Issue: National Foods Inc. Sells Franchises Including China

Issue National Foods Inc Sells Franchises Which Includes Chicky Ds

Issue: National Foods Inc sells franchises which includes Chicky-D’s. Under their agreement the franchisees need to hire and train their employees by strict standards provided by Chicky-D’s. Also, Chicky- D’s supervisors need to approve every employee before they are hired to work at a Chicky- D’s. At one of the Chicky-D’s franchises an employee by the name of Sharon quits and files a suit against National of insistences occurring with the assistant manager who has been saying racist comments. National Foods Inc motions that they are not liable for harassment caused by the franchise’s employees. This law suit falls under contractual law because it involves a contract made by the franchisor and franchisee. In franchises the franchisee has control over the day to day activities that their employees do, but under agreements by the franchisor; the franchisor can regulate the franchisee to make sure the standards for their company is met. Sharon files a suit against National for an incident with the assistant manager at a Chicky-D’s establishment. National believes they are not accountable for the harassment caused by one of the franchise’s employees. Under normal circumstances that do not involve standards National would not be liable because they would not have been involved in the hiring process. In this case however National is involved in the hiring process. Under the agreement for owning a Chicky-D’s the franchisee need to hire and train their employees under strict standards set by the franchisor. Also, Chicky-D’s supervisors are the ones who make the final call on whether a person will be an employee at a Chicky-D’s location. So, in the case involving Sharon and an assistant manager. National was well aware of the employees this particular Chicky- D’s had and were the ones who officially hired the assistant manager. Conclusion: Due to National Foods, Inc being involved in the hiring process and being well aware of who the assistant manager was at the Chicky-D’s the court will not grant their motion. Other student answer Issue: Is National Foods Inc. liable for harassment against franchisee’s employees? Rule: As a general rule, the validity of a provision permitting the franchisor to establish and enforce certain quality standards is unquestioned. The franchisor has a legitimate interest in maintaining the quality of the product or service to protect its name and reputation. If a franchisor exercises too much control over the operations of its franchisees, however, the franchisor risks potential liability. A franchisor may occasionally be held liable under the doctrine of respondents’ superior – for the tortious acts of the franchisee’s employees. Under the doctrine of respondent superior (let the master respond) a principal may also be liable for the harm that his/her agent causes to a third party. This doctrine imposes vicarious liability, in that both are imposed regardless of fault. Under this doctrine, the employer is liable for torts committed by an employee acting within the course or scope of employment. Third parties injured through the negligence of an employee can sue that employee or the employer, if the employee’s negligent conduct occurred while the employee was acting within the scope of employment. Analysis: Under the franchisee agreement, franchisees agree to hire and train employees strictly according to Chicks-D’s standards (not National Foods standards). Also, Chicks- D’s supervisors (not National Foods Inc) are required to approve all jobs candidates before they are hired and all the general policies affecting those employees. The scenario does not show National Foods Inc. exercising too much control over Chicks-D’s operations which may be a key in court. There are other factors to take in consideration as well that are not given in the scenario like how clear the employment application is that employees are Chick-D’s employees and not National Foods Inc. employees. Conclusion: My conclusion is that the court will grant National Foods Inc. motion because there is not enough evidence that National is exercising too much control at all over Chicky-D’s and it has been established in the agreement that franchisees agree to hire and train strictly according to Chicks-D’s standards.