The Basics of Franchisor Vicarious Liability (Part B)

A whole variety of problems could arise for a franchisor when an accident occurs on the premises of a franchisee. If you are in such a situation as a franchisor, your own vicarious liability may be brought into question. Vicarious liability is usually determined through "degree of control."

Degree of Control in Franchisor Vicarious Liability Cases

The degree of control has to do with how much power the franchisor had over the circumstances of the accident that caused the injury in question.

The degree of control retained by a franchisor over the actions of a franchisee is determined by:

  • The franchisor's right to control; and
  • The franchisor's ability to control.

The details of both these factors should be specified in the original franchise agreement between franchisor and franchisee.

With this in mind, it may seem that a lesser degree of control would be most advantageous to the franchisor. However, it is in this sense that control becomes the aforementioned double-edged sword; in any situation other than a personal injury lawsuit, a high degree of control over business interactions and environment of franchisees is generally considered to be of vital importance in any franchise.

The risk of vicarious liability can be reduced through disclaimers and specific waivers of control in the franchise agreement, but it can be difficult to create a contract that allows the franchisor to avoid vicarious liability and still maintain control over vital areas such as financial reporting.

If you are drafting a franchise agreement or there has been an injury on the premises of your franchisee, it would be in your best interest to speak with an experienced New York business lawyer immediately.

How can a New York business lawyer help me?

A New York business lawyer can guide you through every step of the franchise agreement process. An experienced New York business lawyer will know how to draft an agreement that will offer you a comfortable level of control over your business, but still maintain reasonable protections against vicarious liability.

If you are an entrepreneur who is interested in purchasing a business or franchise, there is a lot you need to know, including the top 5 business-buying myths and how to evaluate business assets. For a limited time, get this FREE business manual - An Entrepreneurs Guide to Purchasing a Business or Franchise. Offering expert help in New York, New Jersey and nationwide, business and franchise attorney Charles N. Internicola is ready to answer your questions about franchise, national and international trademarks, and any critical business matters that may arise. Contact us today - 1-800-976-4904.




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