I think you are right on the money, John, in that trademark law and
marketing principles push franchisors to exercise controls.  Of course,
sometimes the franchisor may simply overextend its control out of force
of habit or lawyering run amok.  Absent counter-negotiation by a strong
franchisee association or capable franchisee attorneys, why not, this
thinking goes, place in the contract (or the operations manual) even
more franchisor controls than are really needed?    
This is not to make light of the dilemma franchisors face:  How to
control franchisees sufficiently for various legitimate reasons (even
other franchisees often want those controls, to a certain degree, such
as to fight free-riding), but not too much to increase the prospects of
liability for acts or omissions of the franchisee. 

Robert 
 

-----Original Message-----
From: Academy of Legal Studies in Business (ALSB) Talk
[mailto:[log in to unmask]] On Behalf Of John Allison
Sent: Wednesday, May 26, 2010 8:10 PM
To: [log in to unmask]
Subject: Re: Frontline: Flying Cheap (PBS)

The problem, of course, was that the franchisee was an independent
contractor.  Of course, an agent is often an independent contractor, but
this case involved tort liability, which normally has recognized the
employee-I.C. distinction.

And, the franchisor is in quite a bind to avoid this kind of liability
because it must closely monitor the use of its trademark by various
franchisees, or risk being treated as having abandoned the trademark in
the areas in which there is inadequate supervision.  The supervision
requirement exists to prevent consumer confusion.  You know much more
about franchising than I do, Robert--isn't trademark protection for
legal purposes combined with brand recognition for marketing purposes
the main reason for such detailed control (and very thick franchise
contracts)?

John 

-----Original Message-----
From: Academy of Legal Studies in Business (ALSB) Talk
[mailto:[log in to unmask]] On Behalf Of Robert W Emerson
Sent: Wednesday, May 26, 2010 6:57 PM
To: [log in to unmask]
Subject: Re: Frontline: Flying Cheap (PBS)

The most famous old agency case involving Dairy Queen is more an actual
agency case than apparent agency.  In Singleton v. International Dairy
Queen, Inc., 332 A.2d 160, 162-63 (Del. Super. Ct. 1975), a customer's
personal injury case, franchisor Dairy Queen controlled so many details
of the franchise operations that issues of actual agency between Dairy
Queen and the franchisee had to be resolved at trial.  Summary judgment
thus was denied to Dairy Queen, which had relied on contractual
boilerplate language purporting to make the franchisor-franchisee
relationship an independent contractor relationship.  
The court in Singleton noted that there was substantial proof of an
agency because the franchisor controlled the shape, size, and appearance
of the franchised restaurant, mandated that the only sign simply state
"Dairy Queen," required all containers to show the "Dairy Queen" name,
dictated serving portions and the size and shape of containers, named
the suppliers, determined employee uniforms, decided what may be sold by
the franchisee, and otherwise kept "the very lifeblood of the
[franchisee] in the hands of the franchisor".
		Robert

Robert W. Emerson
Huber Hurst Professor of Business Law 
Warrington College of Business Admin.
University of Florida
[log in to unmask]
 

-----Original Message-----
From: Academy of Legal Studies in Business (ALSB) Talk
[mailto:[log in to unmask]] On Behalf Of John Allison
Sent: Wednesday, May 26, 2010 7:08 PM
To: [log in to unmask]
Subject: Re: Frontline: Flying Cheap (PBS)

I recall long ago reading at least one case finding franchisor liability
for the negligent property maintenance of an independent franchisee
under an "apparent servant" doctrine.  I think I remember that one case
involved Dairy Queen.

John

-----Original Message-----
From: Academy of Legal Studies in Business (ALSB) Talk
[mailto:[log in to unmask]] On Behalf Of Miller, Carol J
Sent: Wednesday, May 26, 2010 2:30 PM
To: [log in to unmask]
Subject: Re: Frontline: Flying Cheap (PBS)

If it the case I am remembering --Texaco was not liable because the
repair shop had a sign on it indicating it was a separate business and
the owner of the repair shop had control over and paid the employees.

-----Original Message-----
From: Academy of Legal Studies in Business (ALSB) Talk
[mailto:[log in to unmask]] On Behalf Of Bill Shaw
Sent: Tuesday, May 25, 2010 9:33 PM
To: [log in to unmask]
Subject: Frontline: Flying Cheap (PBS)

This documentary centered on a recent air disaster of a Colgan commuter
plane
that was aligned with Continental.  You might remember the loss of life
as the
flight into Buffalo crashed a few miles from the airport.

The FAA hearing concluded that pilot error was the cause of the 
crash.  Tickets
were purchased at a Continental counter, the planes were painted in 
Continental
colors, the travelers (or most of them) probably thought they were in 
Continental
hands, and so forth.  Plaintiffs were met with contractual firewall 
that stymied their
efforts at recovery.

I got the idea that the documentary was of recent origin, but there 
was no report on
litigation.  Surely there's something cooking out there.  Anyone 
picked up on some
good articles, or maybe written about it?

Centuries ago, there was a case against Texaco for the negligent 
repair of an auto
by one of their independent dealers.  Plaintiff claimed that the 
motto, "You can trust
your car to the man who wears the star," was one that inclined a 
person to trade
there, and that Texaco should be held for the dealer's 
negligence.  Anyone remember
that, or how it came out?