Recall Miller v. McDonald's Corporation from your reading. In Miller, the plaintiff (Miller) sued McDonald's after she bit into a sapphire stone while eating a Big Mac. She was in a store owned and operated by 3K Restaurants, a franchisee of McDonald's. The issue was whether 3K, as franchisee of McDonald's, was an agent of McDonald's. The court held that, despite the franchise agreement specifically stating that 3K was not an agent of McDonald's, under the facts of the case, there was sufficient evidence to raise a jury issue of whether actual or apparent agency existed. For actual agency, the court held that McDonald's retained sufficient control over 3K Restaurant's operation because the franchise agreement went beyond merely setting the standards and actually required 3K to use precise methods, which they enforced by regular inspection. For apparent agency, the court found that Miller went to the restaurant under the assumption that it was owned, controlled, and managed by McDonald's.

a) Do you think it is fair to hold McDonald's liable? Why or why not?

b) Do you think all franchisors should be liable as principals? Do you think all franchise agreements create agency relationships?