Is Franchising Headed Towards Cryptocurrency And Blockchain Technology?


At the recent International Bar Association, Franchise Law Committee meeting in Rome, Italy, there was a round-table discussion on the subject of blockchain technology and its possible application in the franchise industry. Craig Tractenberg, Partner at Fox Rothchild, sent me the following summary of the discussion: Tractenberg reported: “One of the roundtable discussions dealt with the use of blockchain technology in franchising. Those familiar with blockchain technology know that it can be used beyond cryptocurrency transactions and applied to any record keeping. The anticipated uses of this digitized public ledger technology are for digital payment, smart contract, and database – record management systems.” 

Tractenberg continued: “The discussion itemized the commercial application of the technology to the franchise context. Cited was FOODCOIN Ecosystems ( as a global marketplace for food and agricultural products designed to eliminate intermediaries through the use of smart contacts. Another emerging company is FANTOM Foundation (, which has apps for food reservations, geolocation and supply chain management. Carry Protocol (, provides merchants and customers a platform to communicate and understand each other, and is effectively an advertising channel.”

Terry Kim, Esq. of Lee & Ko in Seoul Korea led the discussion as Korea is one of the countries leading the way in the commercial application of blockchain technology.

Chanticleer’s Holdings, which has franchise brands, American Burger, BGR, Little Burger, Just Fresh and Hooters in its portfolio introduced Bitcoin to Hooters legacy program, in January of this year. “Customers can have a cryptocurrency loyalty program across all Chanticleer Holding brands — and beyond. It runs on the MobivityMind commerce platform, and will pay out in Merits, a  cryptocurrency that’s leveraging the same infrastructure and principles of Bitcoin, Ethereum, Ripple, Litecoin, and more,” stated  Chanticleer’s CEO, Michael Pruitt.

Cryptocurrencies and Block Chain technology

Cryptocurrency is an encrypted, decentralized digital currency transferred between peers and confirmed in a public ledger via a process known as mining. There are a reported 2,000 cryptocurrencies currently in use, ranging from the highly publicized Bitcoin to one that’s used specifically for dentists. The subject of cryptocurrencies and blockchain technology is very complex, therefore I’ll provide a brief explanation using Bitcoin as an example.

 Confirmed transactions from the start of a cryptocurrency’s creation are stored in a public ledger. Blockchain technology is used to confirm the identities of the coin owners are encrypted, and the system uses other cryptographic techniques to ensure the legitimacy of record keeping, making it almost impossible to forge transaction histories. This process can reduce transaction costs by making payment processing more efficient.

A transfer of funds between two digital wallets is called a transaction. That transaction gets submitted to a public ledger and awaits confirmation. Wallets use an encrypted electronic signature when a transaction is made. The signature is an encrypted piece of data called a cryptographic signature and it provides a mathematical proof that the transaction came from the owner of the wallet. The confirmation process takes a bit of time (ten minutes for bitcoin) while “miners” mine. Mining is the process of confirming transactions and adding them to a public ledger. To add a transaction to the ledger, the “miner” must solve an increasingly-complex computational problem that confirms the transactions and adds them to the public ledger.

The blockchain is a new way of storing data in a distributed ledger that allows multiple stakeholders to confidently and securely share access to the same information.

Every time a new transaction is initiated, a block is created with the transactions details and broadcast to all the nodes. Every block carries a timestamp, and a reference to the previous block in the chain, to help establish a sequence of events. Once the authenticity of the transaction is established, that block is linked to the previous block, which is linked to the previous block, creating a chain called blockchain. This chain of blocks is replicated across the entire network and all cryptographically secured which makes it not only challenging but almost impossible to hack.

In the context of security, both transparencies of the system and protection of the data stored on blockchain come into play.  Once data has been written to a blockchain, it becomes virtually unable to be changed.

Evolution into new, alternative implementations

Blockchain technology can be applied to not just a cryptocurrency like bitcoin, but to any “asset” that can be stored, distributed or transacted, franchise transactions, purchase of goods, franchise documents and other data. .

This technology has great implications for the franchise industry as well.  Financial transactions would be instantaneous since the transaction and settlement would happen simultaneously once the ledger is updated.

Blockchain technology can fundamentally change how franchise entities transact business, protect information and preserve valuable assets.


Published on: 2018-10-19 18:59:00

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