Over the last few years, franchises have become a favorite target of cyber criminals. Hackers have stolen password credentials, franchise business records and customer credit card data from some of the biggest names in the industry. The consequences of a hack are serious.

Consider these recent statistics:

  • The average cost of a data breach for small- to mid-sized businesses was $105k in 2021, up from $101k in 20201.
  • Small businesses are three times more likely to be targeted by cybercriminals than larger companies2.
  • One in five organizations had at least one account compromised in 20213.

If these statistics are startling, you’re not alone. A recent U.S. Small Business Association survey found that 88% of small business owners felt their business was vulnerable to a cyber attack.

Reducing your Franchise’s Cyber Exposures

The risks of a cyber attack are something you can’t afford to ignore. Most attacks are the result of a business being unprepared to handle common threats. By taking proper action, you will significantly minimize your risk. Implement these tips:

  1. Protect your computer systems

Protecting your computer systems from these threats requires the right combination of tools. A firewall is essential to keep cyber criminals from accessing multiple systems through a single vulnerability. Antivirus software is needed to stop intrusions and sound the alarm if an attack is successful.

  1. Practice good password security

Always choose strong passwords, use different passwords for each system and update passwords that are old or compromised.

  1. Perform maintenance and updates

Plan for software updates as systems age and make sure critical security update patches get installed right away.

  1. Schedule regular system backups

Perform regular backups for any important data and systems.

  1. Hold cyber risk awareness training

Employees know they should avoid a suspicious email, but spotting today’s most common phishing tactics is getting more difficult. Train employees on what to look out for and how to stay safe.

  1. Create a cyber response plan

Having a plan makes it easier to identify when there’s been a breach and gives you the tools to act quickly to minimize the damage.

  1. Add cyber liability insurance coverage

A cyber security incident can have a far-reaching impact on your business, and the risk is always there, even with all the right protections in place. Cyber liability insurance coverage can help minimize your exposure, cover costs and recover more quickly.

Understanding Cyber Liability Insurance for Franchises

Like you have plans in place for business incidents of all kinds, Cyber Liability has coverage in place for cyber incidents of all kinds.

  • Your front window shatters causing your business to close. You call your go-to repairman to replace it.
    • Cyber Liability comparison: System damage and business interruption. When a computer system disruption prevents you from conducting business and results in the loss of income and extra expenses, Cyber Liability covers the cost.
  • A burst pipe leaves an inch of water throughout your building. You call the restoration company to clean the carpets and restore your space.
    • Cyber Liability comparison: Data restoration expense. Pays for the expenses associated with restoring data, software or firmware that is corrupted or damaged due to a cyber attack.
  • A disgruntled customer rants on social media and the local news outlet picks up the story. You reach out to your lawyer to see how to respond.
    • Cyber Liability comparison: Incident response. To handle the aftermath of a cyber attack, specialists are called upon, including defense counsel, crisis management, initial response guidance, IT forensic investigation, notification services, public relations and more.
  • You ask an employee to place an ad about a job fair. In the ad, they talk badly about a competitor who then sues you for defamation. You contact your lawyer.
    • Cyber Liability comparison: Multimedia liability. Covers you for lawsuits stemming from claims of copyright infringement, trademark infringement and defamation arising out of your company’s electronic publishing.
  • You discover an employee has been stealing. You fire them, following HR guidelines.
    • Cyber Liability comparison: Cyber Theft and Social Engineering Loss. Covers your businesses for incidents of social engineering or fraudulent use of your business computer system that result in fraudulent funds transfers from the bank.

Cyber Liability Insurance for Franchises

Because of your business’s unique vulnerabilities, franchises will likely continue to be a favorite target of cyber criminals. But it’s within your control to make your systems more secure and minimize your own risk.

Contact Lockton Affinity to learn more about cyber liability insurance for franchises and cyber security resources that can help protect your business.


1 Kaspersky . “Managing the Trend of Growing IT Complexity.” Kaspersky, 5 Oct. 2021.

2, 3 “Barracuda Networks.” Volume 7 – March 2022 | Barracuda Networks.  https://www.barracuda.com/spearphishing-vol7.