Franchisor Liability for the Torts of Its Franchisees: The Case for Substituting Liability as a Guarantor for the Current Vicarious Liability

Authors

John L. Hanks, Benjamin N. Cardozo School of Law

Publication Date

Spring 1999

Journal

Oklahoma City University Law Review

Abstract

The author reviews the justifications for applying the law of vicarious liability in the franchising context and concludes that its application is often inefficient and arbitrary. He argues that the employee-independent contractor dichotomy used by courts to determine franchisor liability is not well-suited to franchising, where the relationship encompasses both concepts. He proposes that vicarious liability not be applied in the franchising context. Instead, the courts by case law or state legislatures by statute should impose a guarantor status on franchisors that would expose them to liability for the torts of the franchisees only if the franchisee was unavailable to be sued or without funds or assets with which to pay a judgment. He argues that all the benefits of vicarious liability can be achieved with the substitution for it of a guarantor status, while reducing the litigation defense burdens otherwise imposed on franchisors. In addition, the guarantor status approach provides an additional benefit compared with vicarious liability of giving a tort victim a remedy in the rare case where the franchise is judgment proof but the franchisor might not be vicariously liable. The policy justification for this expansion of franchisor liability is twofold. Franchisors are being relieved of a much larger amount of liability to the extent that they would no longer be vicarious liable for the torts of their franchisees. Second, and more basic, it is fair given the reliance the public justifiably puts in franchise systems due to the extensive marketing of franchisor trademarks

Volume

24

Issue

1 and 2

First Page

1

Last Page

36

Publisher

Oklahoma City University School of Law

Keywords

Commercial Law, Contracts, Torts, Vicarious Liability, Legal Practice and Procedure, Business and the Law, Common Law, Jurisprudence, Franchising, Business Practice and Procedure

Disciplines

Commercial Law | Common Law | Contracts | Jurisprudence | Law | Torts

Comments

Franchising Law Symposium

Recommended Citation

John L. Hanks, Franchisor Liability for the Torts of Its Franchisees: The Case for Substituting Liability as a Guarantor for the Current Vicarious Liability, 24 Okla. City U. L. Rev. 1 (1999).
https://larc.cardozo.yu.edu/faculty-articles/881