Do you agree with this discussion? What do you think about it? Write your own words. The relationship between a franchisor and a franchisee is basically contractual (Agrawal & Lal, 1995). Through a franchise agreement, a franchisee obtains the right from a franchisor to run a business under the same trademark (Legal Information Institute, n.d). The agreement stipulates the rights and obligations between the franchisor and the franchisee similarly to other contracts, whereby the liability between them is mostly defined by the language of franchise agreement. Id. As a separate entity, franchisees are fully responsible for their own debts and obligations to the franchisor and other third parties. Generally speaking, a franchisor is not held liable for franchisee's faults on his behalf.

Having said so, the franchise may form the 'quasi'-principal-agency relationship to a certain extent as long as a franchisor has a high control over the franchisee's business (Lafontaine, 1992). It is because a franchisee's operation of business could run under the control of franchisor concurrently for the benefit of franchisor with authority. On a wide spectrum between employee and individual contractor, a franchisor and franchisee relation could vary by the level of dependence and control. If it is de facto employment-type relationship, a franchisor would not be able to avoid vicarious liability of a franchisee's obligations (Hanks, 1999).

Let's suppose a couple of liabilities of a 7-eleven franchisee in Koreatown in LA. The franchisee decides to sell his own hotdogs at the garage and sells one day a spoiled one. Will the franchisor of 7-elevent be liable for this individual deviation because an item was sold in the vicinity of 7-eleven by the franchisee? Not likely. However, if the franchisee sells the goods that were procured from the franchisor and a problem occurs from them, then the franchisor would be held liable because the franchisor has an exclusive control over the food quality that it supplies. Briefly noted, the vicarious liability may or may not be applicable depending on the control of the franchisor and the language of the contract between them.