Contemporary Business Law Study Set 1
Quiz 31 :
Franchise and Special Forms of Business
Liability of franchisors and franchisees: Generally the franchisee deals with franchisor as an independent contractor. Neither of the party is liable for the act of one another. Each party is responsible for the acts of their own. Independent contractor: An independent contractor can be referred as an individual who deals with others on his own. He is not managed by someone else; therefore a relationship between an enterprise and an individual contract may or may not be covered under agency relationships. Company SC was a franchisor and gave its license to CM. it was expressly stated in the agreement that each franchisee works as an independent contractor. Person TC died and his parents sued CM and SC claiming for negligence on the part of CM and vicarious liability on the part of SC. In the above case SC cannot be held liable for the negligence of its franchisee as the franchise agreement itself stated expressly that each franchisee is working as an independent contractor and no party can be held liable for the act of another. Doctrine of Apparent Agency does not apply here as there is a contract between both the parties which states that no party is liable for other's act. Thus, in the above case SC shall not be held liable for death of TC. The judgment in the above case will be in favor of SC.
The court made decision in favor of defendant as there was no argument and authority to support the argument given by plaintiff. The court stated that the combined efforts of the respondents to break the satellite franchise contract between the complainant and the respondents, the respondents should be ordered from appealing in the business of making tax returns of federal and state income. The respondents have tried to create an income tax provision business depending upon the customer listing, supplies, telephone listings, slogans, and mail in which the complainant. The contract not to compete should be taken as if it was portion of a agreement for the trade of a business and that the court of law go wrong in concluding the agreement to be unenforceable.
No, McDonald's is not liable since they have not broken the contract. The fresh franchise was approved on the "West" of Turney Road, that also works for as the Western border for the special territory as clear in the subject franchise contract. Thus, the new license is outside the special territory as precisely delivered for in the contract. The law of court established that respondents did not donation a license to a third party to run a restaurant in the special territory approved to complainants. The court of law correctly ruled that respondents, in permitting a license situated on the west side of Turney Road, did not thereby invade upon the special territory approved to complainants.