“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.” —Jabar, Judge 

Facts: Domino’s Pizza, LLC, is a franchisor that grants franchises to independent contractors who own and operate pizza restaurants under the Domino’s Pizza name. Domino’s granted a franchise to TDBO, Inc., to operate a franchise restaurant in Gorham, Maine. The relationship between Domino’s Pizza and TDBO was governed by a franchise agreement. Under the agreement, Domino’s established quality-control, marketing, and operational standards and had the right to receive royalty payments from TDBO. TDBO owned its own equipment, purchased supplies from sources licensed by Domino’s, maintained its own records and bank accounts, hired and determined the wages of employees, and established the prices of its products. The agreement expressly stated that TDBO was an independent contractor and that Domino’s was not liable for TDBO’s debts and obligations. Edward Langen was an employee of TDBO. Paul Rainey, while riding his motorcycle, was seriously injured in a collision with a car driven by Langen, who was delivering a pizza for his employer TDBO. Rainey sued Langen, TDBO, and Domino’s, alleging negligence and vicarious liability. Domino’s moved for summary judgment on the negligence and vicarious liability counts. The trial court granted Domino’s motion for summary judgment, finding that Domino’s was not vicariously liable for its franchisee’s negligence. Rainey appealed this judgment. Issue Under the facts of this case, can Domino’s be held vicariously liable for the alleged negligence of its franchisee TDBO? 

Language of the Court: In distinguishing between employees and independent contractors, we consider several factors, the most important of which is the “right to control.” 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. We now turn to the instant case. Based on our review of the agreement, we conclude that, although the quality control requirements and minimum operational standards are numerous, these controls fall short of reserving control over the performance of TDBO’s day-to-day operations. In the end, the quality, marketing, and operational standards present in the agreement do not establish the supervisory control or right of control necessary to impose vicarious liability. 

Decision: The court found that Domino’s is not vicariously liable for the alleged negligence of its franchisee TDBO and affirmed the trial court’s grant of summary judgment in favor of Domino’s. 

Ethics Questions: Did Domino’s breach its duty of ethics by denying liability in this case? What would the consequences be if franchisors were held liable for the negligence of their franchisees?