Franchisor 101: Court does pizza franchisor a favor | Lewitt Hackman

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A Texas appeals court upheld a lower court judgment in favor of Pizza Hut and its franchisee for allegations of alleged sexual assault by a delivery driver. The appeals court found that Pizza Hut was not responsible for the franchisee’s employee since Pizza Hut had no right to control the franchisee’s employment practices.

The Court of Appeal rejected plaintiff’s argument that the Franchise Agreements and Operations Manual, requiring franchisees to adhere to brand standards, established Pizza Hut’s control over the employment practices of franchisees. The court held that Pizza Hut’s requirement that its franchisee comply with the franchisor’s procedures did not constitute proof of control. Plaintiff has not proven that Pizza Hut controlled or had the right to control the franchisee’s hiring practices. Under the franchise agreement, the franchisee, not Pizza Hut, controlled the means, methods, and details of the standards of operation, including employment practices such as hiring, termination, and other actions. Staff.

The appeals court dismissed the plaintiff’s apparent agency claim because the plaintiff failed to provide supporting evidence. Ostensible agency occurs when the principal makes a representation that causes justifiable reliance resulting in harm. The plaintiff focused on the conduct of the franchisee, not the franchisor. And the use of a national brand in general advertising indicates a franchise and not an agency relationship, even if the franchisee’s local advertising has been approved by the franchisor.

Plaintiff’s gross negligence claim failed because there was no evidence that Pizza Hut hired the delivery driver, or that Pizza Hut knew the franchisee hired the driver. The plaintiff showed no dispute as to whether Pizza Hut had a real and subjective awareness of the risk involved, but proceeded nonetheless with a conscious disregard for rights, safety or well-being. third party, an element of gross negligence. Franchisors should consult with franchise counsel about existing franchise agreements, policies, manuals and training materials, in an attempt to reduce the risk of actual or perceived control over a franchise’s employment practices. franchise. Such a review can help franchisors defend against tort claims and alleged agency theories presented by customers or employees of franchised establishments.

Franchisors should consult with franchise counsel about existing franchise agreements, policies, manuals and training materials, in an attempt to reduce the risk of actual or perceived control over a franchise’s employment practices. franchise. Such a review can help franchisors defend against tort claims and alleged agency theories presented by customers or employees of franchised establishments.

See: Doe c. YUM! Marks, Inc.n° 01-19-00844-CV (Tex. App. November 4, 2021)

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