Franchise businesses come in several shapes and sizes, from company owned and operated to franchise owned and operated and many owner/operator combinations in between. For a franchise business owner (franchisee), the model can be quite appealing, since they’re buying into a brand that is already established and successful, mitigating many of the risks that typically accompany starting a new business. Despite these advantages, franchise businesses come with some complexities when it comes to managing franchisee identity and access.

In franchise models that are “company operated,” employees are considered employees of the brand itself. In the models deemed “franchise operated,” employees are not considered employees of the brand. Rather, they're “non-employees” (also known as third parties), akin to contract workers. While it may seem like a small distinction, this difference in employee status and relationship to the main brand has significant implications for the way these individuals are granted access to a brand’s resources, including sensitive data. The business processes used to identify and manage non-employees are often complex and inefficient. Without the proper identity and access management (IAM) solutions that specifically address third-party identity populations, mismanaged franchise-operated employees can increase the brand’s exposure to cyber risks.

Operational inefficiencies and risk

After applying for and being awarded a franchise, franchisees must choose a location, complete training to learn how to run the business, and recruit and hire employees to work for their franchise before being ready to open. The franchisee also needs to ensure they have the right franchise-approved supplies and business operation software and resources. Because franchise-operated businesses are independent owners with their own employees, they may choose their own HR software to track things like employee time and payroll, but the franchisor also has resources to which the franchisee’s employees will need access to do their jobs.

It’s this exchange — access to the franchisor’s resources by franchise-operated employees — that can create security concerns for brands if they lack the right processes to effectively manage this third-party population. Here are some reasons why brands face this issue:

• Lack of an authoritative source that is accessible by the franchisor to drive access of franchisee employees. 
• Account-level management which provides little information for the franchisor and is often a friction-filled process for the franchise owner, leading to bad identity practices like account sharing and mislabeled account access. This can give people access they don’t need and broadens the risk landscape. 
• Untimely access removal upon termination of franchise employees leaves accounts open, making them accessible for bad actors to exploit. 
• Inadequate data privacy from employee lifecycle systems that don’t segregate employee data and information by each individual franchise operation. This leaves franchise owners to filter through hundreds or even thousands of other franchise’s workers to get to their own employees, creating significant data privacy concerns for the franchisor. If a global company operates franchises in various countries, such as a major fast-food chain or a hotel brand, it’s very likely that they could have varying data privacy laws to take into consideration.

To address these issues, a more seamless experience between the franchisor and franchisee is needed, in addition to ensuring the right solutions are in place to support appropriate IAM best practices.

Creating a frictionless experience to reduce risk

Operational efficiencies and cybersecurity risks are inextricably linked when it comes to the lifecycle management of third-party, franchise operated employees. When a system is inefficient and friction-filled, users are more inclined to bend corners and work around the issues, engaging in poor identity practices in the process. Since franchisees are customers of the franchisor, the franchisor has an obligation to them to provide a pleasant experience. This includes simple, efficient processes and systems that provide a seamless experience for the end user. If the franchisee finds the franchisor’s systems to be too complex or inefficient, they might choose to close down their franchise, or worse yet, open up a competitor's shop.

Franchisors also owe it to themselves to ensure that their IAM systems for franchisees are flawless from a security perspective, as they are the ones with the sensitive information and data on the line if there is a breach due to weak processes.

The right system protects all parties

Franchisors that are struggling with these challenges are trying to accomplish a time-consuming, expensive and complex process that their current systems weren’t built to handle. Without the right IAM processes for the many third-party identities that must be granted access to their systems, both the franchisee and the franchisor suffer. The franchisee is left with operational inefficiencies that add friction to their roles, leading them to ignore basic IAM best practices and the franchisor opens themselves up to identity-related cyber risks and data privacy concerns.

There are many great benefits for brands looking into franchise business models, from access to capital to increased brand awareness and efficient growth patterns. But those rewards can be greatly diminished if the franchisor does not address the security vulnerabilities of its franchise-operated employees.