The Internicola Law Firm, P.C.

Franchisor Vicarious Liability; the Ostensible Agency Issue

If you are a franchisor and someone has been injured on the premises of one of your franchisees, you may be facing legal issues such as franchisor vicarious liability. Arguments for your liability could imply that you held "sufficient control" over your franchisee or that your franchisee was working as your "agent," an argument known as ostensible agency. 

What is ostensible agency? 

Ostensible agency states that franchisees, as a franchisor's agents, directly represent the franchisor. Because of this direct representation, any liability acquired by the franchisee is considered the liability of the franchisor.

A franchisee can be legally considered a franchisor's ostensible agent through proof of an existing contract permitting the franchisee to represent and act in the conduct of the franchisor's business. Any franchise agreement should be carefully examined by an experienced New York business lawyer.

How can a New York business lawyer help me? 

A New York business lawyer can guide you to draft a franchise agreement that will ensure you retain sufficient control over your franchisee's business operations, yet maintain a reasonable level of protection against vicarious liability. It's a very delicate balance, and often one that can benefit from the expertise of someone who is experienced in the art of franchise law.