Navigating The Cyber Liability Storm – Part II

Franchisors are facing a precarious three-way intersection of increased accountability and regulation over consumer privacy, the growing volume and sophistication of cyber-attacks on consumer data, and the expanding boundaries of franchisor liability for matters arising at the franchise unit level.

Two recent cases (Aaron's, Inc.¹ and Wyndham²) have raised awareness of the risky climate for franchisors in the realm of cybersecurity and privacy compliance. For a summary of these cases see " Navigating the Cyber Liability Storm – Part I. "

Weathering the storm

In light of the Aaron's, Inc. case (notwithstanding the Privacy Commissioner of Canada's decision not to pursue franchisors) and the Wyndham case (which is yet to be finally determined), it would be wisdom of the most doubtful kind that would prevent franchisors from taking immediate action to develop information governance programs to protect their brands from potential data security breach liability.