Why Franchise Owners Have to Be Especially Careful on Social Media For the franchise world—in which one negative comment can affect an entire system of corporate owners and franchisees—managing your reputation is especially critical.

A decade ago Terry Powell, founder of career-coaching franchise The Entrepreneur's Source, hadn't fully grasped the implications of the transparent world of social media. That changed when he got into a dispute with 14 of his franchisees who were resisting a switch to a digital marketing system.

"This group was working outside the system and falsifying their marketing reports," Powell explains. "They realized that if the system was automated, it would expose them."

The dispute led to a 2004 class action and an attempt by the rogue franchisees to hijack The Entrepreneur's Source marketing committee.