Franchises & The Law: How Liable is a Franchise for Actions of Franchisees Employees?

(Franchise Buy) - By SystemUser - BlogMigration. Updated Oct 30, 2013

Patterson v. Dominos Pizza, LLC, the California case that involves a sexual harassment claim by a franchisees employee once again raises the question whether a franchisor can be deemed a franchisees employer for certain purposes. Patterson, a Dominos employee claimed that her assistant manager both sexually harassed and sexually assaulted her. When filing suit, Patterson listed both the franchisee and Dominos liable for her sexual harassment. The reasoning behind this was that both the franchisee AND Dominos were the supervisors employers, and therefore made them vicariously liable for his actions.The appellate court was faced with a challenge: how liable is a franchise for the actions of individual franchisees employees? The appellate court stated that the franchisors interest in the reputation of its entire system allows it to exercise certain controls over the enterprise without running the risk of transforming its independent contractor franchisee into an agent. However, the court went on to explain that although this is generally true, because of this substantial control over franchisees local operation as well as management-employee, the franchisor can be subject to vicarious liability. The franchisees testimony stressed this issue of control, as he said that he had to abide by the hiring and firing rules given by the Dominos area representative. Californias court decided that Dominos actually can be liable for sexual harassment of a franchisees employee. (2012 Cal. App. LEXIS 753)What does this mean for franchisees? Franchisees can certainly have a specific disclaimer for employment relationships to help protect them from liability. It could also be a reminder for franchisors everywhere to review their operations manuals and determine standards for what a franchisor actually has control, and therefore potential liability, over. I can only imagine that this case, along with several others in the past few years in Massachusetts, Connecticut, Oregon, Pennsylvania, and Florida, has made franchises more cognizant about sexual harassment laws and regulations.What do you think about the ruling of this case? How much liability should a franchisor hold? Does a franchisors right to set standards for franchisees employees appearance and its involvement in hiring and firing decisions make them reliable for sexual harassment cases? Leave your opinions below!