--- title: "How QSR Franchisors Can Get Ahead of Legal Risks with New Technology" url: https://burnaze.com/article/7d0e6eac-4f15-4d8d-b7d9-2b2c927bdedf source: "QSR Magazine" original_url: https://www.qsrmagazine.com/story/how-qsr-franchisors-can-get-ahead-legal-risks-of-new-technology/ author: "Ben Coley" category: "Franchisors" industry: "Franchise Industry" segment: "Franchisors" topics: ["Regulation & legal","Technology"] published: 2026-10-23T11:28:57.000Z modified: 2026-10-31T13:15:35.878Z image: https://www.qsrmagazine.com/wp-content/uploads/2026/10/restauranttechnology-3.jpg --- # How QSR Franchisors Can Get Ahead of Legal Risks with New Technology **TL;DR:** Quick-service restaurant (QSR) franchisors face legal risks with new technology, which can increase expenses and impact franchisee operations. The National Restaurant Association estimates that total expenses for the average restaurant have increased 36% since 2019. *By Ben Coley, originally published in QSR Magazine on 2026-10-23. [Read the original](https://www.qsrmagazine.com/story/how-qsr-franchisors-can-get-ahead-legal-risks-of-new-technology/).* ## Key facts - QSR franchisors face 36% increased expenses since 2019 - 42% of restaurant operators reported unprofitable restaurants in 2025 - Franchisors must consider data ownership and cybersecurity ## Story Quick-service restaurant franchisors are under constant pressure to evolve, and technology is rapidly changing QSR operations. While things like digital ordering, automation, artificial intelligence, and increasingly sophisticated data analytics can present significant opportunity for efficiency, implementing new technology can equally introduce new legal and operational considerations. Operators, for instance, already contend with labor needs, continuous supply-chain purchasing, food-safety requirements, high transaction volumes, and tight margins. At the same time, customers expect consistency across locations, even when those restaurants are independently owned and operated. The National Restaurant Association (NRA) estimates that total expenses for the average restaurant have increased 36% since 2019. Against that backdrop, a systemwide technology decision intended to improve efficiency or strengthen consistency can have an immediate impact at the restaurant level and thus a franchisee’s bottom line. Ultimately, QSR franchising is not necessarily facing different technology challenges than the rest of the franchise industry; it is simply experiencing many of them earlier and more intensely because of how such technology is being used. For franchisors, one of the central legal tensions is determining how to use these new capabilities to protect brand standards and support franchisees without becoming too involved in day-to-day restaurant operations. ## New legal considerations **Greater visibility brings new legal considerations** One of those considerations is the growing visibility into restaurant operations that technology provides. Franchisors need to maintain standards that protect the brand, food safety and customer experience, while franchisees remain independent business owners responsible for operating their restaurants. Through digital operating platforms and other technology systems, franchisors may already have access to real-time data on sales, labor, inventory, customer behavior and restaurant performance. AI and automation can complement these capabilities by further influencing forecasting, staffing, training and marketing. From an operational standpoint, that information can be incredibly valuable. From a legal standpoint, though, it raises an important question: At what point does visibility signal too much involvement? Greater insight can furthermore create questions about data ownership, privacy and cybersecurity. As franchise systems collect and share more information, franchisors need to consider who owns that data, who can access it and how it is protected. Access to more detailed operational information can become relevant in a dispute, too, when questions arise about what a franchisor knew about activity or conditions at an independently operated location. ## Cost and funding questions **One significant question is: who pays?** Technology also raises practical questions about cost. Franchise agreements are long-term relationships, with QSR agreements commonly spanning 10 to 15 years. But technology is changing much faster. According to Stanford University’s 2025 AI Index Report, the computing resources used to train notable AI models have been doubling approximately every five months. At that pace, it’s difficult to imagine what technology a restaurant system will need in 2036 when an agreement is signed in 2026. When a franchisor determines that operators need technology that was not contemplated when those agreements were signed, questions can quickly follow. Who funds the platform? Can the franchisor require the investment? What did the franchise disclosure document tell the franchisee to expect? Those questions matter in an industry already facing substantial cost pressure. In 2025, 42% of restaurant operators reported that their restaurants were not profitable, according to the NRA. Technology may ultimately improve those economics but achieving those efficiencies requires investment. Investment requires cash flow. Franchisors should consider not only whether a new technology can benefit the system, but also how the investment will affect operators in the short term and whether existing agreements and disclosures anticipate the expense. ## Mitigating legal risk **Get ahead of legal risk before rollout** As technology changes how franchisors and franchisees operate, it can introduce new points of friction into their existing relationships. Rarely beginning as legal disputes but as operational disagreements over cost, decision-making or implementation, those disagreements – when left unresolved – can evolve into questions about contractual rights and control, and eventually, legal disputes. How franchisors approach those changes can be the difference between more significant disagreements and catching and addressing issues early on. Either way, the time to identify these issues is before rollout, not after franchisees have already been asked to implement a new system or make a significant investment. One of the biggest mistakes a franchise system can make is approaching new technology with a one-size-fits-all mindset. A systemwide investment may affect operators differently depending on their market, existing infrastructure and restaurant economics. Before implementing a significant change, franchisors should consider both its legal implications and how it will affect franchisees across the system. Legal counsel often adds the greatest value before a dispute arises. Bringing counsel into operational discussions early can help determine how existing franchise agreements and disclosure documents address a proposed change and identify potential areas of friction before rollout. That review should also consider how data will be collected, accessed and protected, particularly when new technology introduces additional privacy or cybersecurity risks. Significant decisions and their rationale should also be documented, particularly when they affect franchisee operations or require additional investment. Communication and transparency are equally important. Franchisee associations can provide a structured forum to identify concerns before disagreements become entrenched, while senior leaders of the franchisor should be empowered to engage directly with those groups on significant systemwide changes. That input can help leadership understand how a proposed change may affect operators and surface potential problems before implementation. That does not mean every decision requires unanimous agreement. But there is a meaningful difference between announcing a mandate and explaining its business rationale, expected costs and benefits and how franchisee concerns were considered. AI, automation and other technologies will continue to change how QSR systems operate. For franchisors, the challenge is continuing to evolve while recognizing that technology decisions made at the system level can have immediate financial, operational and legal consequences at the restaurant level. The legal issue, in many cases, will not begin with a lawsuit or contractual dispute. It will begin with a technology decision and how the system chooses to implement it. ## Entities - QSR Magazine (publication) - Ben Coley (person) - franchise operations (topic) - Regulation (sector) - technology adoption (topic) - National Restaurant Association (regulator) - data privacy (topic) - cost management (topic) - legal risks (topic) --- Originally reported by Ben Coley, QSR Magazine (https://www.qsrmagazine.com/story/how-qsr-franchisors-can-get-ahead-legal-risks-of-new-technology/). Summarized by Burnaze (https://burnaze.com/article/7d0e6eac-4f15-4d8d-b7d9-2b2c927bdedf).