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The principles used in distinguishing between employees and independent contractors for purposes of vicarious liability apply with equal force in the franchisor-franchisee context. With near uniformity, courts apply some version of the "right to control" test in determining whether the imposition of vicarious liability on a franchisor is appropriate. In evaluating the requisite level of control, courts commonly distinguish between control over a franchisee's day-to-day operations and controls designed primarily to insure uniformity and the standardization of products and services. This distinction is consistent with emphasis by Maine courts on the power to control and direct the details of the work, rather than the result to be obtained.
While riding his motorcycle, Paul F. Rainey was seriously injured in a collision with a car driven by Edward A. Langen, who was delivering pizza for his employer, TDBO, Inc., a Domino's Pizza franchisee. At the time of the accident, the relationship between TDBO and Domino's Pizza was governed pursuant to a "Standard Franchise Agreement" (Agreement) and "Manager's Reference Guide" (Guide). The Agreement created a uniform system of standards to ensure that each franchisee offered products and services that meet minimum criteria. Specifically, the Agreement provided that TDBO's franchise store "shall at all times be under the direct, on-premises supervision" of TDBO. By reference, the Agreement incorporated the Guide, section 12 of which has set forth the rules applicable to delivery drivers and delivery vehicles. The Raineys filed a a six-count complaint against Langen, TDBO, and Domino's Pizza, alleging negligence, vicarious liability, and loss of consortium. Domino's Pizza moved for a partial summary judgment, seeking judgment in its favor on the negligence and vicarious liability counts of the Raineys' complaint. The Raineys opposed the motion, arguing that disputed issues of fact existed as to whether Domino's Pizza exerted sufficient control over TDBO's operations to subject itself to vicarious liability for Langen's negligence. The court granted Domino's Pizza's motion, holding that the Raineys failed to raise a disputed issue as to whether Domino’s Pizza controlled or had the right to control Edward Langen. The Raineys appealed.
Could Domino’s Pizza, the franchisor, be held vicariously liable for the negligent acts of an employee of its franchisee?
Although there was a jurisdictional split regarding the issue, the court adopted the traditional "right to control" test rather than the instrumentality rule derived from the Lanham Act, 15 U.S.C.S. §§ 1051-1129. The motorcyclist referred to particular sections of the "Manager's Reference Guide" in support of the vicarious liability claim. However, the Court held that those sections were for informational purposes only and not requirements. Although the quality control requirements and minimum operational standards imposed by the franchisor in the Franchise Agreement and Reference Guide were numerous, the controls fell short of reserving control over the performance of the franchisee's day-to-day operations. Moreover, the franchisee: (1) determined the wages it paid its employees; (2) determined the scheduling of its employees; and (3) made all day-to-day decisions concerning hiring, firing, training, supervising, and disciplining its employees. The quality, marketing, and operational standards did not establish the supervisory control or right of control necessary to impose vicarious liability on the franchisor.