Critical Thinking Questions

Did Domino's breach its duty of ethics by denying liability in this case?

What would the consequences by if franchisors were held liable for the negligence of there franchisees?

CASE 15.2 STATE COURT CASE Franchise Liability Rainey v. Domino's Pizza, LLC 998 A.2d 342, 2010 Me. Lexis 56 (2010) Supreme Judicial Court of Maine "In evaluating the requisite level of control, courts Issue commonly distinguish between control over Under the facts of this case, can Domino's be held a franchisee's day-to-day operations and controls designed primarily to insure uniformity and the standardization of products and services." vicariously liable for the alleged negligence of its franchisee TDBO? -Jabar, Judge Language of the Court Facts In distinguishing between employees and inde- Domino's Pizza, LLC, is a franchisor that grants pendent contractors, we consider several fac- franchises to independent contractors who own tors, the most important of which is the "right and operate pizza restaurants under the Domino's to control." In evaluating the requisite level of Pizza name. Domino's, as the franchisor, granted a control, courts commonly distinguish between franchise to TDBO, Inc., the franchisee, to operate control over a franchisee's day-to-day opera- tions and controls designed primarily to insure a franchise restaurant in Gorham, Maine. The rela- uniformity and the standardization of products tionship between Domino's Pizza and TDBO was and services. governed by a franchise agreement. Under the agree- We now turn to the instant case. Based on ment, Domino's established quality-control, market- our review of the agreement, we conclude that, ing, and operational standards and had the right to although the quality control requirements and receive royalty payments from TDBO. TDBO owned minimum operational standards are numerous, its own equipment, purchased supplies from sources these controls fall short of reserving control over licensed by Domino's, maintained its own records and the performance of TDBO's day-to-day opera- bank accounts, hired and determined the wages of tions. In the end, the quality, marketing, and employees, and established the prices of its products. operational standards present in the agreement The agreement expressly stated that TDBO was an do not establish the supervisory control or right of control necessary to impose vicarious liability. independent contractor and that Domino's was not liable for TDBO's debts and obligations. Edward Langen, an employee of TDBO, was driving Decision a vehicle while delivering a Domino's pizza when he The appellate court found that Domino's is not vicari- negligently caused an accident whereby he hit and ously liable for the alleged negligence of its franchisee injured Paul Rainey, who was riding a motorcycle. TDBO and affirmed the trial court's grant of summary Rainey sued Langen, TDBO, and Domino's, alleging judgment in favor of Domino's. negligence and vicarious liability. Domino's moved for summary judgment on the negligence and vicari- Critical Legal Thinking Questions ous liability counts. The trial court granted Domino's Did Domino's breach its duty of ethics by denying liability in motion for summary judgment, finding that Domino's this case? What would the consequences be if franchisors was not vicariously liable for its franchisee's negli- were held liable for the negligence of their franchisees? gence. Rainey appealed this judgment