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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.
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