Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Franchisors and Franchisees Make for Easy Cyber Targets

By Marc Lieberstein and Raymond Aghaian
September 01, 2022

We are increasingly hearing about security breaches, data leaks and other kind of data theft in the franchise world. This is because frequently the franchise systems operate as a connected mass of franchisees all of whom collect, store and transmit a diverse array of consumer and personal data to the franchisor. In other words, franchisors and franchisee make a nice easy target for cyber theft.

In December 2018, Cybint News reported that "[43%] of cyberattacks target small business. 64% of companies have experienced web-based attacks. 62% experienced phishing & social engineering attacks. 59% of companies experienced malicious code and botnets and 51% experienced denial of service attacks." Cybersecurity: A Global Priority and Career Opportunity (ung.edu). And whether you are a large or small franchisor, it could cost a lot of money to remedy the breach or satisfy any breach claims. IBM reports that it takes an average of 280 days to identify and contain a data breach, and that the "data breach average cost increased 2.6% from USD 4.24 million in 2021 to USD 4.35 million in 2022. The average cost has climbed 12.7% from USD 3.86 million in the 2020 report." Cost of a Data Breach Report 2022 (IBM).

The 2016 data breach at Wendy's provides a good reason for franchisors to take cybersecurity seriously and to act on it sooner rather than later. In the Wendy's case, hackers gained access to some of Wendy's third-party vendor credentials and accessed the franchisor system containing sensitive customer information, including names, credit/debit cards, and other personal identifiable information. Using a RAM-scraping malware program, the hackers infected over 1,000 franchise-owned restaurant systems. Wendy's eventually settled the matter for over $53 million.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

Fresh Filings Image

Notable recent court filings in entertainment law.