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Vol 14 (2016) - Issue 1

Joint liabilities for franchisors: employment, vicarious liability, statutory and other liabilities

Michael Brennan, DLA Piper LLP (US), Chicago, US, Babette Märzheuser-Wood, Dentons UKMEA LLP, London, UK, Raphaël Mellerio, Aramis Avocats, Paris, France, Martin Reufels, Heuking Kühn Lüer Wojtek, Köln, Germany and Francesca R. Turitto, Roma Legal Partners, Rome, Italy

One of the main principles of a franchising relationship is that the franchisee is a legally independent operator, running its business at its own risk and peril and assuming the commercial risks of its own decisions. Franchisees are however economically dependent on the franchisor’s methods and know-how of the franchisor whose control over the franchise system and the franchisees is an area of caution. Third parties may argue that the franchisor controls the franchisee to the point of holding the franchisor accountable for the franchisee’s actions. This article focuses on the vicarious liability of the franchisor vis-à-vis the franchisee’s employees and the different approaches in France, Germany, the United Kingdom and the United States to the issue of joint employment in the context of a franchisor/franchisee relationship.

What is the liability of Canadian franchisors as potential “joint employers”?

Jean-Marc Leclerc and Krishana Persaud, Sotos LLP

In light of recent developments in the United States in relation to the standard for determining joint employer status, this article considers the risk that similar joint employer principles might be applicable to franchisors in Canada. Based on an analysis of Canadian common law and statutory law, the author concludes that the joint employer situation is clearer in Canada than in the United States. The joint employer tests have remained unchanged for many years, but are still couched in broad language that makes each inquiry very fact-specific.