Franchisee and Franchisor PDF

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McDonald's Corporation (McDonald's) is a franchisor that licenses franchisees to run fast-food restaurants and to use their service marks and trademarks. One of the franchises that McDonald's Restaurants of Illinois (Franchisee) own and operate is in Oak Forest, Illinois. Acknowledging the risk of a...

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McDonald’s Martin v. McDonald’s Corporation 572 N.E.2d 1073, 1991 111. App. Lexis 715 Facts McDonald's Corporation (McDonald's) is a franchisor that licenses franchisees to run fastfood restaurants and to use their service marks and trademarks. One of the franchises that McDonald's Restaurants of Illinois (Franchisee) own and operate is in Oak Forest, Illinois. Acknowledging the risk of an armed robbery at its franchises, particularly in the period immediately after closing a day's business, McDonald's created a corporate division to handle their franchises' security issues. McDonald's made a manual for its restaurant security operations and demand that its franchisees observe the established procedures. At the McDonald's regional manager came to the Oak Forest franchise to inform the manager concerning security procedures. He significantly stated the rules: grease and trash must be taken out the side glass door at least an hour before closing, and no one should throw garbage out at the back door after it gets dark. While inspecting, the security manager established that the restaurant locks had changed and the alarm system needed installation for the backdoor. The McDonald's security manager did not follow up to ascertain whether such security measures were adopted. A month later, a six-month crew and all were teenagers attempting to clean up and close the Oak Forest restaurant. Maureen Kincaid, Theresa Dudek, and Laura Martin were members of the crew. An individual later identified as Peter Logan surfaced at the back of the restaurant with a firearm. He demanded that the crew opens the crew to open the safe and gives him the cash and ordered them to enter the refrigerator. Logan killed Martin with a gunshot and assaulted Kincaid and Dudek. Kincaid and Dudek suffered acute emotional distress from the incident. It was demonstrated that Logan had entered the restaurant through the back door. Trial witnesses showed that the work crew exclusively used the backdoor, both before and after dark, and emptied grease and garbage through the back door all day and night. Furthermore, there was evidence that the latch on the backdoor did not function properly. It was also shown that the crew had not been briefed about using the back door after it gets dark. The crew had never received the McDonald's security copies of the manual. The necessary warning concerning not using the back door after dark had not been posted at the restaurant. Dudek and Kincaid and Martin's parents sued McDonald's for recovery of damages for negligence. The trial court awarded damages of $1,003,445 to the Martins for their daughter's wrongful death and awarded $125,000 each to Dudek and Kincaid. McDonald's appealed. Issue Is McDonald’s liable for negligence? Decision The appellate court held that McDonald's was negligent for its failure to follow-up and ensuring that security anomalies it had established at the Oak Forest franchise had been remedied. The court affirmed the judgment of the trial court, holding McDonald's liability. Rainey v. Domino’s Pizza, LLC 998 A.2d 342 Facts Domino’s Pizza, LLC grants franchises to autonomous contractors; TDBO, Inc is granted under the franchise agreement of Domino's Pizza. TDBO is a private independent contractor in the contract, and Domino's is not responsible for obligations and debts. A TDBO employee, Edward Langen, injured Paul Rainey. The victim was riding his motorcycle as he

delivered pizza. Accordingly, he sued Langen, TDBO, and Domino's for the accident due and negligence and vicarious liability. Issue Whether Domino’s Pizza, LLC is liable for the accident caused by an employer of TDBO? Decision Since both sides signed the agreement, there is no ethical dilemma. The contract stated that TDBO was an autonomous contractor, and it is why Domino's was not liable for situations of that nature. The only responsible entity is TDBO for such, and that is why the court decided to blame TDBO. Maybe this company should have stepped up and accepted the blame to avoid the involvement of Domino's. For that reason, the court found that Domino's actions were not negligent, and it was not vicariously liable for the actions of Rainey. It was not vicariously negligent for its franchise's actions, as the agreement between TDBO and Domino's states that Domino's will not be responsible for obligations and debts. Given that there is a distinction between an independent contractor and an employee, Domino's actions were justified. Why was the franchisor liable in one case and not in the other? The franchiser was liable in one case and not in the other because, in McDonald's Martin v. McDonald's Corporation, the franchiser was directly liable for its actions. However, in Rainey v. Domino's Pizza, LLC, the franchiser entered a contract with an independent contractor, TDBO. For that reason, as an independent contractor, TDBO is not an employee of Domino's, and by extension, the employees of TDBO are not employees of Domino's. For that reason, Domino's (franchiser) is not responsible for the actions of an independent contractor's employees. If a franchise is properly organized and operated, how are liability issues between them resolved? If a franchise is adequately organized and operated, liability issues between them resolved are internally solved without seeking legal redress from the courts. For that reason, a franchisor should ensure it protects its employees from any foreseeable danger. However, in case of an unforeseeable risk, the franchise should step-up and take care of the employees' medical expenses....