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In Franchise Advertising, What You Don’t Know Sometimes Can Hurt You
By Paul Woody on November 21, 2022 at 2:15 PM

No brand can be successful, or frankly, exist, without some form of advertising and marketing.  However, the myriad of regulations that apply to advertising and marketing can make that vital activity seem fraught with peril.

I recently presented to the American Bar Association’s Forum on Franchising on the wide variety of laws, regulations and industry standards that apply to franchisor and franchisee marketing and ad campaigns. A co-presenter and I authored an extensive legal paper summarizing many of those aspects, accessible here.

However, franchisors and franchisees who are operating businesses in these uniquely challenging times probably don’t have time to wade through 46 pages of a legal white paper. Therefore, below I provide a few takeaways that can help business owners and marketing directors know when to reach out to legal counsel for guidance and protection.

Marketing the franchise opportunity to potential new franchisees

Advertising franchise opportunities is a highly regulated endeavor. If you are a franchisor who promotes the availability of franchises using in-house staff and resources, you need to work closely with your franchise counsel to ensure that your print, internet and other marketing efforts comply with the Federal Trade Commission's strict requirements.

If you have sales staff using social media to contact potential franchise candidates, that staff needs to go through compliance training with your franchise attorney. And if you use third-party brokers or vendors to promote your franchise opportunities, you should ensure that the broker or vendor has a demonstrable track record in selling franchises legally. If they screw up, you will likely be held liable. Therefore, you should monitor your broker/vendor’s promotional efforts, or have your franchise counsel review their promotional efforts.  

Marketing your underlying product or service

Here are a few areas of potential pitfalls when using various marketing strategies to promote your product or service:

Texts, emails, calls: Are you planning to reach customers via text, email or telephone calls, or do you encourage franchisees to do so? Your first email, text or call should be to your attorney. Federal law regulates the content of your campaign and details regarding how your messages are sent. There is a cottage industry of lawyers who represent consumers who receive noncompliant marketing texts, emails or calls. Those attorneys can turn your marketing universe into a group of class action plaintiffs. Because the defenses to these regulations are few and weak, damages can quickly skyrocket into the millions, and that doesn’t even count the plaintiffs’ attorneys fees you will likely be required to pay.

Celebrity mentions: Thinking about tagging a celebrity from your brand’s, or franchisee’s, Twitter account (if Twitter still exists by the time of this post)? Or do you want to post a meme using a celebrity’s image or likeness? Think again. Federal and state law give celebrities the right to sue companies who use their name, image, likeness or voice (or good impressions thereof) without permission. Remember, just because private citizens can make posts about celebrities doesn’t mean you, as a commercial enterprise, can. Also, the scope of who is a “celebrity” is expanding. YouTube content creators, social media influencers and streamers are now celebrities to large swaths of your consumer market.

Truth in advertising: We’ve all heard the phrase “the truth shall set you free.” That’s often not so in advertising and marketing. A claim in your ad may be technically true and still land your brand in hot water. Generally, if a statement is true, but causes consumers to make assumptions that are not true, regulators — and even your competitors — can come after you.

Third-party marketers: Hope to avoid calling your attorney by just farming out your marketing to a third party? If that vendor takes legal compliance seriously and has sufficient expertise of advertising law, you might get away with it. However, if the vendor doesn’t follow the law, your brand can be held liable — even if you were relying on the vendor to get it right! So, when it comes to third parties, do your homework, make sure your attorney has reviewed the vendor agreement, and don’t just set it and forget it. Your brand, and its resources, are on the line. Keep a close eye on your vendor’s campaigns, and have counsel at the ready.

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