"Does a Franchiser Have Liability for the Wrongful Acts of Its Franchisees?"
Legal Intelligencer (09/27/00) P. 5; DeMarco, Edward J.

The Hamlin v. Motel Six case is the latest case to address the issue of whether a franchiser should be held responsible for the actions of a franchisee. The lawsuit involves two female employees of a Motel Six franchisee who were victims of sexual harassment by a manager of the motel in Troy, Ohio. In addition to the franchisee, shareholders, and the manager of the motel, the plaintiffs in Hamlin sued Motel Six. According to the recent Ohio Court of Appeals decision, the role of Motel Six is to inspect the motel of the franchisee to ensure that it meets national standards. Since the court said Motel Six could not control its franchisee's employment decision, it did not rule that the franchiser was liable for the alleged sexual harassment of its franchisee's employee under an agency theory. In addition, the court ruled that the plaintiffs' argument, that Motel Six breached its duty to train the manager, lacked merit. What franchisers can take away from the case is: relationships with franchisees should focus more on the brand and uniformity of operations; franchisers should refrain from actions that would give the impression that they control the policies and practices of franchisees; and a franchise agreement must include provisions that define the franchisee as an independent contractor that must adhere to the franchiser's standards concerning the protection of its trademark and the promotion of uniformity.