The Internicola Law Firm, P.C.

Ways to Minimize Your Risk of Franchisor Vicarious Liability

Even when a franchise agreement specifies a franchisee as an independent contractor, responsible for its own daily operations, issues of vicarious liability could arise for the franchisor. To limit the risk of such liability, a franchisor must implement precautions beyond a seemingly fool-proof "independent contractor" clause in a franchise agreement. 

How to Limit Potential Franchisor Vicarious Liability

To limit potential vicarious liability risks, franchisors commonly choose to include disclaimers and waivers of control within the franchise agreement.

Aside from included clauses, a franchisor should:  

• Maintain sufficient liability insurance coverage;
• Require franchisees to maintain sufficient liability insurance;
• Require franchisees to indemnify the franchisor; and
• Consistently enforce standards of safety and quality without controlling the franchisee's daily operations.  

As a franchisor, you should avoid using standardized clauses covering indemnification and liability in your franchise agreement without first carefully reading these clauses. A carefully written franchise agreement that has been thoroughly inspected by an experienced New York business lawyer is the best way to minimize your risk of franchisor vicarious liability.

How can a New York business lawyer help me?

A New York business lawyer can guide you through every step of the franchise agreement. By helping you strike the delicate balance between retaining sufficient control over your business operations and maintaining protections against liability, your entire enterprise can benefit from the legal guidance and protection offered by an experienced New York business lawyer.