SYSTEMS: RISK MITIGATION STRATEGIES

CONSUMER PRIVATE DATA COLLECTION

In today’s digitally driven marketplace, consumer data has become a valuable asset for businesses across industries, including food and beverages franchise systems. The collection and utilization of consumer data can significantly enhance marketing efforts, improve customer experiences, and drive business growth.

The collection of consumer personal data is big business. It is estimated to be more than a $200 billion industry. Over the past decade, food companies have increasingly turned to the collection of consumer personal data to help them better understand and adapt to the habits, preferences, and needs of consumers, engage in targeted marketing, and gain insight into the broader marketplace that is, to better compete. Some businesses have also sold their consumers’ personal data to third parties as an additional source of revenue.

DATA COLLECTION PRACTICES COMMONLY USED BY FOOD FRANCHISE BUSINESSES

“Consumer personal data” generally refers to non-public, personal identifying information (“PII”) such as birth date, social security number, income level, purchase history, and biometric information that permits the identity of an individual to whom the information applies to be reasonably discovered. Businesses commonly collect consumer personal data by direct solicitations, tracking customers via electronic means, and/or purchasing from third-party data collectors or brokers.

Food franchise systems, which often operate across multiple locations and under a shared brand umbrella, face unique challenges when it comes to managing consumer data privacy. Ensuring compliance with regulations such as the General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”), while maintaining consistency across diverse franchise units, requires careful planning and implementation of best practices.

STRATEGIES FOR AVOIDING MISUSE OF CONSUMER PERSONAL DATA

Consumers remain willing to share personal data with companies, so long as the collected data is limited and necessary for the specific interaction, and they trust the companies to handle their data and protect their privacy. There are a number of key strategies that the franchisees and franchisors should immediately adopt to navigate the risks and pitfalls of consumer personal data collection.

1. Franchisors and franchisees should each conduct a full assessment of their data collection requirements and/or practices and, confirm the type of consumer personal data they do and do not collect, and why, where, and how that data is being collected, stored, and used.
2. After determining what data is being collected and will continue to be collected, franchisors and franchisees should each conduct an assessment of their data management operations. 
3. Franchisors and franchisees should review and determine if their privacy policies are up to date and provide clear notice of what and how data is being collected, stored, and used and the company’s retention policies. 

RISK MITIGATION STRATEGIES

• Regular Audits and Assessments: Conduct periodic audits of data collection practices and privacy policies across all franchise units to identify vulnerabilities and ensure compliance.
• Incident Response Plan: Develop a comprehensive plan to respond to data breaches or privacy incidents promptly, minimizing the impact on consumers and mitigating potential legal consequences.
• Data Encryption and Anonymization: Utilize encryption techniques and anonymization methods to protect sensitive consumer data from unauthorized access or misuse.
• Consumer Education: Educate consumers about their rights regarding data privacy and provide them with options to control their data preferences, such as opting out of marketing communications or deleting their accounts.

KEY SUMMARY

There is no doubt that collecting consumer’s personal data to have better understanding of their behaviour has immense value to food businesses. But, again, there is a clear push towards regulating consumer personal data collection practices, and giving consumers more legal recourse against businesses that engage in such practices without providing full disclosures of same.

Consumer data collection and privacy have become paramount concerns for franchise systems seeking to leverage data for business growth while maintaining trust and compliance. By implementing best practices and risk mitigation strategies, franchise systems can navigate the complexities of data privacy, protect consumer rights, and build sustainable relationships with their customers across all franchise units.

HOW WE CAN HELP?

A corporate firm can be a valuable asset for businesses of all sizes in this sector, offering a wide range of services to help them navigate the legal landscape and achieve their goals. Here are some key ways our firm can assist companies in the food and beverage industry:

• Our firm can help ensure compliance with these regulations, minimizing the risk of recalls, fines, and even lawsuits.
• Our experts can guide companies through these processes, ensuring they are completed smoothly and in accordance with all applicable laws.
• Our team of experts can help with registering and enforcing IP rights, safeguarding a company’s brand and product identity.
• Our team can ensure that labels are accurate, complete, and compliant with all labelling laws, avoiding potential consumer deception issues.