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The franchise is a common business organization. From fast food to hotels, the franchise structure is pervasive throughout our economy. The following cases help us think about the nature of the franchise/franchisee relationship. Is it an agency relationship? Or, is it something else?
Often times issues arise when the Franchisee commits a tort. Then litigants attempt to assign liability to to the Franchisor by way of agency theories. The plaintiffs argue that the Franchisee is nothing more than an agent of the Franchisor, the principal.
Over the years, courts have developed an approach to dealing with these questions that on the one hand generate principal-agent liability when the instrumentality of the tort is subject to the control of the Franchisor and no liability when the the instrumentality of the tort is under the control of the Franchisee on the other.EDIT PLAYLIST INFORMATION DELETE PLAYLIST
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|1||Show/Hide More||Allen v. CHOICE HOTELS INTERNATIONAL|
|2||Show/Hide More||Wendy Hong Wu v. Dunkin'Donuts Inc.|
In this case, an employee of a Dunkin Donuts franchise sues Dunkin Donuts after she is attacked while at work. As in other cases of this type, the plaintiff seeks to ask the court to look through the stated relationship between the franchisee and the franchisor and hold that it is in fact an agency relationship and thus assign liability to the franchisor.
Note how the court limits the extent of the possible liability for franchisors.
Brian JM Quinn
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