9 Common Legal Problems in Restaurant Marketing

Restaurant marketing has become commonplace, but restaurant owners may not realize their efforts may create legal risk.  Here are nine common legal problems that operators may confront in restaurant marketing.

Trademarks: Even a local single operator may want to protect its name. The best time to do this is before the restaurant launches. Without doing the proper searching, a restaurant may find itself on the receiving end of a cease and desist letter from someone else in the restaurant services business that has prior rights. Even if the restaurant name is clear and protected, restaurant marketing now occurs in the shape of  branded goods, from coffee mugs to t-shirts. New trademark applications should be filed to afford maximum protection to the brand. And let’s not forget that certain hashtags may seem innocuous but are actually registered trademarks whose owners enforce them. (Yes, restaurants have been sued for using #TacoTuesday.)

ADA Website Accessibility: Many restaurants (even small single operators) are finding themselves sued for failure to be compliant with the Americans with Disabilities Act (ADA). Class action attorneys are filing lawsuits against restaurants whose websites do not make special provisions for the blind, for example. If the website invites patrons to review menus, make reservations, or place orders, the argument is that the disabled are disenfranchised from using the website. While the law is unstable in this area, there would be a substantial expense involved with defending such a lawsuit. Every restaurant should be proactive to get ahead of this problem and bring its restaurant into ADA compliance.

Gift Cards: Many restaurants sell gift cards to patrons. There are numerous state laws regarding gift cards, particularly as they relate to disclosures, dormancy/expiration provisions, fees, and unused cards. Restaurateurs should ask if do a compliance check. Even if the restaurant is relying on a third party to administer its gift card programs, the ultimately liability could fall on the restaurant for failure to comply with the laws. Of course, contracts with vendors should be checked to ensure that appropriate warranties and indemnities are in place. In addition, if the restaurant is using any loyalty programs to earn gift cards or points, it could be inviting legal investigation by a state Attorney General if the loyalty program is not implemented properly.

Sweepstakes: Sweepstakes, contests, and other giveaways are popular restaurant marketing tools to maintain patronage and spread the word about a restaurant. Many restaurateurs, however, are not aware that sweepstakes are subject to fifty states’ laws. To ensure that a state Attorney General does not see a promotion as illegal gambling, it is essential that a prize promotion has the right structure. The promotion should also have rules to protect from consumer lawsuits. Finally, the Federal Trade Commission (FTC) is also paying close attention to prize promotions that use hashtags to promote interest in the business. The FTC wants to see appropriate disclosures and hashtags that make it clear that the social media post is in exchange for a sweepstakes entry.

Charity Partnerships: In an effort to give back to the community, restaurant marketing teams may partner with charitable organizations to donate a percentage of sales. More than half of the states regulate such commercial co-ventures. Some even require registration and bonding. Failure to follow such best practices can result in financial penalties and public relations’ backlash.  To avoid running afoul of these statutes, restaurateurs should vet these programs with legal counsel.

Social Media and Mobile Marketing: Restaurants should develop social media policies for employees to ensure they are meeting FTC and state requirements regarding endorsements/testimonials and to provide best practices that will reflect well on the brands. In addition, unless the restaurant marketing teams are producing all content (photos/videos, etc.) in house, restaurants will want some content curation guidelines. Even if content is being created in house, the restaurant will want to make sure it has the appropriate ownerships and licenses set up to avoid copyright infringement claims. Restaurants will  also want to acquaint themselves with local laws regarding publicizing happy hours on social media. These vary from jurisdiction to jurisdiction. Finally, restaurants that email or text their patrons will want to make sure they have appropriate opt-in/opt-out options in place. Failure to do so can result in large financial penalties under CAN-SPAM and TCPA laws. In particular, the TCPA plaintiffs’ bar is very active and seeks large judgments for just one text that should not have been sent.

Privacy Policies: All restaurant websites should have terms of use and privacy policies, particularly when the restaurant is sharing data with delivery/ordering services. By collecting personal data from consumers, the restaurant must notify its customers of how it is using and securing the data. If the restaurant is part of a larger group, the entire group of restaurants should have consistent practices. Open the newspaper any day and stories of data breaches abound. The first line of defense against significant legal problems is having these policies upfront where consumers can see them.

3rd Party Delivery/Ordering Services: Many restaurants contract with third party delivery and ordering services (for example TryCaviar or PostMates or ChowNow). There have been issues with liability connected to both food damage and improper use of customer data. These issues can be addressed contractually with the third party service.

Music: If the restaurant is playing music of any kind, it will want to review its license agreements to ensure it has full permissions. Decided to add a live performer during happy hour? That may change the restaurant’s license requirements.