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Vol 9 (2011) - Issue 4

Vicarious and other franchisor liability

Gregg Rubenstein, Partner, Nixon Peabody LLP, Boston, USA; Francesca Turitto, Of Counsel, Roma, Lepri & Partners, Rome, Italy; Penny Ward, Partner, Baker & McKenzie, Sydney, Australia, and; Larry Weinberg, Cassels Brock & Blackwell LLP, Toronto, Canada

A solid understanding of how different countries approach vicarious liability in the franchise context has become a critical question for a growing number of franchise systems. Despite the independence of franchisor and franchisee, third parties often try to have a franchisor held accountable for its franchisee’s actions. Vicarious liability, the attribution of liability to one party for the acts of another, is the primary source of such liability in many jurisdictions. This article provides the reader with a comprehensive overview of the underlying issues and legal concepts utilized in several countries for resolving question of vicarious liability in the franchise context, focusing on the United States, Australia, Italy, Canada, France and Spain. The authors further suggest how the risk of being held vicariously liable can be managed. A summary chart addresses the primary legal issues concerning franchisor vicarious liability in 17 jurisdictions.

U.S. Supreme Court grants expanded protection for the use of class arbitration waivers

Will Woods, Partner and Paul Russell, Associate, Baker Botts, Dallas, USA

Two U.S. Supreme Court cases in the last eighteen months have provided franchisors with greatly expanded protection to include in their franchise agreements and other contracts arbitration provisions containing class arbitration waivers. The two cases together support the proposition that the Federal Arbitration Act pre-empts state laws that effectively manufacture class arbitration despite contractual arbitration provisions providing for strictly bilateral arbitration. Franchisors can now consider including bilateral arbitration provisions in their contracts and agreements without the fear that certain state laws will be easily employed to overcome any class arbitration waiver.