Franchisor Was Not Vicariously Liable for Delivery Driver

A pizza restaurant franchisee, not its franchisor, had the right to control the physical details of the manner of the driving performed by a delivery driver employed by the franchisee under Oregon law, an Oregon appellate court has ruled. Thus, the court affirmed the grant of summary judgment to the franchisor on the vicarious liability claim brought by an individual who was injured in a motor vehicle accident with the delivery driver.

Agency Relationship

A reasonable juror could conclude that the rules and operating procedures that the franchisor imposed on the franchisee went beyond the stage of setting standards, and that the franchisor retained sufficient control over certain day-to-day operations of the franchisee to establish an agency relationship, the court held. The parties' agreement and the franchisor's operating manual together set forth detailed rules and operating procedures relating to safety, employee qualifications, hours of operation, among many other things.

Employee v. Nonemployee

For vicarious liability purposes, distinguishing between employees and agents who were not employees was important because a principal's liability for the torts of its agents varied based on the type of agent, under Oregon law. The test for determining whether an agent was an employee was predominantly driven by the extent to which the purported employer had the right to control the performance of services by the individual, the court observed. The evidence demonstrated that the franchisor set standards regarding many (if not most) of the daily operations of the franchisee and retained the right to inspect the franchise and terminate the franchise relationship for violations of its standards. That control, however, must be viewed in the context of the particular relationship at issue, according to the court. In the context of a franchise agreement, the franchisor always could be expected to establish certain standards for uniformity of operations. However, apart from that type of exercise of control, the franchisor did not retain the right to control the franchisee in the way that an employer controlled an employee. Given the complex nature of the franchise relationship, it would be unreasonable to conclude that the franchisee was the franchisor's employee.

Control Over Driving

The ultimate question was whether the franchisor had the right to control the physical details of the conduct that injured the plaintiff—namely, the manner in which the employee of the franchisee carried out his driving duties. The plaintiff asserted that the franchisor established stringent controls regarding delivery drivers, their vehicles, and delivery times. For example, the franchisor required drivers to be 18 years of age, carry a state-issued, driver's license, and wear seat belts, among many other things. Although each of those "controls" touched on the delivery process, none of them gave the franchisor the right to control the physical details of the manner of driving, the court determined. The franchisor only required that its franchisee's drivers generally obeyed the rules of the road and drive safely—generalized standards that allowed day-to-day control over the driving operations to remain with the franchisee, the court held.