I know I Need a Social Media Policy. Now what Should it Say?

Marketing

Legal and practical considerations in developing your social media policy.

By Meredith A. Bauer

It is impossible to avoid. The terms “social media” and “social networking” grace the covers of magazines, are the subject of conferences and trade shows and appear in conversation on a daily basis. Once thought of as “social” tools used by high school and college students, media such as blogs, Facebook, Twitter and LinkedIn, among others, are becoming important marketing tools for businesses nationally and internationally.

Most franchisors recognize that allowing their franchisees to utilize this type of marketing may have significant benefits for business development and brand recognition. Most franchisors also realize that the rise in popularity of this type of media cannot be ignored, and that some type of policy controls should be in place with regard to its use. However, most franchisors are also unsure what a social-media policy should actually say.

The use by franchisees of social media and social networking sites are generally thought to be governed by general language relating to “advertising” under the franchise agreement, even if social media itself is not specifically addressed in the agreement. Provisions in the franchise agreement relating to trademark infringement and proper use of trademarks are also applicable. However, due to the widespread popularity and corresponding rise in issues relating to franchisee use of social media and social networking sites, specific language should be incorporated into franchise agreements to address the use of social media and social networking sites.

In addition, it is important that franchisors adopt a socialmedia policy and include it in their operations manuals. Well-written franchise agreements allow for the update of the operations manual at any time to deal with new developments in the law or in technology. An effective social media-policy should address the following topics in some capacity.

The Scope of Permissible “Social Networking” 
This should be the framework of the policy: the role that you envision social networking will play in your franchise system. For some franchisors, it makes sense that a broad adoption of social networking be encouraged, while for others it may only be tolerated or actually discouraged. This determination will depend on the nature of the business, the attitude of corporate management and its marketing department toward social media, and the overall general marketing strategy of the company.

Hand-in-hand with this determination is an analysis of what specific social networking mediums may be used by franchisees. For example, a business-tobusiness franchise system may consider the generally “professionally-orientated” LinkedIn appropriate for a system, while Facebook or Twitter are not. At the same time, a consumer-orientated franchise system may be missing significant opportunities by banning the use of Facebook or Twitter by its franchisees. Franchisors should also consider the applicability of photo-sharing Web sites such as Flickr, music-sharing Web sites and blogs. In some cases, the franchisor may even want to build an application specific to its brand and system and allow franchisees to use that application.

Regardless, the scope of allowable use and medium to be used should be spelled out explicitly in a social-media policy. To the extent that a specific medium is not addressed in the policy, the franchisor should retain the right to approve any other use of social media or other Internet sites not specifically addressed.

Username Format 
A special challenge that franchisors face in the use of social media relates to brand consistency. As an example, log on to Twitter and type in the name of your favorite franchise brand. You will likely see a long list of usernames that include variations of the brand in the name, such as “XYZCompanyMnpls,” or “XYZCompany123,” “Mn_XYZCompany.”

Due to the importance of brand consistency and the risk of customer confusion, franchisors should seriously consider adopting a specific “naming policy” within their social media policy that spells out specifically what public usernames franchisees may have. This policy can specify a format for adopting a username. For example, a username may be required to start with the brand name, include a space, and then end with the city in which the franchisee is located, e.g. “XYZCompany_ Minneapolis.”

Compliance with Laws, Regulations and Third-Party Terms 
Due to the rapidly increasing use of social media, and slow-developing law surrounding its use, social media is often seen as a world unto itself. Users sometimes forget that laws and regulations that apply in everyday life also still apply when using social media. Therefore, users of social media cannot use it to slander or defame another person or entity any more than they could do so in printed media. Employers may not use social media for discriminatory employment practices any more than they could do so in a face-toface interview. Franchisees may not use the copyrighted materials of others on their social-media sites any more than they could do so in their outlets and stores.

Therefore, it is important that a welldrafted social-media policy include requirements that franchisees must continue to comply with all laws and regulations, not just those specific to social-media usage. It may also be wise to include a nonexhaustive list of prohibited actions, such as defaming or disparaging competitors, clients, employees, customers, suppliers, or the franchisor itself; harassing employees, customers, or other individuals; using copyrights, trademarks or other proprietary materials in an infringing manner; discriminating against applicants for employment; violating privacy laws and policies or otherwise misusing the proprietary information of clients; or violating laws or other ethical standards, such as fraud or misrepresentation. To this end, the franchisor should also include an explicit, plain English provision stating that all posts must be truthful and not misleading. The franchisor may also want to include a specific prohibition on mentioning competitors in any posts or content. 

Finally, the franchisor should include a provision stating that the terms of the franchise agreement and all other rules, regulations, and policies of the franchisor apply to the use of social media, specifically including a prohibition against damaging the goodwill of the franchisor or using the trademarks in an infringing manner. Along with this provision, franchisees should be required to comply with the terms and conditions for any third-party site (e.g. the terms and conditions adopted by Facebook relating to the appropriate use of a Facebook page).

Confidential Information 
Another common mistake that franchisees can make when using social media is the inadvertent disclosure of information that may constitute confidential information under the franchise agreement. Due to the nature of social media sites such as Twitter or Facebook, that allow frequent and regular status updates (we have all seen the commercials mocking the mundane updates of certain social media users), franchisees can inadvertently disclose confidential information without realizing or thinking about doing so.

For example, a franchisee of a restaurant concept with a proprietary pizza sauce recipe may post a status update stating: “Picking up basil, garlic, tomato paste, sugar and oregano from the store for my delicious pizza sauce.” This franchisee would likely be in breach of its franchise agreement, and is risking exposure of the franchisor’s proprietary information. As another example, franchisees may feel compelled to comment on legal matters occurring in the franchise system, such as lawsuits, threatened litigation, or settlements among the franchisor and franchisees, that are otherwise limited by confidentiality.

Therefore, the social-media policy should explicitly state that franchisees may not use or post the confidential and proprietary information of the franchisor, or breach any other restrictions on confidentiality or disclosure. It should also include a provision that the franchisee should not comment on legal matters, or private matters internal to the franchise system. Further, franchisees should be reminded that they must be careful not to disclose proprietary information of their clients, customers or suppliers, or use the names of clients, customers or suppliers without permission.

Endorsements and Testimonials
The Federal Trade Commission recently released its “Guide Concerning the Use of Endorsements and Testimonials in Advertising,” which specifically applies to endorsements of products made in blogs and in other social media. Under the guidelines, endorsers of a product must disclose information relating to the endorsement relationship, such as if the endorser received the product for free or received any compensation in return for making an endorsement.

As part of this regulatory framework, employers are specifically vicariously liable for improper endorsements by their employees, and as such, a real concern arises as to whether a franchisor may be held liable for improper endorsements made by franchisees. This is a particular concern when it comes to social media, as its conversational nature can easily lead to a statement that can be considered a product endorsement. Therefore, franchisors should specifically include a provision in the social-media policy requiring the franchisee to comply with all rules and regulations concerning the endorsement of products, and should specifically state that if the franchisee is in any way compensated relating to a product, any post by the franchisee on that topic must disclose that relationship. The franchisee should also be required to be clear about its identify and to disclose its relationship to the franchisor.

Ownership of Domain Names, Accounts and Content 
Many franchise agreements already contain provisions relating to the ownership of proprietary information that is developed during the franchise relationship, with the franchisor retaining ownership of all such information. Many agreements also provide that the franchisor will retain ownership of telephone numbers, Yellow Page listings, and even the content of certain Web sites or home pages. The franchisor should consider including a provision, both in its social-media policy and in the franchise agreement itself, retaining ownership to its franchisees’ social-media accounts, the content thereon, and the domain names associated with these accounts. Therefore, if a franchisee develops a large following of the fan page for its business, this following is not lost if the franchise agreement expires, the franchisee is terminated, or the franchisee simply decides to stop utilizing the account.

This can be tricky, as it takes a crafted definition of what specific accounts the franchisor will retain ownership. For instance, the franchisor will likely not desire to retain ownership to a franchisees’ personal page, even if the page makes some reference to the franchised business. One approach is for the franchisor to retain ownership of any account in which the username or profile name includes the name of the franchise, any of the marks, or any confusingly similar terms. This provision should also require the franchisee to take any acts that may be necessary to transfer listings and registrations to the franchisor upon termination or expiration of the franchise agreement.

Franchisor-Generated Content 
One strategy franchisors have used in an attempt to provide some brand consistency in the social-media world is to provide specific content to franchisees, which the franchisees can then post to their own accounts and pages. This is an effective way for the franchisor to make sure that a consistent message is presented, as well as to easily allow the franchisees to get involved in the use of social media without having to create their own content. If the franchisor wants to utilize this strategy, it should include a provision in its social media policy that franchisees may be required to post or use content provided by the franchisor from time to time.

Prior Approval 
Along with these considerations, the franchisor must also decide whether it intends to require franchisees to obtain prior approval before establishing a socialmedia account, or before posting content to their account. Many franchisors have found that providing all such approvals is both time-prohibitive and leads to an ineffective use of social media much of the value of social media relates to the time-sensitive relevance and constant update of information, which would be lost in an approval process. Many franchisors are instead taking the position that monitoring usage of franchisees is a more effective policing process with respect to social media (see below). If the franchisor intends to institute an approval process, it should be addressed in the social media policy.

Exclusion of Incendiary Topics and the Right to Remove Content 
In most systems, there are certain topics that the franchisor does not want its franchisees to discuss, and that it does not want associated with its business. Classic examples are religion and politics. Allowing franchisees to post content on these topics can lead to customer aversion and allow a brand to be associated with a position on controversial issues. Unless the franchise system is faith-based, maintains a political association, or otherwise has a common-sense reason to allow its franchisees to weigh in on such topics, the socialmedia policy should state that franchisees may not post content on issues such as religion, politics, or other potentially incendiary topics.

Hand-in-hand with this consideration is the necessity for the franchisor to explicitly reserve the right to remove, or require a franchisee to remove, any content posted by the franchisee that violates the socialmedia policy, violates any laws or regulations, or that the franchisor feels is not consistent with an appropriate use of its trademarks. This right to remove or require removal should be in the franchisor’s sole discretion. This will allow the franchisor to monitor the use of social media and social networking by its franchisees, and proactively take action on inappropriate usage of these sites.

Disclaimers 
Depending on the type of site, the franchisor may want to require the franchisee to include a disclaimer stating that the views and content of the site are those of the franchisee, and don’t necessarily reflect the position of the franchisor or the brand.

In addition, the social-media policy should include appropriate disclaimers, clearly stating that the franchisee alone is responsible for its own content and is responsible for complying with all laws and regulations and third-party site terms and conditions, and the franchisor will not have any liability for the franchisee’s use of social-media sites. The franchisor should provide that it does not have responsibility or obligation for monitoring compliance with such laws, regulations, or terms and conditions, and any approval by franchisor of the use of social-media sites or monitoring thereof does not constitute a representation that the franchisee is in compliance with these laws, regulations or terms and conditions. The disclaimer should provide that the franchisee alone is responsible for monitoring its employees to ensure compliance with these requirements. And, if not addressed elsewhere in the operations manual, the policy should make clear that technology is constantly changing and evolving, and that the social-media policy is subject to change and modification at any time.

Other Guidelines and Recommendations
In addition to the more “legal” type of concerns above, a social-media policy can also address in plain terms what the franchisee should attempt to accomplish in its use o

April 2010 Franchising World   Legal and practical considerations in developing your social media policy.   By Meredith A. Bauer    It is impossible to avoid. The terms “social media” and “social networking” grace the covers of magazines, are the subject of conferences and trade shows and appear in conversation on a daily basis. Once thought of as “social” tools used by high school and college students, media such as blogs, Facebook, Twitter and LinkedIn, among others, are becoming   important marketing tools for businesses nationally and internationally.    Most franchisors recognize that allowing their franchisees to utilize this type of marketing may have significant benefits for business development and brand recognition. Most franchisors also realize that the rise in popularity of this type of media cannot be ignored, and that some type of policy controls should be in place with regard to its use. However, most franchisors are also unsure what a social-media policy should actually say.      The use by franchisees of social media and social networking sites are generally thought to be governed by general language relating to “advertising” under the franchise agreement, even if social media itself is not specifically addressed in the agreement. Provisions in the franchise agreement relating to trademark infringement and proper use of trademarks are also applicable. However, due to the widespread popularity and corresponding rise in issues relating to franchisee use of social media and social networking sites, specific language should be incorporated into franchise agreements to address the use of social media and social networking sites.    In addition, it is important that franchisors adopt a socialmedia policy and include it in their operations manuals. Well-written franchise agreements allow for the update of the operations manual at any time to deal with new developments in the law or in technology. An effective social media-policy should address the following topics in some capacity.     The Scope of Permissible “Social Networking”  This should be the framework of the policy: the role that you envision social networking will play in your franchise system. For some franchisors, it makes sense that a broad adoption of social networking be encouraged, while for others it may only be tolerated or actually discouraged. This determination will depend on the nature of the business, the attitude of corporate management and its marketing department toward social media, and the overall general marketing strategy of the company.    Hand-in-hand with this determination is an analysis of what specific social networking mediums may be used by franchisees. For example, a business-tobusiness franchise system may consider the generally “professionally-orientated” LinkedIn appropriate for a system, while Facebook or Twitter are not. At the same time, a consumer-orientated franchise system may be missing significant opportunities by banning the use of Facebook or Twitter by its franchisees. Franchisors should also consider the applicability of photo-sharing Web sites such as Flickr, music-sharing Web sites and blogs. In some cases, the franchisor may even want to build an application specific to its brand and system and allow franchisees to use that application.    Regardless, the scope of allowable use and medium to be used should be spelled out explicitly in a social-media policy. To the extent that a specific medium is not addressed in the policy, the franchisor should retain the right to approve any other use of social media or other Internet sites not specifically addressed.      Username Format  A special challenge that franchisors face in the use of social media relates to brand consistency. As an example, log on   to Twitter and type in the name of your favorite franchise brand. You will likely see a long list of usernames that include variations of the brand in the name, such as “XYZCompanyMnpls,” or “XYZCompany123,” “Mn_XYZCompany.”    Due to the importance of brand consistency and the risk of customer confusion, franchisors should seriously consider adopting a specific “naming policy” within their social media policy that spells out specifically what public usernames franchisees may have. This policy can specify a format for adopting a username. For example, a username may be required to start with the brand name, include a space, and then end with the city in which the franchisee is located, e.g. “XYZCompany_ Minneapolis.”      Compliance with Laws, Regulations and Third-Party Terms  Due to the rapidly increasing use of social media, and slow-developing law surrounding its use, social media is often seen as a world unto itself. Users sometimes forget that laws and regulations that apply in everyday life also still apply when using social media. Therefore, users of social media cannot use it to slander or defame another person or entity any more than they could do so in printed media. Employers may not use social media for discriminatory employment practices any more than they could do so in a face-toface interview. Franchisees may not use the copyrighted materials of others on their social-media sites any more than they could do so in their outlets and stores.    Therefore, it is important that a welldrafted social-media policy include requirements that franchisees must continue to comply with all laws and regulations, not just those specific to social-media usage. It may also be wise to include a nonexhaustive list of prohibited actions, such as defaming or disparaging competitors, clients, employees, customers, suppliers, or the franchisor itself; harassing employees, customers, or other individuals; using copyrights, trademarks or other proprietary materials in an infringing manner; discriminating against applicants for employment; violating privacy laws and policies or otherwise misusing the proprietary information of clients; or violating laws or other ethical standards, such as fraud or misrepresentation. To this end, the franchisor should also include an explicit, plain English provision stating that all posts must be truthful and not misleading. The franchisor may also want to include a specific prohibition on mentioning competitors in any posts or content.     Finally, the franchisor should include a provision stating that the terms of the franchise agreement and all other rules, regulations, and policies of the franchisor apply to the use of social media, specifically including a prohibition against damaging the goodwill of the franchisor or using the trademarks in an infringing manner. Along with this provision, franchisees should be required to comply with the terms and conditions for any third-party site (e.g. the terms and conditions adopted by Facebook relating to the appropriate use of a Facebook page).      Confidential Information  Another common mistake that franchisees can make when using social media is the inadvertent disclosure of information that may constitute confidential information under the franchise agreement. Due to the nature of social media sites such as Twitter or Facebook, that allow frequent and regular status updates (we have all seen the commercials mocking the mundane updates of certain social media users), franchisees can inadvertently disclose confidential information without realizing or thinking about doing so.    For example, a franchisee of a restaurant concept with a proprietary pizza sauce recipe may post a status update stating: “Picking up basil, garlic, tomato paste, sugar and oregano from the store for my delicious pizza sauce.” This franchisee would likely be in breach of its franchise agreement, and is risking exposure of the franchisor’s proprietary information. As another example, franchisees may feel compelled to comment on legal matters   occurring in the franchise system, such as lawsuits, threatened litigation, or settlements among the franchisor and franchisees, that are otherwise limited by confidentiality.    Therefore, the social-media policy should explicitly state that franchisees may not use or post the confidential and proprietary information of the franchisor, or breach any other restrictions on confidentiality or disclosure. It should also include a provision that the franchisee should not comment on legal matters, or private matters internal to the franchise system. Further, franchisees should be reminded that they must be careful not to disclose proprietary information of their clients, customers or suppliers, or use the names of clients, customers or suppliers without permission.       Endorsements and Testimonials The Federal Trade Commission recently released its “Guide Concerning the Use of Endorsements and Testimonials in Advertising,” which specifically applies to endorsements of products made in blogs and in other social media. Under the guidelines, endorsers of a product must disclose information relating to the endorsement relationship, such as if the endorser received the product for free or received any compensation in return for making an endorsement.    As part of this regulatory framework, employers are specifically vicariously liable for improper endorsements by their employees, and as such, a real concern arises as to whether a franchisor may be held liable for improper endorsements made by franchisees. This is a particular concern when it comes to social media, as its conversational nature can easily lead to a statement that can be considered a product endorsement. Therefore, franchisors should specifically include a provision in the social-media policy requiring the franchisee to comply with all rules and regulations concerning the endorsement of products, and should specifically state that if the franchisee is in any way compensated relating to a product, any post by the franchisee on that topic must disclose that relationship. The franchisee should also be required to be clear about its identify and to disclose its relationship to the franchisor.       Ownership of Domain Names, Accounts and Content  Many franchise agreements already contain provisions relating to the ownership of proprietary information that is developed during the franchise relationship, with the franchisor retaining ownership of all such information. Many agreements also provide that the franchisor will retain ownership of telephone numbers, Yellow Page listings, and even the content of certain Web sites or home pages. The franchisor should consider including a provision, both in its social-media policy and in the franchise agreement itself, retaining ownership to its franchisees’ social-media accounts, the content thereon, and the domain names associated with these accounts. Therefore, if a franchisee develops a large following of the fan page for its business, this following is not lost if the franchise agreement expires, the franchisee is terminated, or the   franchisee simply decides to stop utilizing the account.    This can be tricky, as it takes a crafted definition of what specific accounts the franchisor will retain ownership. For instance, the franchisor will likely not desire to retain ownership to a franchisees’ personal page, even if the page makes some reference to the franchised business. One approach is for the franchisor to retain ownership of any account in which the username or profile name includes the name of the franchise, any of the marks, or any confusingly similar terms. This provision should also require the franchisee to take any acts that may be necessary to transfer listings and registrations to the franchisor upon termination or expiration of the franchise agreement.    Franchisor-Generated Content  One strategy franchisors have used in an attempt to provide some brand consistency in the social-media world is to provide specific content to franchisees, which the franchisees can then post to their own accounts and pages. This is an effective way for the franchisor to make sure that a consistent message is presented, as well as to easily allow the franchisees to get involved in the use of social media without having to create their own content. If the franchisor wants to utilize this strategy, it should include a provision in its social media policy that franchisees may be required to post or use content provided by the franchisor from time to time.      Prior Approval  Along with these considerations, the franchisor must also decide whether it intends to require franchisees to obtain prior approval before establishing a socialmedia account, or before posting content to their account. Many franchisors have found that providing all such approvals is both time-prohibitive and leads to an ineffective use of social media much of the value of social media relates to the time-sensitive relevance and constant update of information, which would be lost in an approval process. Many franchisors are instead taking the position that monitoring usage of franchisees is a more effective policing process with respect to social media (see below). If the franchisor intends to institute an approval process, it should be addressed in the social media policy.     Exclusion of Incendiary Topics and the Right to Remove Content  In most systems, there are certain topics that the franchisor does not want its franchisees to discuss, and that it does not want associated with its business. Classic examples are religion and politics. Allowing franchisees to post content on these topics can lead to customer aversion and allow a brand to be associated with a position on controversial issues. Unless the franchise system is faith-based, maintains a political association, or otherwise has a common-sense reason to allow its franchisees to weigh in on such topics, the socialmedia policy should state that franchisees may not post content on issues such as religion, politics, or other potentially incendiary topics.    Hand-in-hand with this consideration is the necessity for the franchisor to explicitly reserve the right to remove, or require a franchisee to remove, any content posted by the franchisee that violates the socialmedia policy, violates any laws or regulations, or that the franchisor feels is not consistent with an appropriate use of its trademarks. This right to remove or require removal should be in the franchisor’s sole discretion. This will allow the franchisor to monitor the use of social media and social networking by its franchisees, and proactively take action on inappropriate usage of these sites.      Disclaimers  Depending on the type of site, the franchisor may want to require the franchisee to include a disclaimer stating that the views and content of the site are those of the franchisee, and don’t necessarily reflect the position of the franchisor or the brand.    In addition, the social-media policy should include appropriate disclaimers, clearly stating that the franchisee alone is responsible for its own content and is responsible for complying with all laws and regulations and third-party site terms and conditions, and the franchisor will not have any liability for the franchisee’s use of social-media sites. The franchisor should provide that it does not have responsibility or obligation for monitoring compliance with such laws, regulations, or terms and conditions, and any approval by franchisor of the use of social-media sites or monitoring thereof does not constitute a representation that the franchisee is in compliance with these laws, regulations or terms and conditions. The disclaimer should provide that the franchisee alone is responsible for monitoring its employees to ensure compliance with these requirements. And, if not addressed elsewhere in the operations manual, the policy should make clear that technology is constantly changing and evolving, and that the social-media policy is subject to change and modification at any time.    Other Guidelines and Recommendations   In addition to the more “legal” type of concerns above, a social-media policy can also address in plain terms what the franchisee should attempt to accomplish in its use of social media sites. For example, the franchisor can adopt general guiding principles, such as that franchisees should post on areas within their expertise, should be cognizant of questions and inquiries by customers, and should invite comments and dialogue from customers. Franchisors may also want to specify that franchisees should use a conversational tone and should post in “plain English.” Finally, the franchisor might also want to include a reminder within the social-media policy as to the permanency and public nature of posting to social-media sites.      Looking Forward  Franchisors must examine their own systems and views as to the value of social media, and develop an individualized social-media policy reflecting these values. Some franchisors may realize that the risks of allowing franchisees to use social media do not outweigh the benefits for their system. Others may desire to encourage and stimulate the use of social media by franchisees.    As the law develops and as social media and social networking sites continue to grow as marketing tools, new considerations will inevitably come into play with regard to social-media policies. Because of this, while language within the franchise agreement is important, inclusion of a specific social-media policy within the franchisor’s operations manual is a best practice for franchisors that wish to continually evaluate and update their policies based on new developments. 

Meredith Bauer is an attorney in the Franchise and Distribution practice group at Larkin Hoffman Daly & Lindgren Ltd. in Minneapolis. She represents small and large franchisors on a wide variety of matters, including social media issues. She can be reached at  mbauer@larkinhoffman  . com or 952-896-3263. 

f social media sites. For example, the franchisor can adopt general guiding principles, such as that franchisees should post on areas within their expertise, should be cognizant of questions and inquiries by customers, and should invite comments and dialogue from customers. Franchisors may also want to specify that franchisees should use a conversational tone and should post in “plain English.” Finally, the franchisor might also want to include a reminder within the social-media policy as to the permanency and public nature of posting to social-media sites.

Looking Forward 
Franchisors must examine their own systems and views as to the value of social media, and develop an individualized social-media policy reflecting these values. Some franchisors may realize that the risks of allowing franchisees to use social media do not outweigh the benefits for their system. Others may desire to encourage and stimulate the use of social media by franchisees.

As the law develops and as social media and social networking sites continue to grow as marketing tools, new considerations will inevitably come into play with regard to social-media policies. Because of this, while language within the franchise agreement is important, inclusion of a specific social-media policy within the franchisor’s operations manual is a best practice for franchisors that wish to continually evaluate and update their policies based on new developments. 

 

Meredith Bauer is an attorney in the Franchise and Distribution practice group at Larkin Hoffman Daly & Lindgren Ltd. in Minneapolis. She represents small and large franchisors on a wide variety of matters, including social media issues. She can be reached at mbauer@larkinhoffman.com or 952-896-3263.