No silver bullet exists for franchisors to avoid vicarious liability. Franchisors are sometimes held liable for the negligence for the employees of their franchisees. Even where through no fault of the franchisor, and the inability of the franchisor to prevent a tragedy, franchisors have been held liable for risks that they simply cannot control. That is the outcome of the Superior Court case of Robizza Coryell v. Inc Morris, Dawson, Robizza Inc. and Domino’s Pizza, No. 1977 EDA 2021.

In Coryell, Steven Morris made a left hand turn into Clarence Coryell’s motorcycle, causing severe injuries and the amputation of a leg. Liability and the severity of his injuries were not seriously contested. Morris was in the course of his employment as a pizza delivery driver for Robizza Inc. Robinzza Inc. was a franchisee of Domino’s Pizza, LLC. The jury award, plus delay damages, totaled $2,337,279.41. Damages were assessed against Morris, Robizza and Domino’s. Domino’s appealed as it was held vicariously liable for Morris’ conduct even though Morris was not an employee of Domino’s.

Under Pennsylvania law, not all franchisors are vicariously liable for the acts of their franchisees, or even of their franchisees’ employees. Vicarious liability may be imposed where a principal has a right to control an agent, or exerted actual control of the method and manner of operation. When the relationship is so controlling that the details of the operation are dictated by the principal, the relationship escalates from principal-agent to master-servant and vicarious liability is imposed.

• Controlling the brand is not the same as controlling the operation.

All franchises have a brand name-a trademark. Under the federal trademark law, the Lanham Act, if a registered mark is not properly controlled, the registrant of the mark may lose the exclusive rights to use the mark. If the franchisor does not police how the trademark is used, then competitors may dilute or encroach on the mark. Exclusive use protections not only extend to registered trademarks, but also to “trade dress” if the look or images of the franchise is distinctive. This is why franchise companies work so hard to distinguish their identities through décor and images. Once successful, they are subject to copycats. Policing their intellectual property maintains their advantage in the marketplace.

Trademark controls require franchisors to include contractual controls in their franchise agreement and their operation manuals. These controls include style books and display instructions. How customers are welcomed and the speed of customer service are regulated by the franchisor. Menu items are controlled so that the customer experience is uniform from location to location. Franchisors strive for consistency to reinforce customer expectations and identity. Regulation of the operation from a brand perspective is a necessity for franchisors.

• When do franchisee controls create vicarious liability?

That is the magic question. The answer lies in mixed issues of fact and law and is not easy to discern. In Coryell, during the trial, Domino’s moved for summary judgment on the issue, then a compulsory nonsuit and finally for judgment notwithstanding the verdict, all on the issue of lack of control. On appeal, a panel of the Superior Court held that summary judgment should have been granted. But the Superior Court, en banc, with one dissent, reinstated the jury verdict. Although the summary judgment motion perhaps should have been granted, the jury interrogatories finalized the mixed fact and law analysis such that the summary judgment analysis was superseded. This is true in state practice and the court stated that the standard of review differs from that of federal practice on this issue.

The court sustained the jury verdict because in a light most favorable to the jury, the words of the franchise agreement and the acts of the franchisor created the controls sufficient to support a finding of vicarious liability. The court noted that not all franchisors, and that not even all Domino’s cases are vicariously liable, even under similar fact patterns. Each case is different.

In this case, the court rejected Domino’s agreement that the controls exerted under the franchise agreement and the operating standards merely protected the quality of the end product, not the day to day operation of the franchise. Coryell argued that the jury found Domino’s had the right to, and actually did, dictate not just the results, but also the precise issues involved in the accident.

The court concluded that “Domino’s used its operating system to continuously subjugate Robizza to Domino’s will as to the minutia of the store’s staffing and daily operation far beyond the minimum quality threshold addressed by product standards.” The court pointed out that the franchise agreement and operations manual regulated areas such as cash handling, training, décor, appearance, menu and even regulated delivery driver conduct. The franchisor was instructing the franchisee on how much money a delivery person should carry, the condition of their delivery vehicle and how to deal with customer complaints on delivery. The court concluded this was sufficient to sustain the jury verdict.

• Could this outcome have been avoided?

Domino’s is the deep pocket. It did nothing wrong. It merely controlled the quality of the product and protected its brand by requiring delivery drivers of franchisees to drive attractive vehicles, observe the vehicle laws, not argue with customers and carry sufficient change to transact business. Domino’s did not hire or train the driver and had no power to restrict the franchisee’s decision to hire this driver.

In my view, the issue should have been whether Domino’s controlled the delivery aspect of the operation—the only relevant operational component in this case. The Superior Court panel decided that summary judgment was appropriate, but that is not the standard of review in state court—only in federal court. The case may have been decided differently in federal court-and that is not how law in this area should be decided.

To avoid vicarious liability, franchise systems need to draft to avoid delivery driver controls and other sensitive areas of the franchise business that may result in vicarious liability. The franchise system can be structured so that regulation and training in those areas are provided by outside vendors engaged by franchisees. But some systems cannot afford to outboard those controls. For those systems, they must assert control sometimes to protect the safety of their patrons, who are often children in learning situations. Careful lawyering can help, but unfortunately there is no vaccination against vicarious liability for franchisors.

Reprinted with permission from the February 19, 2025 issue of The Legal Intelligencer© 2025 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.