26-6:Quality Control

JTH Tax, Inc., doing business as Liberty Tax Service, provides tax preparation and related loan services throughout the United States in more than two thousand company-owned and franchised stores. Liberty's agreement with its franchisees reserved the right to control their ads. In company operations manuals, Liberty provided step-by-step instructions, directions, and limitations to its franchisees regarding their ads. Liberty retained the right to unilaterally modify the steps at any time. The California Attorney General filed a suit in a California state court against Liberty, alleging misleading or deceptive ads by its franchisees regarding refund anticipation loans and e-refund checks. Can Liberty be held liable? Discuss. [People v. JTH Tax, Inc., 212 Cal.App.4th 1219, 151 Cal.Rptr.3d 728 (1 Dist. 2013)] (See The Franchise Contract.)