Social media helps consumers understand the brands they use every day, but what does it all mean for franchisors?

It’s 2020 and everyone is on social media. Even your grandma has a social media account and regularly comments on your vacation pictures. It is safe to say that social media is going to be here for some time. Whether it’s a microblogging social networking site or a photo and video sharing platform, it seems every brand is trying to connect more with consumers by using social media. Social media is also big business. One post from a user with great engagement can command up to hundreds of thousands of dollars. The beauty of social media is that both new and old brands are using it to showcase their “personalities”. Whether it’s through their use of memes or funny online spats, with some of our favourite fast food brands regularly getting involved, social media is where consumers go to get a better understanding of the brands they use every day. But what does it all mean for a franchisor?

If social media is a place where brands use their voice to give consumers insight into a brand, careful thought needs to go into who is allowed to control a brand’s social media pages. In some franchise arrangements, the franchisee is given free rein to set up social media pages to promote its particular business. A popular fitness brand, which offers high-intensity group workouts, has over 50 dedicated pages on a well-known photo and video sharing site, each one promoting the activities and events of each franchise business. Superficially, all the pages are very similar. The logo is clearly displayed on the profile picture, the biographies give a great overview of the brand, and without scrolling too far down, you can very quickly see what the workouts are like. On closer inspection, the quality of pictures, the frequency of posts and the engagement is very different across these accounts. In the midst of these pages however, there remains the brand’s main page with over 220k followers (the rest average about 3000 followers) with a “verified badge” next to its account handle confirming its legitimacy. Verification is undertaken by the social media platform and means that platform has confirmed the account to be an authentic presence of the brand it portrays. For someone completely unfamiliar with the brand, the verified badge (appearing as a blue tick) provides some sort of comfort and credibility in the chaos of endless pages. However, since the verification process differs between the social media platforms and is subject to each platform’s terms of use and community guidelines, there is no guarantee that the verified badge is solely reserved for the brand’s main page. For some other well-known brands, the verified badge can be found on multiple social media pages including those managed by individual franchisees. Franchisors need to ask themselves whether the information provided, responses to consumers and tone is consistent across these pages. Multiple profile pages can be problematic for the franchisor for many reasons, the two main ones being:

  1. Consumer engagement with each profile page will not be consistent. As more consumers use social media to make complaints, the administrators for each profile will handle these complaints in an inconsistent and haphazard manner, which can result in reputational risk. Furthermore, the franchisor lacks a mechanism to collect metrics about complaints if there is no central system for collation and categorisation of them; and

  2. Many franchise agreements state that the goodwill in the brand system remains with the franchisor but the issue with franchisee owned social media profile pages is that the franchisee will be the ‘owner’ of the account handle, the social media page, plus any goodwill associated with it – including key metrics such as number of followers.

When negotiating franchise agreements, franchisors are becoming increasingly concerned with social media rights. In particular, they want ownership and control of the social media pages and rightly so. Social media generates a lot of traffic and engagement monitoring platforms summarise how this traffic translates into revenue for brands. By monitoring social media engagement, companies can easily see how a tweet, or an image directly affects a brand’s awareness.

Franchisors need to understand that the days of conventional marketing arrangements covering only websites and advertisements are long gone. To make a real impact on consumers, a clearly and cleverly planned social media page is not only a great idea, it is essential. As the global franchise landscape continues picking up pace, the underlying agreements governing these franchise relationships also have to keep up. The use of a brand’s intellectual property, third party links and branding, account handles etc. all need to be considered.

Social media’s effectiveness for brand promotion is second to none. Within seconds, information is circulated very quickly at the hit of the retweet and repost button. If a post or meme associated with your brand goes viral, it could mean serious profits. When a famous fried chicken fast food brand released its chicken sandwich, it was tweeted about, retweeted and shared across all social media platforms. It seemed the internet couldn’t stop talking about this chicken sandwich. The social media activity meant that this infamous chicken sandwich was sold out within weeks across all branches in the US. This is an example of the positive effects of social media. On the contrary, the same social media buzz that had this fast food chain selling out within weeks, could bring your brand into disrepute.

Given the pace of social media, it is very easy for brands to gain and lose momentum at the post of a tweet or image. Franchisors should be able to approve (within reason) what is done on social media in order to protect their brand and maintain some consistency in how their brand is marketed globally. Importantly, franchisors must be aware of the different markets they operate in and that each jurisdiction can have different regulations (such as comparative advertising). For example, here in the UAE, the Federal Decree-Law No. 5/2012 on combating IT crimes (the Cybercrimes Law) makes it an offence to defame or offend others using any electronic information system. This means that clear social media guidelines should be provided to franchisees as well as social media training covering how a brand should be marketed and ensuring that the values and ethos of a brand are maintained as well as compliance with local laws. Just as with the franchise business, franchisors want to be able to step in and control social media pages if the relationship with the franchisee turns sour. Log in details, access, data ownership (both content and followers / likes), are just a few things that need to be dealt with in franchise agreements.

Creating a social media account is not only free, it is a lot more straight forward than creating a website. Franchisor’s must also look out for third party infringers who may look to profit off their brand’s goodwill and customer base. Even recently terminated franchisees pose a threat, particularly as they are already familiar with a brand’s social media practices. Given their previous access, it would be very easy for them to cause reputational damage, especially where the franchise relationship has soured. Franchisors should be cautious and ensure that the recourse they have for IP infringement under the franchise agreement is all encompassing and considers the extent of infringement via social media.

When consumers hear about a brand for the first time or want to find out what their favourite brand is up to, social media is now one of the first places they turn to. It gives a snapshot as well as live updates of what a brand is doing. It is also very common for businesses to redirect customers to their social media pages through their websites and email updates. If so much of a business’s marketing is conducted using social media, it is up to franchisors to ensure that their rights are protected and at the very least dealt with in the franchise agreement.

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