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Developments in Vicarious Liability

Franchisors generally have deeper pockets than their franchisees, making them an obvious target for vicarious liability lawsuits when a customer or client of a franchise is harmed or believes he has been harmed. These claims are regularly advanced by plaintiffs, even though “part of the very nature of setting up a franchise system is to limit [the franchisor's] liability and to push liability down to franchisees, who really have control over their own business operations,” said Nixon Peabody partner Gregg Rubenstein during a Webinar in December about vicarious liability trends in franchising.

Courts have occasionally concluded that a franchisor might be liable for the actions of its franchisee or for harm suffered on the premises of a franchisee. Rarely do these issues arise in the most common form of vicarious liability claim, those related to the actions of an employee, because franchisors have been very successful at writing contracts that make it clear that franchisees are employing their workers, not franchisors.

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